Bancor (BNT) – Crypto news in French

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What is Bancor? (BNT)

Bancor is software designed to encourage users to lock up cryptoassets in pools, in exchange for a portion of the fees traders pay when buying and selling.

In this way, Bancor attempts to facilitate the operation of what is called an automated market maker (AMM), a well-established mechanism that aims to provide liquidity to the markets without a financial institution having to manage them directly.

Simply put, AMMs like Bancor aim to make more niche markets for cryptoassets more liquid by incentivizing users to create and maintain pools of assets.

Each time a trade is executed on its platform, tokens are converted into BNT as an intermediate step. The liquidity providers who deposited the assets then generate a return on their funds as a percentage of the fees paid by traders.

While this may seem similar to other popular DeFi platforms like Balancer or Uniswap, Bancor is designed to facilitate its service across both EOS and Ethereum. Additionally, other blockchains could be made compatible with its platform in the future.

Bancor is also one of the more established MMTs, launching in 2017 when platforms using multiple cryptocurrencies were less prevalent than today.

It is worth noting that the platform underwent a complete overhaul in 2020. The latest version, Bancor V2, promotes improvements for traders and users who lock tokens on the platform.

Who created Bancor?

Bancor was co-founded by Guy and Galia Benartzi, and among the project's notable investors is Tim Draper, a partner at investment firm Draper Fisher Jurvetson.

The project raised $153 million in a 2017 token sale, run by a Swiss nonprofit called Bprotocol Foundation. In total, funding was raised from nearly 11,000 investors, which was the largest sale of its kind at the time.

Half of the tokens were to be distributed to token sale participants, while the rest would be made available to the founding team for various operating budgets and support programs.

For more details, see the official project white paper.

How does Bancor work?

In order to automate its AMM service, Bancor wants to encourage users to deposit assets into pools. Each pool consists of a pair of tokens and a BNT cryptocurrency reserve.

When a user deposits coins into a pool, they receive a new token in exchange. This token is called a pool token and allows the user to get back the initial amount they blocked in the log.

BNT tokens are used as an intermediary currency when trading each token.

Note that Bancor allows users to lock a single token in one of its pools (as opposed to a pair). For example, with other AMMs, a user might be asked to block pairs of tokens in given proportions to gain access to the pool.

In a pool consisting of ETH and DAI on Bancor, a user could only deposit ETH or DAI. On Uniswap, a user had to alternately deposit both ETH and DAI.

However, users must also deposit BNT into each Bancor pool.

Oracle

You may be wondering how Bancor ensures that liquidity providers can recover the correct price of the coins they have locked up on the platform?

Bancor V2 claims to solve this problem with a solution known as an “oracle”, which transmits a price from an external source to an existing system.

Through this service, Bancor pools automatically adjust the proportion of tokens relative to their prices, so that a liquidity provider can withdraw the same value of deposited tokens.

Why does BNT have value?

The BNT cryptocurrency is essential to facilitate exchanges between pools on Bancor.

Like other cryptocurrencies, Bancor's BNT token has a fixed supply of 69 million tokens. According to data provider Nomics, around 65 million tokens circulate freely on the markets.

Perhaps the most compelling reason for BNT is that Bancor can convert value between coins on different blockchains. Bancor is based on both Ethereum and EOS, meaning BNT can be withdrawn from pools made up of coins from both chains.

BNT may also have value because it is designed to track usage of the Bancor platform.

This is because each pool on Bancor must hold BNT. As liquidity is added to Bancor pools, an increase in demand for BNT should be expected.

Bancor also plans to reward its liquidity providers with BNT tokens. Although this measure has not yet come into effect as of mid-2020, it could further motivate users to provide liquidity to Bancor pools.

BNT holders may also be offered the opportunity to vote on key parameters of the Bancor system, even if such a system has not been implemented.

Why use BNT?

BNT might be of interest to you if you think platforms that allow crypto users to create markets and facilitate trade will continue to thrive.

It may also be of interest if you believe that a platform that runs on multiple blockchains is more robust than offerings that only rely on a single blockchain.

Investors should consider purchasing BNT if they want to participate in setting the rules of the Bancor platform and thus gain greater control over their holdings.