Decentralized automated market maker (AMM) Bancor is set to launch new staking pools and an upgrade to its impermanent loss protection mechanism as part of its long-awaited Bancor 3 update.

Bancor was founded in 2022 and was the showtime DeFi protocol to innovate automated market place makers (AMMs) to the blockchain. The Ethereum-based exchange and lending platform besides permit users to earn staking rewards via various liquidity pools.

In a Tuesday blog post introducing the upcoming Bancor 3 update, the platform announced several new features and upgrades including the Omnipool, the Infinity Pool and "Instant Impermanent Loss Protection."

Impermanent loss (IL) occurs on AMMs similar Bancor or Uniswap when the prices of two assets in a liquidity pool diverge significantly, with one side going strongly upwards or downwards in value.

In Oct 2022, Bancor offset introduced a mechanism to gainsay the issue past rolling out (IL) insurance, which guarantees that liquidity providers will receive up to 100% of their initial capital, plus fees accrued subsequently a 100-mean solar day wait catamenia.

As part of the Instant Impermanent Loss Protection update, users volition no longer need to wait the initial 100 days as they volition receive full protection from day one.

The new Omnipool characteristic volition see the creation of a unmarried puddle to stake BNT that offers yield from the entire network, equally opposed to the current method of offering yield from separate asset pair pools such as ETH/BNT.

"The Omnipool allows for all trades on the network to occur in a single transaction. In Bancor'southward previous versions, trades required transfers via BNT, creating an extra transaction and added gas costs compared with competing DEXs."

Infinity Pools will offer unlimited deposits on Bancor, and no longer require users to look for "space to open up in a pool before being able to eolith tokens."

Other notable updates in Bancor 3 will include car-compounding liquidity mining rewards, dual-sided rewards to "allow third-party token projects to offer IL-free incentives on their pools" and further multi-chain and layer two support.

Related: How liquid staking disrupts parachain auctions on Polkadot

Bancor is governed by a decentralized autonomous arrangement (DAO) and currently offers cross-chain support to the EOSIO blockchain. The platform said that Bancor 3 volition be rolled out in 3 stages, dubbed "Dawn, Sunrise, and Daylight," and is targeting a release in Q1 2022, pending a vote by the BancorDAO.

According to data from DeFi Llama, Bancor is the thirty-second largest DeFi platform in terms of total value locked at $1.65 billion. At the time of writing, Bancor's native token BNT has gained two.3% over the past 24 hours to sit at $4.06 with a total market cap of $949.4 million.