Exchange

Bancor

★ ★ ★ ★ ☆
Bancor is a unique exchange initially built on Ethereum, that has recently moved its protocol over to EOS as well. Bancor describes itself as a ‘decentralised liquidity network’ and it operates very differently from most exchanges, using what it calls ‘smart tokens’ and the Bancor algorithm in order to calculate the price of tokens listed on the network, rather than relying on the traditional model of matching buyers to sellers. Bancor aims to offer instant trading, to be easy to use, and to reduce price the potential for price manipulation by offering liquidity.
Bancor X is a new cross-chain bridge which can convert BNT from ERC-20 BNT to EOS BNT tokens, and vice versa. By transferring BNT across networks, this simplifies the process of transferring tokens between the EOS and Ethereum ecosystems.
Analysts score
80%
Users 7d
N/A
Users 24h
164
Volume 7d
8.00
Volume 24h
N/A
Initial Supply
N/A
Circulating Supply
56 889 807.00
Total Supply
N/A
Max Supply
N/A
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dApp & Token Report: Bancor

root
Reviewed: 31 January 2019
Bancor is a unique exchange initially built on Ethereum, that has recently moved its protocol over to EOS as well. Bancor describes itself as a ‘decentralised liquidity network’ and it operates very differently from most exchanges, using what it calls ‘smart tokens’ and the Bancor algorithm in order to calculate the price of tokens listed on the network, rather than relying on the traditional model of matching buyers to sellers. Bancor aims to offer instant trading, to be easy to use, and to reduce price the potential for price manipulation by offering liquidity.
Bancor X is a new cross-chain bridge which can convert BNT from ERC-20 BNT to EOS BNT tokens, and vice versa. By transferring BNT across networks, this simplifies the process of transferring tokens between the EOS and Ethereum ecosystems.
Name Bancor
Platform
Token of interest
BNT
Supporting wallets
Category
Users 24h
164
Users 7d
Overall rating:
20 / 25
User experience
★★★★☆
Token integration
★★★★☆
Team
★★★★★
Community
★★★★★
Security
★★☆☆☆

How to use

  1. Install (or access) Scatter (https://get-scatter.com). The desktop version is recommended.
  2. Set up a new EOS account (or use your existing one by importing private keys).
  3. Fund the account with EOS, either from another account or from an exchange
  4. If using Ethereum, sign into your Bancor wallet or use your wallet of choice to trade in ETH and ERC-20 tokens. To buy EOS or EOS tokens using ETH, buy BNT tokens and use Bancor X to convert your ERC-20 BNT tokens to EOS BNT tokens.
  5. Click on the token you’re interested in buying/selling, select the token you want to exchange it with, click convert, and sign the transaction.

FUNCTIONALITY

Despite the complexities behind the algorithms and the token economics, the actual exchange itself is extremely simple and intuitive. On the EOS page, after signing into your wallet, you are given a simple list of different EOS tokens, ranging from EOS itself, to BNT, to a variety of different airdrops and other dApp tokens. At the time of writing, 15 EOS tokens are currently available. The current price in EOS and USD is listed next to each token, the 24 hour USD volume is also shown, and next to these metrics is the convert button. At the top of the screen are links sending you to Bancor’s main about page, a link to the ETH token page, a link leading to a forum for submitting a request to add your own token to the Bancor Network, and finally a link to Bancor X.

The convert screen brings you to a screen where you can choose to either buy or sell your current token. The top text box allows you to manually enter the exact amount of the chosen token you wish to sell, and the bottom text box will show you how many of the selected token you will receive. Alternatively, you can manually type in how much of the chosen token you wish to receive. A drop down menu next to each text box allows you to change which tokens you will be selling and receiving. The page also shows the current price rates on the pair, as well as displaying the percentage of price slippage. An advanced options tab can be clicked to give the user options to buy limits and limits on price percentage changes. Once down, click convert, sign the transaction, and the conversion will be nearly instant.

The ETH version of the Bancor Network is largely the same, but it has far more ERC 20 tokens than EOS tokens listed, in addition to a few extra UI features and differences. The ERC 20 page does not show the price of each token in ETH, only USD. But it also measures the 24 hour percentage difference in the change of the token price reletive to USD, the liquidity depth of the token in USD, and finally a small graph showing the 7 day price movement for each token. The ETH page also has a search function, a list of (currently unavailable) relay tokens, and a bounties page.

Bancor X allows you to convert your BNT tokens between the Ethereum and EOS blockchains. First, the screen shows two drop down boxes showing whether you want to convert your BNT tokens from ETH to EOS or vice versa. Then, you type in the amount of BNT you want to convert, and finally you type in your EOS account name or your ETH address before clicking next.

TOKEN MECHANICS

The BNT token (Bancor Network Token) is used to connect all other tokens on the Bancor network together. Everytime a trade is made on the network, the sold token will be converted into BNT first, then converted into the token being brought. Every time a token is converted into BNT, the token is sent to a reserve and more BNT is created. Whenever tokens are removed from the reserve, the BNT that was used to remove the tokens from the reserve is destroyed. As tokens that are listed on the Bancor Network as smart tokens increase in value, the algorithm also ensures that the BNT tokens held in reserve for each listed token also increases to match the increased price of the smart token. The increased value of BNT thereby increases the value of other smart tokens listed, and it also means that for every token listed on the Bancor Network as a smart token, more BNT will be staked to that smart token, thereby further increasing the value of BNT.

No fees or dividends, or other benefits are granted to BNT token holders, so investment is purely speculative. From another perspective, purchase of the BNT token can also be considered a donation to the Bancor Foundation.

Issues

On the 9th of July, 2018, Bancor announced that it had been hacked, suffering losses totalling $23.5 million in tokens taken from the smart contracts. While there hasn’t been a successful hack on Bancor in the months since then, Bancor was able to freeze the BNT tokens to prevent the criminal from liquidating, calling into question the advertised decentralisation of the exchange and the BNT token supply. The centralisation issue is a complex debate that is outside the scope of this article, but the fact remains that the hack was a huge loss for the company, which means that the Bancor Wallet should be used with caution. Since Bancor otherwise doesn’t require deposits, it is recommended that you stick to wallets you trust, hardware wallets in particular, when using Bancor. (or any other Dapp, for that matter) Luckily, the Bancor protocol is fully open source, and the code can be examined on Bancor’s github page.

Aside from the hack, another, less egregious issue is that crypto already has a large amount of exchanges, the most prominent of which are also legally regulated. Bancor lacks a fiat gateway, and it also lacks coins outside of the Ethereum and EOS ecosystem, such as bitcoin itself. The newly added Bancor X and EOS integration also need some time to mature. Many more EOS tokens need to be added, price graphs and price movement percentages need to be added to EOS tokens, and ideally Bancor would support more wallets besides Scatter for EOS as well.

The Bancor algorithms and the purpose of the BNT token can also be challenging to understand for the average investor, even after having researched detailed explanations. While the user experience for basic trading is quite impressive, the average investor may fail to understand the value of the Bancor Network over traditional exchanges and DEXs in these early stages. Continued growth of the network is very important if the price of the BNT token, and by extension the confidence of current and potential future investors, is to remain healthy.

Final verdict

While the user experience makes the Bancor Network seem deceptively simple on the surface, Bancor looks to be doing something incredibly special that is vitally needed in the crypto space. Instant transactions, cross chain liquidity, and fair pricing algorithms that are resilient (although not immune) to traditional price manipulation tactics. Bancor shows that the different competing ecosystems of EOS and ETH can work together rather than against each other, despite the heated disagreements between the communities and developers of the two projects. Furthermore, Bancor is capable of expanding out to provide value to other projects and tokens as well.

Bancor is massively ambitious, and to meet that ambition it will require community and developer support, marketing, and adoption. If one is looking to accumulate and trade tokens on the EOS or ETH networks casually rather than day trade, Bancor is a safe, easy, and overall excellent option to consider. The BNT token itself should be invested in at your own discretion, taking into consideration your belief in the Bancor Network. This article is not investment advice, but as with every investment, you should never put in more than you can afford to lose.

The hack and the associated debate surrounding how centralised Bancor is is always something to keep in mind. Bancor is and has always been open sourced, however, and there hasn’t been a hack since Bancor launched on EOS, suggesting that the former security issues may have been fixed. Despite this, it can take a long time to regain trust from users, and the hack was severe enough that I feel it still cannot be ignored while evaluating Bancor. As it is currently, Bancor is still a unique and ambitious project, one which is still growing and which still provides a useful service.

User experience
★★★★☆
Token integration
★★★★☆
Team
★★★★★
Community
★★★★★
Security
★★☆☆☆

Rating System:

< 13 (avoid) | 14-16 (bad) | 17-19 (acceptable) | 20-22 (good) | 23-25 (exceptional)

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