DeFi Platform Bancor Halts ILP Due to “Hostile Market Conditions”
2022.06.20 17:46
DeFi Platform Bancor Halts ILP Due to “Hostile Market Conditions”
- Bancor Network has paused its Impermanent Loss Protection (ILP) for users.
- They reassure users that there are no ongoing attacks and that funds are secure.
- A Twitter (NYSE:TWTR) user claims that the Celsius Network pulled manipulative behaviors against Bancor.
Bancor, a decentralized trading, and staking protocol, has halted its Impermanent Loss Protection (ILP) for its users. The trading and staking protocol platform reassured users that the ILP would be reactivated eventually and that no ongoing attacks were happening.
In their official Medium Blog on June 20, where they made the announcement, they claim the decision was “due to hostile market conditions,” with promises to reactivate the ILP as the market stabilizes.
They reassured their users that there was no ongoing attack on the system and that funds were secure.
In the current state, withdrawals will be ineligible for IL protection. However, users who remain in the protocol will continue earning yields and be entitled to withdraw their fully-protected value when IL protection is reactivated. Trading remains active on all liquidity pools on the network.
They later added that the temporary measure was to “give the protocol some room to breathe and recover.”
In their words:
…, we have observed anomalies, if not manipulative behavior, occurring in the data. Therefore, we are taking bold measures to protect the protocol by temporarily suspending IL protection and other steps to limit further exposure.
The Impermanent Loss Protection is a mechanism by Bancor to protect liquidity providers from excessive losses while staking their assets for liquidity purposes.
Some Twitter users have bashed Bancor for its action because IL protection was their main selling point.
Meanwhile, a Twitter user @MikeBurgersBurg argued that according to ‘two sources’ the “hostile market conditions” that Bancor was referring to was Celsius acting maliciously towards Bancor. The unknown sources claimed that Celsius pulled out their large Bancor deposits, collected Bancor (BNT) impermanent loss rewards, and subsequently opened a short position for BNT on the FTX Exchange.
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