Part of Onboard BMS needs to know the degradation parameters to improve safety and prolong the battery’s life.
A new battery cell is balanced so that, for example, 0% stoichiometry of anode corresponds to 95% stoichiometry of cathode, and the half-cell open-circuit voltages of anode and cathode at these stoichiometries add up to the cutoff discharge voltage specified by the battery manufacturer. But after some loss of lithium inventory, 0% stoichiometry of anode corresponds only to 90% stoichiometry of cathode, hence the voltage will still be higher than the initial cutoff. At this point, discharging the battery further would damage the anode and accelerate the battery degradation:
Picture from 
In the most salient case, 30% loss of delithiated cathode material (albeit this type of loss is relatively exotic, and 30% is extreme), the discharge voltage limit should be changed from 2.7V to about 3.4V:
Note that adjusting the charge/discharge limit in response to losses of Lithium inventory or active materials doesn’t mean a huge loss of capacity. In the picture above, although the cycleable voltage range is reduced by 47% (1.5V → 0.8V), we reduce the cycleable capacity only by 8% (76% → 70% of the initial capacity, 70/76 ~= 0.92). So this is still relatively modest compared to the 20-40% losses recommended to operators anyway. In all other types of degradation, and at a smaller loss of Lithium inventory or active materials, the limits should be changed less, and the capacity is never reduced by more than 2% (see Figure 5 in the paper linked above).
My hypothesis is that if BMS correctly adjusts the charge and discharge limits then battery could degrade up to 50% slower (which will lead to up to 30% life) in cases when the operator does usually discharge almost to 0% or charge to 100% because we prevent over-stress of the battery when it already started to degrade.
Similarly, after some loss of active material(s), the BMS should adjust the charge/discharge power limits and the value of “1C current” so that they correspond to the same current density as in a pristine battery.
 Degradation diagnostics for lithium ion cells