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What is Bancor (BNT) ?
Bancor (BNT), is a piece of software that actively encourages users to pool their crypto assets in exchange for a part of the fees paid by traders when they buy and sell them.
Bancor is seeking to make the functioning of an automated market maker (AMM) easier by doing so. An AMM is a well-established system that provides liquidity to markets without requiring a financial institution to operate it directly.
A set of Smart Contracts has been created to mobilise liquidity and facilitate peer-to-contract exchanges within a single transaction without the use of a counterparty.
The ability to link to other networks, like Ethereum and EOS, distinguishes Bancor Network from several other virtually identical AMM networks in the DeFi market. For the time being, Bancor customers can connect to these two networks to add extra liquidity to their trade execution within the Bancor programme, with more suitable networks to be introduced in the future.
Simply said, AMMs like Bancor aim to increase the liquidity of specialised crypto-asset markets by incentivizing users to create and manage pools of assets.
Tokens are exchanged into BNT as an intermediate step when any trade is executed on its platform. The liquidity providers who deposited the assets receive a share of the fees paid by traders as a payback on their funds.
Who are the founders of Bancor (BNT)?
Galia and G.Benartzi co-founded the Bancor idea, and T.Draper, a partner at the D.Fisher Jurvetson investment firm, is among the investors. Bprotocol Foundation arranged and oversaw a token sale that raised $153 million for the project. Over 11,000 tokens were handed to investors, while the remaining tokens were distributed to the development team for grants and operations expenses.
In 2020, the development team launched Bancor v2, the protocol’s second version, which included features like impermanent loss insurance and single-sided exposure. The team is still working on new features, with hopes to expand support for more networks in the future.
What makes Bancor (BNT) unique?
- The ability for Bancor to exchange value between coins on multiple blockchains is perhaps the most convincing rationale for BNT. Because Bancor is based on both Ethereum and EOS, BNT can be withdrawn from pools comprising coins from both chains.
- To establish liquidity for its protocol, Bancor introduced Smart tokens. Smart tokens are ERC-20 tokens that aim to keep the network’s token prices updated while providing continuous liquidity.
- Smart tokens are intended to make buying and selling digital assets easier and faster. Smart tokens are also speedier at facilitating conversions since they do not need to be published on exchanges to attain liquidity.
- The Constant Reserve Ratio (CRR) was established by Bancor as a novel tool for price discovery. The objective for smart token developers is to establish the appropriate CRR for each reserve token. This formula assures that the reserve token amount and the market cap of a smart token are in a constant ratio.
How Many Bancor (BNT) Coins?
Out of a total of 236,968,659.162017 BNT, there are presently 236,968,659 BNT in circulation. The protocol uses an elastic supply to mitigate against temporary loss, hence there is no capped maximum supply for BNT. If swap fees aren’t enough to reward liquidity providers, more tokens are released, boosting the BNT supply.
The Bancor market cap is calculated by multiplying the amount of Bancor coins in circulation by the current market price. The market capitalization of BNT affects its position among other cryptocurrencies, as well as its market share and supremacy.
How does Bancor (BNT) Work?
Bancor’s goal is to cut out the middlemen by providing a digital currency reserve as well as an autonomous exchange mechanism that regulates the pricing and volume of the tokens being traded.
BNT is Bancor’s native reserve currency token as well as the reserve currency for the network’s Smart tokens. Smart tokens are essentially virtual coins that store the monetary worth of other virtual coins that are compatible.
One of the promises made during BNT’s initial coin offering (ICO) was that investors would earn interest on transaction fees when other crypto coins were exchanged into and out of BNT.
Bancor wants to entice consumers to deposit funds into pools to automate its AMM service. Each pool has a pair of tokens as well as a BNT coin reserve.
When a user puts coins into a pool, they are rewarded with a new token. This token is referred to as a pool token, and it enables the user to fetch the amount they originally locked in the protocol.
As each token is traded, BNT tokens act as a medium of exchange. Users can deposit a single token in one of Bancor’s pools (as opposed to a pair). In some AMMs, a user may be required to lock up pairs of tokens in specific proportions to gain access to the pool.
How to use Bancor (BNT)?
Bancor is used to trade multiple micro-tokens and ERC-20 tokens throughout the network as well as other platforms like EOS and Ethereum through interoperability.
Liquidity providers can also receive awards and trading fees based on the number of tokens they stake in liquidity pools. Bancor facilitates a user-friendly atmosphere for traders by enabling rapid and secure liquidity-induced trading dependent on automated procedures and algorithms.
The protocol allows users to convert between ERC-20 compliant tokens. Smart contracts that contain holdings of other ERC-20 tokens are connected to each smart token. Internally, the tokens are exchanged based on such reserves and the number of user requests.
Conclusion
Bancor isn’t the only DeFi project which allows for AMM trading and token swaps, however, it is the earliest and most well-known in the industry. Bancor, as one of the main projects in the new era of decentralised financial systems, enables instant and quick trades while working on additional enhancements.
The company also offers a non-custodial wallet that allows users to connect to EOS and Ethereum from any device and trade with over 500 tokens.
Despite the presence of several identical protocols on the market, Bancor continues to rank among the best AMM software.
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