Bancor Review: All You Need to Know to Invest in BNT
Bancor is a decentralized protocol that allows traders, liquidity providers, and developers to exchange a variety of tokens in a stress-free manner. There are over 10,000 pairs of tokens that users can exchange with just one click.
The Bancor network enables users to make a quick swap between a pair of tokens. In addition, it creates a platform for autonomous liquidity without the presence of a counterparty.
You can use its basic token, BNT, within the network for transactions. The platform operates in a frictionless and decentralized manner while using the BNT token to ensure transactions.
Bancor Network Token is popular for being the standard for the introduction of “Smart tokens” (ERC-20 and EOS compatible tokens). You can convert these ERC-20 tokens in your respective wallets.
It operates as a DEX network (Decentralized Exchange Network), a class of crypto exchanges that permit P2P transactions in a seamless way. Smart contracts are responsible for liquidizing the protocol.
BNT token facilitates the conversion of various smart tokens, which are connected to smart contracts. This process of token conversion happens within the wallet and is determined by the users. The big picture behind the token is vast usability amongst all users—newbies inclusive.
Bancor functions as an automatic price calculator that evaluates the specific amount of a token a user wishes to convert. Then, it provides its equivalent amount in another token the user desires to convert to.
This is possible by implementing the Bancor’s Formula (a formula that provides the price of a token by evaluating the market cap and available token’s liquidity).
- 1 History of Bancor
- 2 Understanding Bancor Closely
- 3 BNT Vortex
- 4 Bancor and vBNT Burner Contract
- 5 How to Buy and Store Bancor
- 6 What Bancor Team Plans for the Network?
- 7 Conclusion
History of Bancor
The name “Bancor” was tagged in memory of the late John Maynard Keyes. John termed “Bancor” as a global currency in his presentation in the International Trade of Balance at the Bretton Woods conference in 1944.
It was founded in the year 2016 by the Bancor Foundation. The Foundation has its headquarters in Zug, Switzerland, with its R&D Center in Tel Aviv-Yafo, a city in Israel. The protocol was developed in the Research Center in Israel.
The development team consists of:
- Guy Benartzi, the Israeli CEO & Co-founder of the Bancor Foundation, founder of Mytopia, and a private investor in blockchain technologies
- Galia Bernartzi, a sister to Guy, a tech Entrepreneur who helped in creating the Bancor protocol. Galia was also former CEO of Particle Code Inc., a development environment for mobile devices;
- Eyal Hertzog, Co-founder and Product Architect at Bancor Foundations. Before joining the team, Eyal worked as a Chief Creative Officer and President at Metacafe.
- Yudi Levi, the Chief Technology Officer at Bancor. He is the Co-founder of Mytopia and a technology Entrepreneur.
- Guido Schmitz, a highly recognized swiss tech Entrepreneur who also contributed to the development of the Tezos (XTZ) coin. He has been an active partaker in a number of successful developments for the past 25 years. This is just a handful of the Bancor Development team, and as we’ve seen, it includes competent and professional men and women.
Bancor’s Initial Coin Offering happened on the 12th of June, 2017. So far, the ICO has attracted 10,000 investors. Sales rose to over $153 million, an estimated amount for 40 million tokens, each at $4.00. As of now, the total circulating supply is 173 million BNT tokens worldwide.
The token rose to an all-time high price of $10.72 on Jan 9, 2018, and sank to an all-time low of $0.120935 on the 13 of March 2020.
As of the time of writing, Bancor seems strong and it may update an all-time high. It has a monthly all-time high trade volume of more than $3.2B monthly. Also, the TVL in the platform is over $2 billion.
It’s worth knowing that the Bancor has a very user-friendly UI that enables a user to convert tokens seamlessly.
Also, it’s equally important to know that the wallet interacts with smart contracts in the blockchain directly. It does this while simultaneously granting the users absolute governance over their individually invested funds and private keys.
A fascinating fact about Bancor is that amongst the numerous solutions it offers, it is the first DeFi network to permit trustless swapping between users. Thus, eliminating the need for any middlemen within any transaction.
The Bancor Network started inter-blockchain aggregation motives with the Ethereum and EOS blockchains. They are making proper preparations to feature various other coins and their respective blockchains (including popular coins such as BTC and XRP).
Bancor provides crypto investors a wide variety of cryptocurrency options. Crypto traders using the Banchor wallet can also access up to 8,700 token trading pairs quickly.
Understanding Bancor Closely
The Bancor protocol solves two major problems:
- The dual coincidence of wants. This was a challenge during the barter system when there was no currency. Then, one will have to trade his merchandise for another important product by swapping what he has for the one he needs. But he must find someone who desires what he has. Therefore, a buyer needs to find a seller who needs his product. If not, the transaction won’t work. Bancor solved this same problem in the crypto space.
- The organization offers a Smart Token to connect all crypto in a permissionless liquidity exchange network. While Bancor provides an easy way to convert these tokens without an issue book or counterparty. It uses BNT as the default token for others tokens originating from the network.
- Then, the Illiquidity of crypto: The platform ensures consistency in the liquidity of crypto. Noting that not all DeFi tokens have continuous liquidity. Banchor provides asynchronous price-discovery for these legacy tokens using the backward compatibility method.
More on Bancor
Also, the Bancor Network salvages the problems that arise from centralized crypto exchanges, although they are more widely used.
Exchanges such as Exodus provide liquidity to a limited range of tokens. But Bancor’s exchanges not only provide liquidity for general tokens but EOS- and ERC20-compatible tokens, which are enormous. It also provides a platform for trading. And all these are done in a permissionless way.
The protocol achieves a feat like no other. Regular fiat currency exchange transactions consist of a transaction between two parties—one to buy and the other to sell.
However, in Bancor, the user can perform an exchange of any currency with the network directly, making a one-sided transaction a possibility for the users. Then the smart contracts and BNT create the liquidity.
Smart contracts provide a consistent balance between the tokens. Once an exchange takes place, there’d a balance in the wallet displayed in its BNT equivalent.
The network provides the user the platform and its BNT token to eliminate the need for intermediaries (in this case, exchange platforms). Users can swap either ERC20 or EOS tokens that comply with the Bancor Standards using the wallet.
BNT introduced an incentivized method of rewarding investors who bring in some liquidity into the platform. The motive was to minimize transaction charges for the platform’s crypto traders and simultaneously to improve the total network charges and volumes from trades.
Thus, attracting users with specific token rewards each time they provide more liquidity, with hopes to expand the network.
Notwithstanding, the preparations for the integration of these incentives are still upcoming. The objective is to award investors as they reserve their BNT tokens in any liquidity pool.
The next set of BNT tokens that will be created will be in the form of the staking incentives, and this will only be shared to various liquidity pools through users voting with the BancorDAO.
The Bancor vortex is a dedicated kind of token that allows a user to stake in BNT tokens in any of the pools. Then borrow the vortex token (vBNT), and utilize them as they desire using the Bancor network.
The vBNT tokens can be sold, swapped with other tokens, or invested as leverages for liquidity on the network to earn more token incentives.
The vBNT tokens are necessary for a user to access a Bancor token staking pool. These pools are only those which have been whitelisted. These tokens provide a user part possession in the pool. Its attributes include:
- Ability to vote using Bancor’s governance.
- Leverage vBNT by converting it to any other ERC20 or EOS compatible token.
- Ability to stake the vortex token (vBNT) in the dedicated vBNT/BNT pool to earn a percentage of it for incentives from conversion.
Users can withdraw any ratio of their deposited BNT by choice. But, for a user to withdraw 100% amount of deposited BNT tokens from any pool, a Liquidity Provider (LP) must sum up to a minimum equivalent of the amount of vBNT provided to the user when he was staking into the pool.
The gasless voting was integrated in the month of April 2021 via the Snapshot governance. The protocol’s proposal to couple with the Snapshot Company was by far the most famous vote for any DAO (Decentralized Autonomous Organization), with a percentage of 98.4 votes for the notion.
Integration with Snapshot increases the usability of the protocol as it permits users in the community to vote.
However, a contingency plan has been brought forth to mitigate a situation where the implementation of Snapshot becomes defective. The plan is to return back to the Ethereum blockchain.
Earlier in April 2021, the Gasless voting was released for Bancor governance. So far, the protocol’s DAO has experienced a large number of token communities which have gotten whitelisted to ensure legal protection and one-sided liquidity.
Numerous Automated Market Makers have shown a massive interest in the platform by moving their investments and rewards to it. This action has boosted the incentives of the one-sided and guarded liquidity pools.
More nouvel and committed token communities are being brought in more often to work hand-in-hand with BancorDAO to create deep and liquid on-chain pools.
This will make the token easier to use, attractive, and with lower volatility for users who choose to invest in and wait for the price increase.
Bancor and vBNT Burner Contract
The initial plan of the vBNT was to provide a supply system solution to hold a part of the revenue from the crypto trading. Then, utilize that portion in buying and burning vBNT tokens.
That model was, however, complex but they replaced it in March 2021 for a stable-fee model.
Using this stable-fee model, the vBNT receives 5% of the overall returns from token conversion returns, resulting in the scarceness of the vBNT. This strategy is profitable for the Bancor Network platform.
This stable charge will increase as time goes by during the next 1 year and 6 months until it reaches up to 15%. The anticipation is that the burning of these vBNT tokens will lead to an increment in the volumes in trade.
The DAO has made preparations for the vortex burning to be a chief portion of its expansionary monetary policy.
These tokens consist of:
- The Smart token converters: ERC20 or EOS tokens utilized in conversions between various of the ERC20 protocol standards and are kept as reserve tokens
- Exchange-Traded Funds (or token Baskets): Smart tokens that carry token packages and permit it to record only one smart token.
- Protocol tokens: The use of these tokens is for Initial Coin Offerings campaigns.
Opportunities and Challenges in BNT
There are various enticing features of the Bancor Network Token you need to know. Also, there are some other negative factors worth considering before investing in the protocol. We will outline several advantages and concerns with the protocol below:
- Consistent liquidity: There is an infinite possibility of liquidities that you can create or terminate on the network.
- No additional fees: In comparison to centralized ad exchange networks, the transaction fees are stable.
- Spread-less: No need and presence for order books and counterparties when conversions are taking place.
- Lesser transaction time: The time taken to convert any currency is close to zero.
- Predictable price deficit: The protocol is very stable, and any decline in the prices can be forecasted.
- Lesser volatility: Bancor doesn’t fluctuate dramatically as many other cryptos do in the industry.
- No availability for fiat currency exchanges
How to Buy and Store Bancor
If you want to buy Banco, check the exchanges below:
- Binance; you can buy Bancor on Binance. Crypto lovers and investors who reside in countries like UK, Australia, and Canada can easily buy Bancor on Binance. Just open the account and complete the processes involved.
- io: Here is the perfect exchange for investors living in the United States of America. If you’re one of them, don’t use Binance because of restrictions placed on the exchange regarding selling to USA residents.
The next consideration is how to store Bancor. If you’re investing heavily in the token or want to hold it for a price increase, use a hardware wallet. Hardware wallets are the safest for investors making huge investments in Bancor.
But if you only want to trade, you can use an on-exchange wallet to fasten the transactions. Some of the best hardware wallets you can find include Ledger Nano X and Ledger Nano S. Luckily; they support BNT.
What Bancor Team Plans for the Network?
It’s commendable that the team had already released Bancor V2 and Bancor V2.1. The team continues to pursue more developments and new features in a bid to make it great. For instance, April 202q1 brought in the integration of Gasless voting through Snapchat.
According to their announcement in May 2021, the Bancor team will be focusing on achieving three amazing features for Bancor.
- The Bancor team aims at bringing in more assets to the platform by lowering their barriers to whitelisting. They also want to make it a bit cheaper for token projects to join the platform.
- Bancor developers want to increase the earnings of liquidity providers on the platform. They aim at designing and introducing many financial tools that will ensure higher returns for LPs and a seamless method for returns management.
- Almost every project would want to grab an enviable market share and increase its trading volume. Well, the team aims at that prize too. They want to offer competitive prices, provide charting and analytic tools that will aid both retail and professional traders to transact easily on the platform.
The Bancor protocol solves the issues of low liquidity and poor adoption in the crypto space. Before the entrance of Bancor, it wasn’t very easy to exchange one token for another. But by automating liquidity, the protocol has provided a way to achieve it without hassles.
If you’re a newbie to using Bancor, the protocol may seem daunting at first. Using the Bancor wallet is as easy as they come. You can make your exchanges without issues or need for technical skills. Moreover, the team aims at making the platform an easy-to-use answer for investors, both big and small.
Now that you’ve learned every important aspect of Bancor go ahead and join other investors for some rewards.