24/7 Cryptocurrency News

‘Hostile’ Market Conditions Force Bancor To Disable This Protection

The DeFi protocol Bancor on Monday said it has paused the Impermanent Loss Protection to protect liquidity providers
Published by
‘Hostile’ Market Conditions Force Bancor To Disable This Protection

The DeFi protocol Bancor on Monday said it has paused the Impermanent Loss Protection to protect liquidity providers (LPs) amid extreme market conditions. It will be reactivated once the crypto market stabilizes. Moreover, the Bancor DAO has been asked to pause the Impermanent Loss Protection for rewards on its liquidity pools.

In order to prevent further decline in BNT token prices, Bancor has used the BIP21 to disable swaps and liquidity provision for compromised tokens on the Bancor Network.

Advertisement

Bancor Pauses Impermanent Loss Protection Indefinitely

Bancor Network in a blog post on June 20 reported that its Impermanent Loss Protection feature will be temporarily paused to protect the DeFi protocol and liquidity providers. In fact, withdrawals will not be eligible for Impermanent Loss Protection and deposits are also not accepted.

However, trading will remain active and users will continue earning yields, but the withdrawal will only be possible when IL protection is reactivated.

“As our knowledge of current circumstances has increased, we have observed anomalies, if not manipulative behavior, occurring in the data.”

The recent sell-off of BNT rewards emissions led Bancor to pause IL protection. Generally, BNT rewards have a double cost. It decreases BNT token price, resulting in an impermanent loss. This impermanent loss is compensated to liquidity providers with additional BNT emissions.

The insolvency of two large centralized companies have caused the costs to rise further. The companies were liquidity providers which received BNT liquidity mining rewards. However, the companies continue to liquidate their BNT positions to cover their liabilities. Moreover, another unknown company has opened a large short position on the BNT token on an external exchange. It has caused the BNT price to fall further due to the selloff.

The Impermanent Loss Protection will be reactivated soon as the market stabilizes.

Advertisement

BNT Token Plummets 65% in a Week

BNT token is at risk as it has plummeted nearly 65% in just a week. Meanwhile, the Bancor (BNT) token price is down 95% since the all-time high, and Bancor ROI is down 88%.

At the time of writing, the BNT token price is trading at $0.51, up nearly 6%.

The liquidation risks of Three Arrows Capital and Celsius have caused a major crisis in the DeFi market. The companies are liquidating digital assets to repay their lenders.

Advertisement

Share
Varinder Singh

Varinder has over 10 years of experience and is known as a seasoned leader for his involvement in the fintech sector. With over 5 years dedicated to blockchain, crypto, and Web3 developments, he has experienced two Bitcoin halving events making him key opinion leader in the space. At CoinGape Media, Varinder leads the editorial decisions, spearheading the news team to cover latest updates, markets trends and developments within the crypto industry. The company was recognized as Best Crypto Media Company 2024 for high impact and quality reporting. Being a Master of Technology degree holder, analytics thinker, technology enthusiast, Varinder has shared his knowledge of disruptive technologies in over 5000+ news, articles, and papers.

Published by
Why trust CoinGape: CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights to our readers. Our journalists and analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.

Recent Posts

  • 24/7 Cryptocurrency News

Polymarket Founder Shayne Coplan Teases Potential POLY Token After $2B ICE Deal

Polymarket founder Shayne Coplan has sparked speculation about a potential native token launch following a…

October 9, 2025
  • Bitcoin News

FOMC Minutes Signal Fed Open to More Rate Cuts This Year, Bitcoin Bounces

The FOMC minutes have signaled a dovish shift from the Fed officials, who look likely…

October 9, 2025
  • 24/7 Cryptocurrency News

North Dakota To Issue ‘Roughrider’ Stablecoin Following Wyoming’s Footsteps

North Dakota is set to become the second U.S. state to issue a stablecoin, named…

October 8, 2025
  • 24/7 Cryptocurrency News

Ethena Labs and Jupiter Partner to Launch JupUSD Stablecoin on Solana

Ethena Labs reported that it has partnered with Jupiter Exchange to develop JupUSD. This is…

October 8, 2025
  • 24/7 Cryptocurrency News

BlackRock’s Bitcoin ETF Leads ETFs With $3.5B Weekly Inflows as It Eyes $100B in AUM

BlackRock’s Bitcoin ETF, the iShares Bitcoin Trust (IBIT), has become the most bought exchange-traded fund…

October 8, 2025
  • 24/7 Cryptocurrency News

MetaMask Launches Hyperliquid Perpetuals In-App, Plans To Integrate Polymarket

MetaMask has officially introduced perpetuals trading on its platform, powered by Hyperliquid. Meanwhile, the crypto…

October 8, 2025