Bancor

Bancor aims to offer a blockchain protocol network that allows users to avoid cryptocurrency markets for token exchange by converting them directly. The ultimate goal is to provide a liquidity boost to the (many) tokens that lack reliable supply and demand in centralized exchanges. Bancor Network Token (BNT) is the price token used to fulfil trades and provide liquidity on its decentralized exchange.

In this article, we discuss what Bancor is, the people behind it and delve into its key metrics, insights and risks.

What is Bancor? 

Bancor was created to both generate liquidity for altcoins and to remunerate liquidity providers. Bancor achieves this using an automated market maker (AMM) smart contract alongside a new class of cryptocurrencies, referred to as Smart Tokens. Essentially, the Bancor protocol aims to integrate those tokens which get excluded from the internet of value due to a lack of consistent buyers and sellers, offering a long-term solution to liquidity problems.

Key Metrics

TickerBNT
Token NameBancor
Token Type/ProtocolERC-20
Total Token Supply232,910,572
Current Circulating Supply See Coinmarketcap
Market CapitalisationSee Coinmarketcap
Token Creation Date2016
Can it be mined?No

The people behind Bancor

Bancor was founded by four experienced technology entrepreneurs: Eyal Hertzog, Guy Benartzi, Galia Benartzi, and Yudi Levi. Eyal Hertzog is the Bancor Network Token product architect. He has been a technology entrepreneur for over 20 years and previously founded MetaCafe, a top video-sharing site in Israel with over 50 million users. Yudi Levi is Bancor’s CTO who also happened to co-found AppCoin. In addition, Guy Benartzi is the chief executive at Bancor, while Galia Benartzi, the CEO and founder of Particle Code, is the Bancor business developer.

Bancor Network Token

The Bancor protocol consists of a native currency. This currency was also the first Smart Token on the Bancor network and is known as the Bancor Network Token (BNT). All Smart Tokens hold BNT in reserve. This feature of enhanced connectivity means significantly fewer conversions are required to reach the end token.

How does Bancor work?

As discussed, the Bancor protocol is a mixture of a series of smart contracts that manage the on-chain conversion of tokens. This makes it effortless and quick to convert tokens without having to go through an exchange, unlike when trading other cryptocurrencies. Bancor makes use of Smart Tokens to process token conversions internally by holding reserves of other ERC20 tokens within users’ smart contracts. They can then convert back and forth between those reserves as per users’ requests.

Tokens used in the network are allowed to converse seamlessly because there is no need for an exchange platform or any third-party platform, resulting in self-governing pools for tokens supported by the network. BNT, built via blockchain technology, is the main token for the Bancor protocol, which is the default for all smart tokens created on the network.

Bancor network ecosystem supports a two-way token model, liquid tokens, and relay tokens:

  • Liquid token: an automated token with a single reserve that mints and destroys itself, sends or removes the server token to its smart contract. It is required to reserve either BNT or a derivative of BNT token to use the Bancor network.
  • Relay token: used in staking to provide liquidity. It indicates the proportion of the amount staked to the total value in the pool so that the token holders will get a percentage of the future earnings of Bancor.

Key insights

Below we discuss some of the key insights of the Bancor Network:

  • Automated market maker AMM smart contract: The Bancor protocol uses an automated market maker (AMM) smart contract to facilitate trades against token liquidity pools without matching buyers and sellers.
  • Allows for trades to occur between coins on different blockchains: The Bancor Network Token, unlike many other DEX coins, allows for trades to occur between a range of coins on a variety of blockchains, for example, Ethereum and EOS. More chains are planned to be added to the ecosystem in future.
  • Demand expected to grow: As liquidity is added to Bancor pools, the demand for Bancor Network Tokens can be expected to grow, as every pool on Bancor must hold BNT.
  • Accurate price retrieval: Bancor retrieves the prices for coins locked on the platform accurately by using ‘Oracles’, such as Chainlink to relay prices from external sources into the system correctly.
  • Versatility: The protocol allows other tokens to be liquidated as well. However, these tokens (also called reserve tokens) must comply with ERC-20 or EOS standards.

Key risks

Below we discuss some of the key risks of the Bancor network:

  • Unfamiliar territory: The Bancor network is not intended for those who are not familiar with the Ethereum ecosystem. Even though the protocol allows other tokens to be liquidated, the reversed tokens must still comply with ERC-20 or EOS standards.
  • No fiat currency support: Bancor network token doesn’t have fiat currency support. As such, it may be considered risky for traders who lack experience within this protocol.
  • Trading platform and margin trading are not provided nor supported: The interface consists of a simple order box. Therefore, beginners to the Bancor network may have to face a small learning curve.

Bancor news and updates

Below we discuss some of the latest news and updates surrounding Bancor:

  • Bancor made a move to provide more liquidity and awareness for its native token: In January, Bancor distributed some ETH/BNT valued at $60,000 into various wallets that were holding a required minimum of BNT. In 2017, the protocol raised more than $144M during its initial coin offering.
  • Over $2 billion trades: Bancor has facilitated over $2 billion trades involving several tokens including cross-chain tokens as at the time of this writing.
  • Bancor rolls out Vortex: In April 2021 Bancor rolled out Vortex, a new mechanism that allows users to increase their capital efficiency while providing liquidity in its pools. The solution allows users providing liquidity in BNT to borrow funds while continuing to obtain a yield from swap fees.
  • A decentralized exchange upgrade report for Bancor’s v2.1 was released: This upgrade covers the performance of Bancor’s decentralized exchange over the last three months. Based on the document, the total liquidity increased by almost 1000%, resulting in the platform earning about $1.12 million in cumulative swap fees.

Community & Whitepaper Links

In summary

Bancor, through its decentralized trading protocol. empowers traders, providers, and developers to actively take part in an open-source financial marketplace. Bancor has been around for a while, effectively standing the test of time, having overcome various obstacles along the way. The innovation behind Bancor continues to prove potential. It has essentially reshaped the AMM economy by offering a wide range of tokens with opportunities for liquidity and eradicating the middle man from token swaps.

Disclaimer  

All investments are speculative and involve substantial risk and uncertainty. Investors should understand the nature of digital assets including the terms of return and the risk of assets. We encourage investors to fully understand the assets and the risk associated with them prior to making any investment.  

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