Bancor Safe Staking

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"Bancor Safe Staking" refers to the unique staking features of Bancor:

Single-Sided Staking

Bancor allows token holders to deposit and earn on their favorite tokens with true Single-Sided Staking. We won’t convert your tokens 50/50 into BNT, ETH or any another asset. As a result, depositors on Bancor maintain their desired exposure to their tokens while earning interest.

Impermanent Loss Protection

The Bancor protocol is designed to ensure a depositor ("liquidity provider") gets back the same value of the tokens deposited (as if they held the tokens in their wallet) plus trading fees & rewards, using a novel mechanism called Impermanent Loss Protection (IL Protection).

IL Protection tracks the HODL value of your deposited tokens. Even if a token moons, you are entitled to withdraw the full value of the tokens you deposited. For example, if you deposit 1 ETH, even if the ETH price doubles, you're entitled to withdraw the equivalent value of 1 ETH. Plus you earn trading fees (paid in ETH) and rewards, in the form of BNT or any other TKN by third party projects that may offer it. 

How does it work?

The Bancor protocol uses its protocol-owned BNT to jointly fund pools alongside user deposits. In other words, when a user deposits $100,000 in a supported token ("TKN"), the protocol matches the user's deposit by providing $100,000 worth of BNT to the pool. In return, both the user and the protocol receive fee-accruing LP tokens (pool tokens).

When a user withdraws their liquidity, the user's and protocol's LP tokens are both burned. If the user has suffered any IL, fees earned by the protocol's LP tokens are used to compensate for the IL, and the remainder is burned for BNT.

The amount of BNT offered by the protocol to support trading liquidity in a given token is governed by the Bancor DAO. The DAO aims to offer protocol liquidity in amounts that are profitable for the network, i.e., where trading fee income exceeds the cost of IL protection.

In exchange for providing its Safe Staking service, the Bancor DAO employs a 15% insurance premium on trading fee revenue, which is burned for vBNT, placing deflationary pressure on the BNT token supply.

Check out our deposit guide here.

Learn more about Bancor here & here.

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