Bancor Protocol – A Hierarchical Monetary System & Decentralized Exchange

INTRODUCTION

The Bancor Protocol is named in honor of the Keynesian proposal to introduce a supranational reserve currency called Bancor to systematize international currency conversion after World War II. The Bancor Protocol represents the first technological solution for the classic problem in economics known as the “Double Coincidence of Wants”, in the domain of asset exchange. For barter, the coincidence of wants problem was solved through money. For money, exchanges still rely on labor, via bid/ask orders and trade between external agents, to make markets and supply liquidity.
Through the use of smart-contracts, Bancor-Enabled Tokens can be created that hold one or more other tokens in their reserve. Tokens may represent existing national currencies or other types of assets. By using a reserve token model and algorithmically-calculated conversion rates, the Bancor Protocol creates a new type of ecosystem for asset exchange, with no central control. This decentralized hierarchical monetary system lays the foundation for an autonomous decentralized global exchange with numerous and substantial advantages.

THE GRAND VISION

The Bancor Protocol is a smart-contract-based token conversion protocol, which enables a single party to convert any token to another, without requiring a second party to exchange with. It achieves this through the use of reserve currencies, which allow for automatic and algorithmic price discovery regardless of trade volume.
The Bancor Protocol is a technological solution for the classic problem in economics known as the “double coincidence of wants”, in the domain of asset exchange. Through the use of blockchain-based smart contracts, tokens can be created with the ability to hold one or more other tokens in a reserve. These tokens may represent existing national currencies or other types of assets, creating a new type of ecosystem for asset exchange, with no central control. One of the implications of this system is that any token in the network can achieve instant liquidity, regardless of its market cap or notoriety.

USE CASES

Decentralized Exchange
Hold, transfer and convert any token to another at any time, with no bid/ask spread. Remove counter-party risk and maintain predictable price slippage, providing lower volatility for your tokens.

Etfs
Bancor Protocol enables the creation of ETFs (Exchange Traded Funds) with no central control, owned directly by their holders.

Local Currencies
Design new tokens using Bancor smart contracts. Customize your reserve ratio, issue your coins, and enjoy instant viability and continuous liquidity.

HOW IT WORKS?

The Bancor Network smart contract protocol will be cross-blockchain, starting with the Ethereum blockchain. It will be powered by “Bancor-Enabled Tokens” (BETs). A BET is an ERC-20 compliant smart-contract, which also holds one or more additional tokens in its reserve, at a pre-set “Constant Reserve Ratio” . The reserve ratio can be set between 0 and 100 percent in total, thus the combined CRR of all reserve tokens cannot exceed 100%. These reserve tokens and ratios are what enable automatic conversion between any BET and/or standard Ethereum Token in the network. A BET can be purchased with any of its reserve tokens, or any other token which is convertible to its reserve tokens through the network.

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CONNECTED LINK

Website : https://www.bancor.network/

Twitter : https://twitter.com/bancornetwork

Blog : https://medium.com/bancor

Reddit : https://www.reddit.com/r/Bancor

Github : https://github.com/bancorprotocol/contracts

Meet and discuss with Bancor community : https://bitcointalk.org/index.php?topic=1789222.0

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