Bancor announced today that its native token (BANCOR) will be the first currency issued using its protocol, and will be introduced through a crowdsale launching May 30, 2017. This token will be used as the primary reserve currency in the ecosystem and will draw its value from the collective network effect of all Bancor-compatible tokens holding it in reserve.
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. It recently won first place at a startup competition by unanimous vote from a panel of expert from the blockchain industry.
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“Bancor’s network token will be called BANCOR. It will serve as a kind of connective tissue linking all of the user generated tokens to each other. The beauty of Bancor is that the more people use it as their reserve currency, the more value it captures. It essentially encapsulates the network effect of every Bancor-compatible token,” explained Galia Benartzi, who heads the firm’s business development.
The Bancor Protocol aims to solve the liquidity problem for the long-tail of user-generated cryptocurrencies. The smart-contract protocol will be cross-blockchain, starting with the Ethereum blockchain. By issuing tokens backed by a reserve a new token immediately receives a conversion rate, making it tradeable regardless of the availability of buyers. It also enables the creation of new categories of cryptocurrencies, such as decentralized token baskets.