What is Bancor Coin?
Bancor Coin is a system designed to manage the next generation of cryptocurrencies. It uses smart tokens based on Ethereum's smart contracts that make the tokens more useful and practical.
How Does Bancor Coin Work?
The Bancor Coin smart token protocol includes one or more other reserved tokens. These allow anyone to purchase a smart token in real time in exchange for one of their standby tokens, according to a special formula that balances the sheets.
On June 12, 2017, Bancor ended the Crowdsdale event. The company raised $153 million in ETH, which set a record for cryptocurrency recruiting. Bancor Coin temporarily facilitated the development of a token and the introduction of a crowd scale. This increased the usability of Ethereum's smart contracts and other currencies using the contracts.
Features of Bancor Coin
As mentioned above, Bancor Coin was developed to maximize the efficiency and usability of smart contract tokens.
Key features of the platform include:
- Liquidity: The smart tokens can be bought or issued by any participant. The tokens of the ERC20 standard are relatively liquid.
- There is no spread: Pricing is based on an intelligent token, which means that buying and selling are done at the same price.
The lower volatility allows a predictable slippage of the price calculated “in proportion to the size of the transaction”.
What is a BNT Token (Bancor Network Token)?
BNT is an important part of the Bancor ecosystem. The smart tokens will be implemented using intelligent contracts that will initially be deployed in the Ethereum network. The BNT tokens are compatible with ERC20 and the EIP228 standards.
Over time, the protocol will be extended to include additional standards to provide greater flexibility, better blockchain compatibility and increased security for smart tokens.
Practical Application of the Bancor Coin Protocol
Some of the proposed Bancor protocol applications include:
The token changer is used to exchange the tokens on the ERC20 basis. The system will support the prices with the use of arbitrage, which will stimulate the restoration of market balance as the estimated stock market prices drift off.
ETFs (so-called token baskets) contain several ERC20 tokens in their funds. This allows users to keep a portfolio of coins with only 1 smart token.
The identifiers of projects and logs: The smart tokens are used for crypto financing, where users receive coins that are liquid and can be sold automatically at market value.
We wanted to create a common currency that will help build a network of yoga studios. We needed at least 250 ETH to start the first phase. Ideally, we wanted 500 ETH, so we can get a really good sound system, cushions, flooring, etc., but we could cope with less. So we went to Bancor and used the chatbot.
We said that we wanted a YogaCoin. Our project offered 100 YOGA Coin for 1 ETH. The reserve would be 25%. The ICO held Bancor for 30 days, but the tokens would be continuously created to support the development of new studios.
When buying the YOGA tokens, users got discounts for visiting the studios and special benefits for token owners. There are also top secret bonuses for those who own more than 5000 YOGA. Fortunately, we collected exactly 500 ETH tokens during the 30 days.
Now we have 25% in the reserve (125 ETH) and 50,000 YOGA Coins in the operating budget, which is 75% or 375 ETH.
Our tokens cost 0.01 ETH for 1 YOGA coin, based on the calculations in the white paper. The reserve rate directly influences the volatility of the currency. Once the project picks up, it may be wise to increase the reserve rate to stabilize prices and keep them growing.
The constant reserve ratio (CRR) is a parameter specified by the smart token creator. CRR is a key parameter used as an asynchronous pricing mechanism because it takes into account the relationship between the reserve balance and the estimated market capitalization of the smart token.
A CRR of 10%, for example, has a reserve with a credit of 100 ETH – a smart token then costs the 1000th part of the market price of the ETH cryptocurrency. Whenever a smart token is bought or sold, the reserve balance increases or decreases, as does the total volume of the smart token.
Therefore, for a smart token with a CRR of less than 100%, buying a smart token leads to a price increase, while each sale leads to a decrease. This mechanism constantly adjusts the price and the balance of the price.
The price change is proportional to the size of the transaction, so a larger buy or sell significantly affects the price. The smart tokens are bought directly from their smart contracts and not through the sellers or the exchanges.