Robert has reported for a variety of international publications including the Associated Press, The Guardian, Vice, and Decrypt. Current areas of interest include the political economy of technology, cryptocurrencies, and privacy. Robert has a Bachelor of Science from UCL, and a Master's degree from the University of Oxford's Internet Institute.
What is Bancor (BNT)?
Bancor (BNT) is a decentralized exchange (DEX) that launched on the Ethereum blockchain in 2017 after raising $153 million in an initial coin offering. Unlike centralized crypto platforms like Wealthsimple, it runs entirely on code and is governed by a network of token holders.
Bancor’s exchange was one of the first to be structured as an automated market maker — a platform that maintains vast pools of cryptocurrency pairings that users can swap in and out of when they want to exchange one coin for another.
Like the larger exchange Uniswap, Bancor uses pools of paired tokens that users add to and draw from in order to make trades. In Uniswap, those pairs will be things like ETH/SHIB or SHIB/COMP. If there isn’t enough SHIB in the ETH/SHIB pool, the Uniswap protocol might grab some from the SHIB/COMP pool. There’s a brief imbalance, but the laws of supply and demand take over and buyers and sellers drive the prices back to where they should be.
The difference with Bancor is that the BNT token serves as an intermediate pairing for all other coins, and there are always enough BNT to facilitate any trade. This makes a huge difference to the people who provide crypto to Bancor pools: since everything is tied to BNT, they can offer up a single token. No need to give the full pair.
What can you do with Bancor?
If you’re a liquidity provider — and anyone with a little crypto can be — you’ll earn a cut of trading fees in either BNT or the currency you added to the pool. That BNT can be staked as well, compounding your returns.
Since BNT is issued on the Ethereum blockchain, you can stake it in any decentralized finance protocol that will accept it. For instance, you could lend your BNT to earn interest on your holdings within a DeFi protocol or stake it within an exchange.
You can also use BNT to speculate, but like all crypto, BNT is volatile, so holding it means exposure to extreme ups and downs.
How can you buy Bancor?
You can buy Bancor on a cryptocurrency trading platform. There are, broadly, three main types.
The first is a brokerage, like Wealthsimple Crypto 👋, which lets you buy and sell BNT for cash. One advantage of platforms like these, at least in the case of Wealthsimple, is that your purchase is safe and secure.
The second option is a cryptocurrency exchange. These companies match buyers with sellers and let you use cash to purchase.
The third is a decentralized exchange (DEX) — a blockchain protocol that matches buyers and sellers entirely through computer code. While you can’t use fiat to buy crypto on a DEX, and transaction fees can be expensive, many users like that DEXes are non-custodial, so you are in complete control of your crypto in your own wallet, not the platform.
Last Updated May 31, 2022
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