Why is there a withdrawal fee and cooldown?

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Exclusive to Bancor, users are able to deposit their favorite token single sided with instant Impermanent Loss Protection. To provide these features and make sure the protocol remains secure,  withdrawals are subject to a 7-day cooldown period and a 0.25% withdrawal fee (determined by the Bancor DAO). The withdrawal fee goes to the protocol as an insurance to compensate in case of  Impermanent Loss

The cooldown is necessary to prevent abuse, and financial exploits. Once withdrawal is initiated, the user can confirm and complete withdrawal any time after the 7th day.

During the 7 days, there will be no rewards nor trading fees generated (the user's withdrawal value does not change). The user will have an option to cancel; the cooldown can be reversed.

If the user reverses the cooldown - it is the same as never starting it. All trading fees and rewards are returned.

Full withdrawal guide can be read here.




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