Bancor (BNT) Project Overview

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17.03.2022 03:29
Bancor (BNT) Project Overview

     

    The Bancor team

     

    Project Bancor was launched on June 12, 2017, following an initial coin offering (ICO) bringing in $153 million. Half of all BNT tokens were distributed during the event.

    Initially, the team' roles were as follows:

     

    Currently, however, a decentralized autonomous organization (DAO) with more than 30 known protocols is responsible for the development of the project. Decisions are taken by voting.

     

    The use of BNT

     

    The BNT token is a native protocol token. It acts as the default reserve currency in all trading pairs, thus enabling trades between ERC-20 tokens. A part of the DEX trading (commission) fees is distributed to liquidity providers, which encourages them to transfer funds into pools.

    Trading fees keep user deposits safe from intermittent losses, while BNT minting and burning maintains a constant market function for ongoing token pricing.

    Due to automatic rebalancing, the weight of the pool changes according to market demand, ensuring minimal losses in liquid pairs, even when token prices grow. This design ensures a low level of slippage on most assets.

    The BNT native token is involved in the following mechanisms:



    Vortex Burner

     

    A solution called Vortex Burner has introduced an adjustable fee that is taken from the proceeds of trades generated by liquidity providers.

    For example, if a trade of $100,000 is made in a pool with a 0.2% fee, $200 is charged by the liquidity providers as commission. The vBNT burner takes 5% of the fee ($10), and uses it to buy vBNT and burn it.

    The vBNT burn is designed to:

    • Increase liquidity with its fixation in the protocol.
    • Reduce the circulating supply of BNT. Tokens are permanently redeemed and withdrawn from circulation, by exchanging for vBNT and burning it.
    • Increase lending capacity. Burning vBNT, by constantly increasing the price of the BNT token, reduces the risks for leveraged users who keep their BNT staked.

     

    Tokenomics

     

     

    10,885 users took part in the ICO. The average purchase amount was $13,471. Participants of the presale received 39.7 million BNT tokens (50% of the issue) out of 79.3 million BNT tokens created initially at a price of $3.86 per token.

    The remaining 39.7 million BNTs were distributed as follows:

    • 20% (7.9 million BNTs) were sent to Project Bancor's long-term budget and locked up for 24 months;
    • 20% (BNT 7.9 million) were distributed among the then-existing and future project team, with the right to transfer within 24 months;
    • 10% (4 million BNT) was allocated to community grants and partnerships.

     

    Risks

     

     

    Growth prospects

     

    The project is 97th in the overall CMC ranking and 6th in the DEX ranking.

    High hopes are pinned on the third version of the protocol, with key features that will be:

    • Omnipool. It allows for all trades on the network to occur in a single transaction.
    • Infinite pools. They allow unlimited deposits and provide super-fluid liquidity that can be simultaneously used for market-making and other revenue-generating strategies.
    • Instant impermanent loss protection. Users don't have to wait 100 days for full IL protection as with previous versions of the protocol.
    • No need for gas-intensive manual re-mining to get rewards for mining liquidity. Rewards are now accrued automatically.
    • Dual-sided rewards. They allow third-party token projects to offer IL-free incentives on their own.
    • Revised tokenomics. It creates a more cost-effective non-permanent loss protection, and increases deflationary pressure on BNT.

    Support for multiple chains like Polkadot and L2 will also appear.

    Although Bancor already exists on Ethereum and xDai/Solana, it can be integrated into any blockchain with support for smart contracts to provide inter-chain liquidity.

    As a result, "Bancor V3" offers a new version of the BancorDAO protocol that reduces costs for traders and stakeholders, and makes it easier for users to earn from their tokens. The innovative mechanics should help boost demand for the token from investors.

     

     

    According to conservative estimates, the coin's price could reach $5 within 3 years, which is ±250% of the current price of $2.1 per token. 

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