Bancor is a system that provides liquidity for small market tokens with one or more tradable ERC20 tokens built in as reserves. Reserve tokens are exchanged by issuing new tokens through smart contracts. The price of new tokens is set autonomously through smart contracts, allowing direct conversion between tokens without the need for exchanges, without the need for a second party to participate in the transaction, or a third party to match the transaction. The network effect of the tokens created by the Bancor agreement effectively solved the liquidity problem by lowering barriers to market entry for these new currencies.

1. Bancor's goal is to generate liquidity for competing coins and reward liquidity providers. The protocol is capable of converting various virtual assets into other currencies, including those running on other blockchains, without interference from third parties; 2. Bancor aims to support all tokens compatible with the ERC-20 standard. Any smart token built on the Bancor network is also compatible with ERC-20 and thus with other currencies on the network; 3. Bancor aims to incentivise customers to hold coins and convert them into other assets at automatically calculated prices using simple online wallets.

There are many small cryptocurrencies emerging and developing at the moment. They lack liquidity due to insufficient market capitalization, and there is not enough trading volume. The transaction cost of such coins is higher than the most liquid cryptocurrencies like Ethereum and Bitcoin, so they are untradable for holders.

For users ready to invest in small-cap virtual assets, Bancor's smart token technology provides an opportunity to smoothly buy and sell those assets at a low cost, using blockchain-based smart contracts and reserve currencies to solve the problem.

The Bancor system has a built-in mechanism that allows conversion between different compatible ERC-20 tokens. These transformations are processed on a blockchain-based basis without the need to use the established protocols of intermediaries or providers. Each smart token is linked to a smart contract that has its ERC-20 token reserve, and the token conversion is processed on top of these reserves. The Bancor agreement also supports all erC-20 compatible virtual currencies. In addition, all smart tokens created on the Bancor network are compatible with ERC-20. As such, they are also interchangeable with all other tokens on the platform. 1. Constant Reserve Ratio (CRR) : The Bancor platform uses the concept of constant reserve ratio (CRR) on all smart token contracts within the system. This is why the Bancor system can ensure that the stored value of the smart token will not be exhausted; 2. With the constant Reserve ratio guaranteed, the token price will fluctuate dynamically with the Reserve balance and Supply, based on the matchmaking of exchange transactions by smart contracts on a moment-to-moment basis. When users purchase "smart token" with smart contract, they need to deposit a reserve into the smart contract according to the current market price. After completion, users can get "smart token". In this process, the "reserve balance" and "token in circulation" both increase, but in order to maintain the "constant reserve rate", the "smart token" price will rise accordingly. Similarly, when a user destroys a "smart token" through a smart contract, the price of the token goes down when they withdraw their reserves. Using the formula, the price of the token adjusts in time to the latest deal. Simply put, the market value of the "smart token" is backed by the reserves in the smart contract, and as the reserve balance increases, the price of the token goes up.

The Bancor platform issues its own native currency token, called the Bancor Network Token (BNT), which is used as a reserve currency for all smart tokens created on the Bancor network. 1. BNT can be exchanged for any token in the network, using the liquidity of BNT borrowing and mortgage; 2. When users create or pledge Bancor pool, ERC20 token +BNT (or EOS token +BNT) of the same value shall be used for creation or pledge; 3. BNT can provide cross-chain conversion and positive network effects and will use them for equity pledge in the second quarter of 2020.

1. Continuous liquidity: Users can buy or sell tokens directly in the network through smart contracts, even if there are few or no other buyers or sellers in the market. Since the price will be adjusted according to the scale of exchange, there will always be a certain exchange price. The Bancor agreement effectively disconnects liquidity from trading volume; 2. Smart contracts charge no fees for exchanges performed: the only fees incurred by the user are the fees required to interact with the underlying blockchain. Although the exchange of some smart tokens may be subject to optional user fees set by the creator, these fees are generally very low. Due to the open source nature of the Bancor protocol, other users can easily create competing smart tokens to provide similar exchange services, effectively reducing fees; 3. Adjustable price sensitivity: large connector token reserve and relatively high CW generate leverage, making the price of smart tokens less sensitive to sudden fluctuations caused by short-term speculation or large orders; 4. No spread: When dealing with buy and sell orders, Bancor formula uses the same price calculation method and there is no bid-ask spread, which is in contrast to the traditional trading platform where the buy price is always lower than the sell price; 5. Price predictability: Different from traditional order book-based transactions, the price algorithm of smart tokens is completely transparent, allowing users to pre-calculate the effective price of their exchange before the execution of the exchange, and give early warning of price decline according to the trading volume before the execution of the transaction.

The biggest innovation of the Bancor protocol is that the value discovery of digital currency on traditional exchanges is based on real-time synchronous matching of buy and sell orders, whereas with the Bancor protocol, the price of digital currency depends on the balance of reserves and the number of tokens in circulation, and the value discovery process is asynchronous.

Bancor mechanism cannot fundamentally solve the liquidity problem, which is based on the intrinsic value and market recognition of tokens. Bancor mechanism can only solve the liquidity problem in form, and cannot change the intrinsic value and market recognition of the token. There was no liquidity in the original token, but if the fundamentals did not improve substantially, after joining the Bancor mechanism, there would be a continuous price, but there would be no market depth.

The concept of Bancor agreement has development prospects in the field of project business expansion: Although the Bancor mechanism cannot fundamentally solve all liquidity problems, it is still an effective means to improve the governance mode and enhance liquidity in the initial stage for projects with good fundamentals. Under the current model, the project side can get a lot of money at a very early stage, and investors have little ability to restrain the project side. Under the Bancor agreement, the BTC and ETH obtained by the project party can be used as reserves and most of them can be locked up to ensure that investors can choose to quit when the project party deviates from the agreement. As the project progresses and milestones are achieved, the acquired BTC, ETH and CW will be gradually unlocked. By the time the project has completed all the objectives in the white paper, the CW is down to 0, the Bancor mechanism exits, and the token enters the open market. BNT is a project that needs special attention if we are optimistic about the future development of DeFi.

1. Bancor will allocate 100,000 to 200,000 BNT per week to the large pool and 10,000 to 20,000 BNT per week to the medium pool, of which 70% of the total BNT award will be allocated to the BNT end of the liquidity pool and the remaining 30% to the base ERC 20 (TKN) end; 2. To motivate users to continue to provide liquidity, Bancor increases the reward multiplier, which magnifies the base BNT reward by up to two times. This means that participation in BNT liquidity mining can earn base rewards and additional rewards through reward multipliers, and the total number of BNT rewards earned per week can be magnified up to two times; 3. Liquidity providers who pledge token awards directly to the Bancor agreement may also enjoy the "reward multiplier" rule, i.e. after electing to repledge, these awards will also compound through continued mining for the remainder of the cycle.

1. There are two impressive things about Bancor's project. The first thing is that it raised 153 million DOLLARS, which is a relatively high amount of financing both at that time and now. Another thing is that we let hackers steal a lot of coins, but as a result, the Bancor official directly froze the stolen coins. Although the matter has been dealt with and the users' tokens have not been lost, the centralization of Bancor official has also been exposed, which has become a point of criticism for Bancor. In fact, I think there is no need to hold on to this issue. Whether it is centralization or decentralization, it is all relative, but the degree of strength is different. Bancor wouldn't have done it if it hadn't been for that. But in the long run, there is still a certain market demand for decentralized exchanges or such trading agreements, but I think the service is more important than the currency price. 2. BNT is a decentralized exchange-like project that uses the Ethereum blockchain, which supports smart contracts, to build price discovery and liquidity mechanisms into its tokens. These "smart tokens" can hold one or more tokens as reserves, allowing anyone to quickly exchange or destroy tokens or reserves through smart contracts at any time. Personal feel this running protocol is doing well, at least many powerful projects side use the agreement to circulate their tokens, that this is approved, the team strength is good, have the technology strength, the exchanges have shelves, currency performance, liquidity, investor benefits, I think the prospect of this project is ok and can pay attention to.

From EOS RAM to Fibos of Zangma, Bancor protocol is popular, but the price of BNT as its token does not increase much. The reason is that the Bancor protocol can choose to use BNT or not. From the current situation, Bancor protocol cannot support a large number of transactions. So the role of BNT is not obvious. The value of the Bancor agreement has been recognized in many markets, and looking to the future, the value of BNT depends on how it finds its position in the agreement. To sum up, the concept and prospects are good, and the practicality is also strong. With good circulation, we can pay attention to the follow-up development and choose opportunities to attack.