/biz/ - Business & Finance

6/7

Bancor's IL protection is a ticking time bomb IMHO. As soon as the following two things happen with a single asset at the same time, it's over:
- the asset rises in price dramatically
- people want to all withdraw the asset at the same time
Then there will be lots of people whose IL insurance gets paid out in bnt (see pic related). They still want their asset back so they swap the bnt for the asset, leading to falling bnt prices. Falling bnt prices cause the exact same process to repeat with other pools (since all pools trade against bnt), depressing bnt prices even further, etcetera. It's potentially a death spiral.
I'll leave it as an excercise for the reader which token will most probably set this off in the near future.