The lack of liquidity is one of the most urgent problems of cryptocurrency at the present time. In spite of the fact that almost every week new coins appear, only the “great ten” coins remain really popular and in demand.
Many traders and investors are faced with the fact that the application for the sale of not very popular cryptocurrency has to wait several hours or even days. And all because centralized exchanges do not have tools for selling illiquid (i.e., unclaimed at the moment) coins.
We recently reviewed one of the cryptocurrencies that solves the above illiquidity problems - Stellar. Today, next in line is the Bancor project, which offers an equally interesting solution to this problem.
History of creation
Bancor was established by the Bprotocol Foundation in 2017. The company's management includes Eyal Hertzog, Guy Banartzi, Guido Schmitz-Krummacher and Bernard Lietaer. The Foundation is engaged in the support, development and popularization of the project.
The technical part of Bancor is entrusted to the company LocalCoin Ltd., which is currently engaged in improving the protocol.
Like most modern coins, the Bancor token (BNT) was issued through an ICO. The initial offer of this cryptocurrency was one of the most successful - in less than three hours 396 720 ETH (more than $ 140 million) was collected. This happened on 12 June 2017 of the year. In total, 39,6 million BNT out of the total number of 79,3 million BNT 10 885 was sold to investors, in the few hours that ICO lasted, 15000 transactions were completed. One of the buyers acquired 6,9 million BNT for $ 27 million
Among Bancor's investors were quite famous personalities, for example, Tim Draper, who is the founder of the VC Draper Fisher Jurvetson fund. Later, he also supported the Tezos ICO.
Team
The Bancor team consists of members of the company directly Bprotocol and the advisors.
The core consists of four people - all of them are located in Zug, the famous “crypto-circle” in Switzerland:
- Bernard Lietaer (Bernard Lietaer) - founder. Civil engineer, economist, author and professor. Originally from Belgium. His specialty is money management systems. He also advocates the creation of communities in which their local currencies operate.
- Guy Banartzi is a co-founder. The creator of the gaming company Mytopia and the founder of the development studio Particle Code, which is located in Israel, in the city of Tel Aviv.
- Guido Schmitz-Krummacher - Executive Director. Participates in various Swiss entrepreneurial projects. He is also the executive director of another well-known crypto project called Tezos (XTZ).
- Eyal Hertzog - the main developer. Co-founder of Metacafe. He is also a co-founder of Appcoin, a project whose idea is similar to Bancor, which enables users to create their own marketplaces and currencies.
- Bancor’s welcoming personalities are Tim Draper, John Clippinger, Lee Linden, Justin Rosenstein, Yariv Gilat, Guy Corem.
Technology
Bancor was created on the Ethereum blockchain, but despite this it offers a very interesting solution. The Bancor protocol uses smart contracts to create smart tokens, which will be described in detail below. The key feature of the protocol is that the exchange of tokens takes place directly with the platform and does not require the participation of the second party, as it happens on conventional cryptocurrency exchanges, where one user “buys out” the other cryptocurrency, closing the order created. Bancor allows you to work with all ERC20 standard tokens, i.e. those that were created on the Ethereum blockchain.
Smart tokens. Smart tokens in the Bancor system are cryptocurrencies that act as a counterparty when converting one ERC20 coin to another. Each of the coins has a reserve, which is regulated by a separately prescribed smart contract. The tokens interact with each other in the Bancor global network, which provides a high liquidity ratio. One of the most important tasks of the Bancor protocol is to ensure that coins are kept in reserve at all times. The balance of tokens is determined by the Constant Reserves Ratio (CRR), or the weight of the connector, - this is a coefficient that takes into account the balance of the reserve token and its market capitalization.
Bancor allows users to create smart tokens. The original number of smart tokens is set by the creator, then the number is regulated by sales and purchases within the system. The price is determined by CRR: if the CRR is less than 100%, then the price of the token rises (with purchases), if this indicator is more than 100%, then the cost, on the contrary, decreases (with sales).
Bancor network can be compared with a bank that stores reserves of different currencies (smart tokens) and allows you to perform exchange operations between them using reserves.
Tokens-relays (Token Relay). These are smart tokens that consist of two coins (connectors), the total CRR of which is equal to 100%, for example, GNOBNT. Token relay can be bought or sold for any of the coins that are included in it (in our case, GNO and BNT). Thanks to this system, any token can be converted to any other via BNT.
The principle of operation of smart tokens and relay tokens is shown in the picture below:
BNT - this is Bancor's native token. New projects that decide to add their tokens to the Bancor platform will need to keep BNT in reserve. Only compliance with this condition will allow them to connect their smart token to the Bancor network and provide it with maximum liquidity. BNT serves as a "mediator" when converting one token to another.
Smart contracts. Smart contracts in the Bancor network perform several functions: they ensure the constant presence of tokens in the reserve, calculate their cost, and also perform conversion between smart tokens.
The work of smart contracts can be seen in the example of the exchange of two tokens, for example, STORM on KIN. To do this, go to Bancor website and connect your wallet, which allows you to store ERC20 standard tokens. Then you need to select the appropriate coins and click on the Convert button.
Advantages and disadvantages
Bancor is a protocol that enhances the convenience and efficiency of buying and selling ERC20 tokens through smart contracts. Among the main advantages of cryptocurrency are the following:
- Providing high liquidity - you can buy or sell any token created on the Ethereum blockchain at any time through a smart contract.
- There are no risks associated with attracting the counterparty - the user does not need to use exchangers or cryptocurrency exchanges; Cryptocurrencies can be exchanged directly using the Bancor website.
- No commission - cryptobirds charge an exchange, there is no commission in Bancor.
- Low volatility and spread - due to the fact that the price is calculated using formulas and depends on the CRR indicator, as well as on the degree of “fullness” of the reserve, you can buy or sell coins with minimal volatility. Spread (the difference that can be obtained as a result of speculation with assets) is also practically absent.
- The speed of exchange - due to the fact that each coin has a reserve, the transaction is carried out instantly regardless of the demand for cryptocurrency being sold, unlike traditional exchanges, where closing a warrant requires another user to “buy out” a coin for sale.
- Lack of speculation - the exchanges were seen in the use of trading bots that imitated activity, thereby affecting the pricing of coins. In Bancor, prices are calculated by the embedded algorithm, so there is no risk of speculation and price manipulation.
- A simple procedure for launching your own smart token - anyone can release their token without even having special knowledge. The procedure is very simple - you just need to perform simple steps according to the instructions from the chat bot. To create your own smart token you do not need high-power equipment - even a regular smartphone will do.
Technically, Bancor is fine. However, the questions leave two points. The first - half of all coins is in the hands of the creators. A total of 79,3 million BNT was created, of which 39,6 million BNT was purchased during the ICO. There is a risk that the founders may manipulate the value of the BNT using the coins currently held in the company's reserve. According to the Coinmarketcap website, 57 814 699 BNT is currently in circulation, which means that the creators “brought” some of their coins to the market.
The second point is the presence of a serious competitor in the face of 0xProject, which performs the same tasks as Bancor, but, in addition, is also supported by major venture capital companies, such as Polychain Capital and Pantera.
Cooperation
According to the official website, Bancor has entered into cooperation agreements with 129 startups. Among the most significant and interesting are the following:
- Game Protocol is a blockchain, whose task is to integrate cryptocurrency into video games, as well as game marketplays, where users can buy or sell game items for cryptocurrency.
- Snip is a media platform on which users can create content of various types (text, graphic, video) and reward each other with the help of donations in cryptocurrency.
- trade.io - blockchain exchange. In the framework of cooperation, the site integrates the Bancor protocol, which will allow making a profitable Trade Token (TIO) exchange for any of Ethereum tokens.
- Auctus is the first project that invites users to take care of their future and create a retirement plan using innovative technologies of the distributed registry. Bancor integration will ensure high liquidity of AUC tokens.
- B2Broker is a project that develops and offers professional trading tools for independent brokers and brokerage companies. Bancor implementation will automate the liquidity of the platform's own token - B2BX.
- DATARIUS is a social cryptocurrency bank that offers traditional banking services, but on more favorable terms than traditional institutions. Within the framework of cooperation, the cryptobank will launch Token Relay based on the Bancor protocol.
- Elementh is a blockchain-platform of electrical networks. Now the EEE token can be converted to any of the ERC20 standard coins.
Course and capitalization. Where can I buy
At the time of this writing (mid-October 2018), the cost of one BNT coin is $ 1,32, and the capitalization is more than $ 76,26 million. Currently, the Coinmarketcap Bancor service is ranked 77-th.
The graph and capitalization of cryptocurrency since the beginning of 2018, looks like this:
The maximum Bancor price for the entire existence of the coin was $ 10,8 - this level of BNT showed in January 2018, when all cryptocurrencies increased sharply. Now the cost has fallen more than 8 times compared with the peak January price.
The uniqueness of the BNT coin is that you can buy it for any ERC20 standard token on the official project website. In addition, Bancor (BNT) is presented on such popular exchanges as Binance, HitBTC, Bitrex, Upbit, where you can buy it for BTC, ETH and USDT.
Any wallet that supports ERC20 tokens, for example, the popular MyEtherWallet, is suitable for storing coins. In addition, the project team has developed its own Bancor Wallet, the functionality of which allows you to immediately convert tokens. You can also use Trezor or Ledger hardware wallets to store large amounts of money.
Development prospects
Bancor's relevance is hard to overestimate, because it offers an excellent solution to one of the most important issues of cryptoindustry - the lack of liquidity of most tokens. This is indeed a problem, because today there are a lot of coins that offer interesting solutions, but they go unnoticed due to the fact that exchanges require huge amounts for listing or refuse to add to their sites. As of October, 2018 represented 95 tokens on the Bancor platform, but the team does not stop there and expands the list of partners.
But expanding the list of available tokens is not the only task that lies ahead of Bancor. The project is actively working to improve security and expand the functionality of the platform. So, the immediate plans for the team include:
- The ability to conduct automatic transactions, the conditions for which will be written in the code of the smart contract;
- The ability to store cryptocurrency Ethereum on Bancor wallet;
- The ability to create several offices in one account;
- Implementing API (Application Programming Interface) and updating application development tools on the platform.
The main task of 2019 of the year will be to create a cross-platform platform. This will provide access to the framework of Ethereum-tokens and allow you to create a blockchain that can support coins of other standards.
Another key development direction for Bancor is its collaboration with EOS. At the end of September 2018, the launch of a test version of the BancorX platform in the EOS network was announced. The principle of operation of the new site is no different from the main service, but compared to Bancor on Ethereum, BancorX on EOS has several advantages:
- Faster transactions (1 second compared to Ethereum 10 seconds);
- Absolutely free transactions (as opposed to the need to pay "gas" on Ethereum.
In the future, the Bancor team plans to launch their sites on other blockchains on the same principle as they did on Ethereum and EOS.
However, despite the ambitious plans of the project, as mentioned above, a serious problem lies in the fact that a large number of coins are contained in several “hands” - in the so-called reserve of the Bprotocol company, as well as from an unknown investor who during the ICO acquired 6,9 million BNT , which is almost 9% of the total number of tokens. This creates a high risk of course manipulation.
In addition, Bancor has a serious competitor - 0xwhich is actively developing, has an active community and famous investors.