Bancor is the world’s largest decentralized liquidity network. Bancor Protocol aims to provide continuous liquidity for crypto tokens through their smart contracts. Bancor leverages the capabilities of smart contracts to build liquidity directly into tokens themselves. Such tokens are called Smart Tokens. Each Smart Token has one or more connectors that link the smart token to other tokens in the network. These connectors hold a balance of another token, thus establishing a relationship between the Smart Token and the tokens held by its connectors, or its connected tokens. The price of Smart Token is determined by the Bancor Formula. Bancor Protocol adopts human-machine（smart contract）trading, allowing users to trade with no counterparties and without having to trade with exchanges, avoiding a series of problems caused by centralized exchanges. Besides, most small-scale and new cryptocurrencies are generally used by a small number of people and face liquidity problems. According to the Bancor algorithm, small-scale tokens can use mainstream tokens as their reserve tokens, so that the trading order can be processed in time through the built-in smart contract, and the transaction price is determined by the Formula. By this way, the token can achieve liquidity without trading on the exchanges.
1.Main Functions of Bancor Protocol: Provide liquidity for small-scale cryptocurrencies. The small-scale token could realize price discovery by anchoring a connector token (such as ETH) and setting the connector weight CW for the token. The small-scale token and the connected token then can convert between each other at any time and this helps solve the liquidity problems.
Token Crowdfunding. The project party can use the Bancor protocol for crowdfunding, also known as IBO. The IBO model establishes a conversion relationship between tokens issued by the project and the raised funds (ETH, EOS or other tokens) through the Bancor protocol. Users could buy tokens by trading with machine. The IBO model has following advantages: 1) The account is transparent, and the EOS fund pool can be checked at any time; 2) Since all the crowdfunding funds are recorded on the blockchain，if the project party needs to withdraw funds, it needs to release the token, which will be monitored by all the participants. 3) Under the IBO model, there is no need to worry about the exchange absconding with the money and the lack of liquidity.
Provide token conversion function. You can create a relay token with two connected tokens, with a total CW of 100% and 50% CW for each connected token. As an intermediary, the relay token can provide conversion between the two connected tokens.
2.Application Scenarios: EOS RAM trading. RAM is memory resources on EOS. On the EOS network, RAM is mostly used by developers to store the data used in the launching and production of decentralized applications (DApps), and it can also be used to create new EOS accounts. Thus, RAM is a necessity for developers and has a rigid demand. Initially, considering that many RAM holders are not developers, and there is no incentive for them to buy or sell these resources, which will make developers with development needs abandon development because of lack of resources, so BM introduces Bancor algorithm to enhance RAM liquidity.
Fomo3D P3D trading. FOMO3D is a game on Ethereum platform and it once ranked first in the Ethereum DApp active list. In this game, users with P3D can get some dividends. P3D is a token issued by a game developed by FOMO3D team before, whose distribution mechanism is similar to Bancor. The more P3D tokens are released, the higher the price of P3D.
The Bancor team comes from Silicon Valley and Israel and its team members have been in the internet field since the 1990s. Companies created by team members include Contact Networks (the first web social platform), MetaCafe (a phenomenal video product before YouTube), Mytopia (social gaming platform and was acquired), Particle Code and AppCoin. Its team members also include early members of the Founders Fund, a venture capital firm created by Peter Theil and whose investment portfolio includes Airbnb, Stripe, LinkedIn, and SpaceX.
Guy Benartzi Co-founder and CEO
Guy Benartzi is an Israel internet software entrepreneur and angel investor. He was previously founder and CEO of the multiplayer game company Mytopia, acquired by 888Holdings in 2009. After that, he served as co-founder and president of Particle Code, a cross-platform technology company, which was acquired by Appcelerator in 2012. After Particle Code, he was co-founder and CEO of Israel company AppCoin.
Yehuda Levi CTO
Levi is an experienced technical lead with more than 20 years of experience in building complex, cross-platform software systems. Levi previously worked for several startups backed by VCs. He once served as Chief Architect of Mytopia, Chief Architect of Particle Code, and Co-Founder and Chief Technology Officer of AppCoin. Before starting his career at technology companies, Levi worked as a software developer for four years in a computer department of the Israel Defense Forces.Levi holds 10 software patents in the field of mobile technology, software architecture and protocol development.
Eyal Hertzog Product Architect
Hertzog is an experienced consumer internet entrepreneur who once raised $100 million from tier-one venture capital firms including Accel, Benchmark, Polaris, DAG Ventures and Highland Capital. In 1998, Hertzog established Contact Networks, one of the earliest social networks, and created the online video site Metacafe in 2003, which has more than 50 million active users during peak hours. Hertzog also served as head of IT & Information Systems of the Israel Defense Forces Intelligence Unit 8200.
GaliaBenartzi Head of Business Development
She once worked as a venture partner in the world-renowned investment company Founders Fund, which has successfully invested in Facebook, Palantir, SpaceX and Airbnb. Prior to Founders Fund, Galia served as business development VP of the social game company Mytopia and co-founder and CEO of the cross-platform technology company Particle Code.
On Mar 9th, 2017, Bancor was voted the best blockchain project out of eight competing companies at the international CoinAgenda conference held in Puerto Rico. CoinAgenda is a leading conference for digital currency investors.
On Jun 12th, 2017, Bancor raised $153 million worth of ETH by selling its digital tokens in less than three hours, making it the largest taken sale ever at that time.
On April 3rd, Bancor officially released Bancor’s native wallet.
On Sep 20th, 2018, Bancor team announced that it will be expanding to the EOS blockchain. Bancor has ported its public code to EOS in preparation for the launch of its decentralized cross-blockchain liquidity network supporting Ethereum and EOS— BancorX.
1 Project Business Value
1.1 The Necessity of Using Blockchain Technology
Bancor provides continuous liquidity to cryptocurrencies through smart contracts. The conversion between smart tokens and connected tokens is achieved through smart contracts. While smart contracts are applications running on the blockchain, blockchain technology is necessary in this project.
Bancor is a decentralized liquidity network that realize decentralization primarily through its wallet and smart contracts. Firstly, bancor wallet, which supports conversion between multiple cryptocurrencies, allows users to convert cryptocurrencies directly within Bancor Wallet without sending tokens to exchanges; Besides, users can buy and sell at any time through smart contracts without counterparties. The trading process does not include the middleman, nor does it involve the deposit of funds, thus achieving the decentralization of the trading.
1.2 Competitiveness and Market Potential
The Bancor protocol aims at solving the liquidity problems of small-scale tokens and facilitating the trading of buyers and sellers more efficiently. With the development of blockchain technology, various new tokens will continue to appear, but various cryptocurrencies will also face liquidity obstacles in the conversion process. The liquidity of cryptocurrencies requires the two parties to achieve “dual demand coincidence”, that is, the buyer just want to buy the token and the seller is just ready to sell the token, and both parties must agree on the price before they make the deal. This makes the token conversion to some extent a small probability event. Liquidity barriers make it almost impossible for small-scale currencies, such as community currencies, merchant points, and various customized tokens to find reasonable exchange rates through the market and convert the tokens with mainstream currencies. As more and more crypto tokens emerge in the future, solving the conversion problems between crypto tokens is a rigid requirement.
Traditional exchanges (including centralized and decentralized exchanges) provide liquidity for cryptocurrencies by matching the pending orders of buyers and sellers. For mainstream tokens, there are few liquidity barriers because of the adequate trading depth and the short match time. However, for some small-scale tokens, due to the small amount of trading on the exchange, or the inability to list on exchanges, it is easy for them to face liquidity problems. The Bancor protocol allows users to trade with machine (or smart contract), so that small-scale currencies can achieve liquidity without listing on exchanges, thus solving the liquidity dilemma faced by small-scale tokens.
Initially built on Ethereum platform and as one of the most popular and valuable decentralized applications on Ethereum，Bancor is now evolving into a cross-chain liquidity protocol starting with added support for EOS. Bancor will allow users to perform instant EOS-based token conversion against its automated smart contracts. The EOS-based tokens listed on Bancor will soon be instantly convertible to any Ethereum-based token through the Bancor Protocol.The more tokens issued on the Ethereum and EOS public chains in the future, the greater the demand for Bancor. If Bancor supports more public chains in addition to Ethereum and EOS in the future, the market demand will be even larger.
1.3 Relative Competitive Advantages
Compared to traditional exchanges，Bancor has the following advantages：
No Counterparty. In both centralized and decentralized (DEX) cryptocurrency exchanges, buyers and sellers must be matched in order for a trade to be executed. With Bancor, every transaction is executed directly against a smart contract. This means that converting a cryptocurrency does not require matching two parties in real-time with opposite wants; rather, it can be completed by a single party directly through the token’s smart contract.
Reduce transaction costs and the risk of asset theft. In the traditional centralized exchange mode, the exchange keeps user assets with high commission fees and low security. Many popular exchanges (such as Bitfinex) have been hacked, and hundreds of millions of dollars of assets have been stolen, and users face risks of asset theft. The Bancor protocol has the function of a decentralized exchange. When a user converts tokens with smart tokens, the user does not need to directly trade with the counterparty, nor does he need to deposit the tokens in the exchange, thereby reducing transaction costs and risk of asset theft.
Continuous Liquidity. In traditional exchanges, a token’s liquidity is pegged directly to the availability of a buyer or seller at the time of a transaction. On the Bancor Network, tokens are always available for purchase regardless of trade volume. This is possible through Bancor’s automated pricing mechanism which increases a token’s price and its supply each time it is purchased.
No Order Book / Predictable price slippage. Exchanges require an order book, a list of potential buy and sell orders, to match buyers. Since this list is dynamic, it is usually difficult to determine what the price slippage will be if an order requires more than one counterparty, e.g. if someone is looking to buy more tokens than any 1 person is selling at the desired price. Bancor does not have an order book and all prices are calculated using a formula so the price slippage for every transaction is known ahead of time.
2 Project Realizability
2.1 Blockchain Infrastructure Support
Bancor has launched its decentralized cross-chain liquidity network—— BancorX, which will support both Ethereum and EOS. Ethereum and EOS provide token issuers with the ability to issue their own tokens. With the development of the blockchain industry，there will be demand for issuing tokens on the two major public chains in the future. The more tokens to be issued, the greater the demand for Bancor.
After the expansion of the Bancor Protocol to EOS, the benefits of Bancor on EOS are as follows: Fast transactions (EOS can basically achieve 1 second transaction while 10 seconds on Ethereum) No transaction fees (as opposed to gas on Ethereum) No front-running risk (EOS transactions are not prioritized by gas fees as they are on Ethereum)
2.2 The Technical Capabilities
The Bancor Protocol was developed by the Israel team. CTO Yudi Levi and product architect Eyal Hertzog have good technical backgrounds. Levi is an experienced technical lead with more than 20 years of experience building complex, cross-platform software systems and he has four years of software development experience in a computer department of the Israel Defense Forces. Hertzog is a serial entrepreneur who has served as IT head of Computer Science Intelligence Unit of the Israel Defense Forces.
Since launching on Ethereum in 2017, the Bancor Network has processed over $1.5 billion token conversions, with 8000+ trading pairs across ETH, DAI, BNB & more. The Bancor team is expanding the Bancor Protocol to EOS and has launched its decentralized cross-blockchain liquidity network supporting Ethereum and EOS.
Bancor has 14 repositories on Github with frequent code updates. Its Bancor Protocol Contracts repository has 1,251 commits, 27 releases, 10 contributors and 468 Stars. Bancor has ported its public code to EOS.
3 Token Value Analysis
3.1 Value Analysis for BNT Token
Bancor is initially built on the Ethereum blockchain. On June 12th, 2017, Bancor raised approximately $153 million, which is the largest amount of crowdfunding before EOS. The total circulation of BNT tokens is 79,384,422, and the current circulation is 53,529,029. Its crowdfunding price is 26.22 yuan, and the current price is 11.04 yuan.
The first Smart Token launched was the Bancor Network Token（BNT）, which is the hub of network token, connecting all tokens in the Bancor Network. BNT currently has a single connector to ETH with a 10% CW, and is managed by the Bprotocol Foundation. The BNT Network can promote the increased demand for BNT by any other network token, making them use BNT as a connector token or reserve.
With the launch of the decentralized cross-chain liquidity network BancorX， Bancor Network is positioned to become reserve token on the Ethereum and EOS public chains, providing liquidity for tokens on both chains. The popularity of Bancor is related to the popularity of Ethereum ERC-20 tokens and EOS tokens. Therefore, if an increasing number of projects released based on Ethereum and EOS in the future, the demand for Bancor will also increase.
3.2 Token Distribution Mechanism
Half of the initial supply of BNT Smart Tokens were distributed through crowdfunding，while the other half is held by the Bprotocol Foundation and allocated to its long-term budget, team and advisors，partnerships and community grants. Use of funds: 20% held by the ETH connector balance of the BNT Smart Token，establishing a strong and dynamic initial 10% weight. 40% deployed to develop the Bancor Protocol and surrounding technologies. 12% used to market the Bancor Protocol and develop the Bancor ecosystem. 10% committed to setting up and propelling demonstration Relay Tokens and Array Tokens for popular ERC20 tokens, as well as Proxy Tokens on the Ethereum platform for integrating cryptocurrencies from other blockchains, and various real-world assets, into the Bancor network. 18% designated for operational costs, including legal expenses and other overhead.
4 Community Influence
On June 12th, Bancor raised $153 million worth 390,000 of ETH by selling its digital tokens in less than three hours, making it the largest token sale ever at that time. The Bancor crowdfunding attracted more than 10,000 buyers and received 15,000 transactions at that time. Its investors include Time Draper from DFJ Ventures, and Blockchain Capital, a company focused on investing in blockchain.
At present, the Bancor protocol already has several typical use cases. For example, the price of the EOS RAM is determined by the Bancor formula, and the KEY of the blockchain game Fomo3D is priced with the Bancor protocol. Besides, 122 projects have announced their intention to integrate with Bancor.
Bancor is expanding to EOS for fast, free transactions. Bancor selected the first batch of the most promising EOS ecology blockchain projects to list on its decentralized cross-chain liquidity network——BancorX, including Chaince exchange token CET, Everipedia, MEET.ONE, HorusPay and KARMA, etc. Bancor has 6959 members in its Telegram English group, and 398 in Chinese group. It also has 75,000 Twitter followers and 67,000 Facebook followers.
5 Project Risks
On July 9th, 2018, Bancor was hacked and cryptocurrencies worth more than $22 million was stolen, including ETH, NPXS and BNT. The Bancor team’s handling of the incident caused questions that Bancor’s smart contracts had excessive administrator privileges, which may lead to over-centralization risk of the project.
6 Function Example
1.First, you need to register a Bancor account. Users could register through existing SMS、Messenger and Telegram account.
2.After the registration is successful, you can buy or transfer tokens you want to pay with in your wallet. Take ETH as an example, users can purchase ETH via the “Buy” button under ETH, or transfer ETH from other addresses via “Receive Tokens”.
3.On the Tokens page of the website, take the ETH to BNT as an example, you can enter the token and amount you want to pay with（ETH）, and select the token you want to receive（BNT）.
4.Click Convert, and it will jump to the confirmation page, enter password and the “transaction in progress” page will pop up if successful.
5.You can also choose tokens you want to buy/sell on Tokens page, and click “Buy” or “Sell” to process.