The growth of the cryptocurrency space remains commendable, considering the amount of negative criticism it gets, especially from mainstream media. However, one sector of the space worthy of mentioning is the Decentralized Finance (DeFi) market. Since 2020, the rapid growth of the DeFi space has made it a valuable terrain for both enterprises and investors. The DeFi ecosystem offers investors services that earn them passive rewards and massive interests. Alternatively, the DeFi platforms continue to allow potential investors to earn by offering products and services tailored to their needs. However, one entity thriving today is Bancor crypto, which raised $153 million from 11,000 investors in 2017.
What Is Bancor?
Launched in 2016, Bancor is a Defi protocol that allows users to convert digital tokens directly, without a centralized exchange. The project’s founder, Galia Benartzi and Guy Benartzi leave their powering, ownership, and governance in the hands of their community. After using their assets to facilitate trades for users, the protocol rewards users who stake their tokens in its platform. This means that users who lock assets in its pool get rewards from fees paid by others who trade them.
This way, Bancor acts like an Automated Market Maker (AMM) who provide liquidity to the crypto market. However, Bancor is taking a step ahead by offering users incentives for creating and maintaining these asset pools. This is why, Bancor is one of the most-established AMMs today, allowing users to earn passively via single-sided deposits. One advantage for users staking on Bancor is protecting them against impermanent loss. Bancor Network Token (BNT), an ERC-20 token, is the primary and utility token of the network. It is also the reserve currency for all smart tokens developed on the network.
How Does Bancor Work?
Typically, Bancor operates like a Decentralized Exchange (DEX), allowing users to swap multiple tokens in a pool. There are a pair of tokens in each pool and a reserve of BNT cryptocurrency. However, unlike other DEX, the Bancor users power its AMM services. Hence, depositors are kings in the protocol, as their funds facilitate Bancor’s trade globally. This is why depositors earn money on their stakes on the platform. Alternatively, traders who swap tokens on the exchange pay fees to the network to generate revenue. It is from these fees that the protocol pays depositors. Surprisingly, Bancor is not the only platform offering such services, as Uniswap and Pancakeswap users also enjoy related offerings.
However, unlike competitors, Bancor only requires users to lock a token in a pool consisting of pairs to access it. A typical example is a pool consisting of ETH and DAI on Bancor. Depositors, with any of the assets, can stake in the pool. Unfortunately, Uniswap users will have to stake both assets to access the pool. However, users must also deposit BNT into any Bancor pool to enjoy this. One advantage is that depositors remain protected, getting zero exposure to impermanent loss. However, investors must lock their funds on the platform for at least 100 days to enjoy this total protection. That way, they will be able to receive the same amount deposited during withdrawals.
Features Of Bancor
In order for liquidity providers know the exact prices of coins when locked in the platform, Bancor utilizes an oracle. This oracle’s design allows it to relay prices from external sources into the network. This oracle also helps to adjust the proportion of tokens relative to their prices. This way, liquidity providers can withdraw the exact value of tokens deposited into the pools. However, listed below are the unique features of Bancor;
Protection against impermanent loss
With the launch of the protocol’s latest version, users cannot experience impermanent loss from their inception into staking. Unlike the previous versions, where users need to lock their assets for 100days, this is more efficient and attractive. The Bancor v3 upgrade currently provides this opportunity to users.
Multiple Rewards
Bancor users are eligible for dual-sided rewards, with third-party protocols allowed to offer rewards on their pools. This means that depositors can earn rewards in BNT and any other token staked. Fortunately for depositors, both forms of rewards are devoid of impermanent loss. There are also no deposit limits for Bancor liquidity pools. This is why anyone can contribute their preferred amount without waiting for slots to open up.
Reduced transaction cost
The launch of Bancor 3 means that users can stake BNT in a single pool and earn rewards. This means depositors do not need to move their assets around pools to earn rewards. However, the advantage for users is reduced transaction costs on trading and staking.
Support all Ethereum-compatible tokens
Bancor converts between different ERC-20 tokens, with each linked to a smart contract, holding reserves of other ERC-20 tokens. Any smart token created on the Bancor network is ERC-20 compatible and therefore compatible with other tokens on it.
What Is Impermanent Loss?
Impermanent loss is the reduction in asset price within the deposit period and at the time of withdrawal. This difference can either be great or minimal, depending on the changes in the asset prices. However, the impermanent loss only becomes realized once depositors withdraw assets from the liquidity pool. Typically, this loss occurs after depositing two cryptocurrencies into an AMM and withdrawing them later. Unfortunately, impermanent loss becomes severe if the difference in value is less than what it’d be if left in a wallet. There is no standard rule to avoid impermanent loss, but investors need to watch out for some signs.
Firstly, some staking pools, especially ones containing volatile assets, are more prone to impermanent loss than others. This is why it is risky to pair very volatile assets with less volatile ones in the same pool. Secondly, cryptocurrencies paired together in a pool with huge price differences are also prone to impermanent loss. Lastly, to avoid impermanent loss, investors can provide liquidity for two stablecoins. This is because stablecoins can maintain a market price over a long period. Unfortunately, this low-risk activity might not yield investors rewards.
Why Bancor?
Apart from offering juicy rewards, total protection for investors against impermanent loss remains a huge advantage of Bancor. The network is also open, as it provides support for the staking of multiple Ethereum-compatible tokens. This way, investors can stake their idle assets and earn passive income. Bancor allows single-sided deposits that eliminate the need for market makers and takers. This is why depositors do not worry about the bid and ask prices of their crypto assets. Another leverage Bancor offers ahead of its competitors is its huge rewards for depositors providing liquidity. To promote and boost BNT, Bancor also offers its liquidity providers higher rewards.
Limitations Of Bancor
Like many DeFi products, novices might find navigating the platform challenging. This is not unusual for many crypto platforms, as they mostly require some technical knowledge to ease navigation around them. Another limitation of Bancor is that the platform does not support fiat currencies. This means that depositors who wish to stake in the platform, must-own compatible-cryptocurrencies. Lastly, Bancor’s lack of a third-party trading platform currently forces traders to seek one. This further complicates its technicalities, and does not embrace novices.
Bancor Network Token (BNT)
Today, Bancor generates millions from fees monthly for its depositors, offering up to 60% annual returns on other tokens. BNT is the utility, governance, and native token of Bancor, with multiple uses across the network. With the token, holders can provide liquidity for the numerous pools in the platform, with this keeping the network functional. To stake in any trading pool on Bancor, depositors can pair BNT with tokens like ETH, LINK, AAVE, etc.
Alternatively, users can stake BNT alone to earn the best possible reward and a portion of trading fees. This is why staking BNT alone gives users up to 70% rewards while pairing it gives about 30% only. The utility token also acts as a governance token. Hence, BNT holders can vote on proposed changes or update on the Bancor platform. With an uncapped total supply, there are 288,306,131 BNT coins in circulation.
How To Buy BNT On Bybit Exchange
BNT is available for purchase on many exchanges, including Binance, OKX, Bybit, FTX, and Bitget. However, the simple steps below will guide you in buying the token on Bybit.
Step 1
Signing up on Bybit is the first for new users. You will have to download the Bybit app or use the exchange’s website. The app is available for Android and iOS devices and is downloadable from the respective stores. The signing-up process is usually seamless and complete after supplying a few KYC details. You will also need to verify the information provided and secure your account with a strong password. It is worth noting that only verified accounts will have access to the Bybit trading platform. However, existing users will only need to log in to their accounts.
Step 2
Next, it is vital to have USDT in your wallet or buy from the exchange. Buying USDT is easy and can be done with your preferred fiat currency. Bybit allows users multiple options to pay, like card and bank transfer options. Once the transaction is successful, USDT tokens will be transferred to your Bybit account.
Step 3
After buying USDT, you can then purchase your BNT tokens. Click on trade, under USDT, select the BNT/USDT pair from the search items, and enter the amount you want. You can use a limit, market, or conditional order to place your trade. You will then review and confirm the amount and proceed to make payments for it. The new assets will automatically reflect on your account.
Is BNT a good buy in 2022?
According to CoinMarketCap, BNT is a highly-rated low-cap token in the crypto market, currently in the top 100. Its average 24hour trading volume is $$15,867,870.75, with a market cap of around $403 million. Today, the protocol’s total value locked (TVL) is around $720 million. Despite the crypto market’s fall, its gain of 15% this week is encouraging as investors continue to lurk around. Surprisingly, its long-term performance predictions are great, despite its recent performances.
WalletInvestor is bullish, predicting it will reach $2.71 this year. Their forecasts for the assets in 2023, 2024, and 2025 are also optimistic, as they anticipate a progression. The Crypto analysts are confident that BNT will reach $7.648 in 2027. DigitalCoin is also bullish about BNT, seeing the token hitting $3 this year. However, the analyst also thinks it will reach 2026 before crossing the $4 mark. GovCapital, like others, is also optimistic about BNT’s future. They predict the token to hit $6 this year and $25 by 2026. However, while forecasts are great, cryptocurrencies remain volatile, and anything can happen in the future. The advice to investors is to commit funds they can lose to crypto assets.
Conclusion
Launched in 2016, Bancor is a Defi protocol that allows users to convert digital tokens directly, without a centralized exchange. Typically, Bancor rewards users who stake their tokens in its platform after using them to facilitate trades for other users globally. BNT is the utility, governance, and native token of Bancor, with multiple uses across the network. With the token, holders can provide liquidity for the multiple pools in the platform. It is available for purchase on many exchanges, including Binance, OKX, Bybit, FTX, and Bitget. Fortunately, despite its falls in the past, crypto analysts are optimistic about the future of Bancor and BNT.
