Bancor (BNT) Coin Complete Guide - The Core of DeFi that Even Beginners Can Easily Understand
What is Bancor (BNT) Coin?
Bancor (BNT) is an innovative decentralized liquidity protocol that was created to overcome the limitations of existing centralized exchanges. In simple terms, you can think of it as a platform that helps users trade cryptocurrencies safely without banks or intermediaries.
Bancor's biggest feature is its 'automated market maker (AMM)' system. This is a method that automatically determines prices and executes transactions through smart contracts, rather than the traditional order book method. It provides an environment where you can exchange any cryptocurrency you want, just like a vending machine.
Bancor's birth background and development history
Bancor brought a lot of attention to the blockchain industry in June 2017. It received a lot of attention by successfully completing the largest ICO (Initial Coin Offering) of all time at $150 million. This was a symbolic event showing the high expectations for blockchain technology at the time.
It initially started based on the Ethereum network, but it has continuously evolved to solve various user needs and scalability issues. In 2020, Bancor v2.1 was launched to introduce the 'impermanent loss protection' feature, and in 2021, Bancor v3 provided single token staking and improved yields.
In particular, with the DeFi boom in 2021, Bancor was recognized for its value as a pioneer in liquidity mining. It had a great impact on the industry to the extent that many later projects benchmarked Bancor's AMM model.
How does Bancor work?
The core of Bancor is the 'Liquidity Pool' system. This is a completely innovative approach that is completely different from the order book method of existing exchanges.
Step 1: Liquidity provision
Users deposit their cryptocurrencies into the liquidity pool. For example, if you deposit ETH, you will receive the corresponding BNT tokens. The BNT you receive acts as a kind of 'certificate of deposit'.
Step 2: Automatic price determination
A smart contract determines the token price in real time through a mathematical formula. This is automatically adjusted according to the laws of supply and demand, making artificial price manipulation almost impossible.
Step 3: Trade execution and fee distribution
The transaction fees incurred when other users exchange tokens are distributed proportionally to liquidity providers. This is a structure that allows them to earn passive income.
Various Use Cases of Bancor (BNT)
Core Infrastructure of the DeFi Ecosystem
Bancor currently plays an essential role in the DeFi ecosystem. Numerous DeFi protocols provide services using Bancor's liquidity, contributing to the expansion of liquidity in the entire DeFi market.
Cross-chain Bridge Function
Bancor also acts as a bridge that enables asset transfers between various blockchain networks. BNT can be utilized on various networks such as Ethereum, Binance Smart Chain, and Polygon, expanding the range of choices for users.
Liquidity Management Tool for Institutional Investors
Recently, there have been increasing cases of large cryptocurrency funds and institutional investors managing the liquidity of large assets through Bancor. Especially because it is possible to trade 24 hours a day and has the advantage of relatively low slippage (price slippage).
Current status of major exchanges where BNT can be traded
Centralized exchange (CEX)
Binance has the largest BNT trading volume in the world and offers various trading pairs. BNT can also be traded stably on major exchanges such as Huobi, Kraken, and Coinbase Pro.
Decentralized exchange (DEX)
BNT trading is also active on DEXs such as Uniswap and SushiSwap. In particular, many users prefer Bancor's own platform because it allows BNT trading at the most favorable conditions.
Active Bancor Community and Governance
Bancor's community is very active worldwide, and it realizes truly decentralized governance. BNT holders have the right to vote on major protocol decisions, which essentially determines the direction of the platform's development.
Main Community Channels
You can check the development progress and important announcements in real time on the official Telegram channel. The Discord server is a lively place for discussion on a variety of topics, from technical questions to investment-related discussions.
Regular Community Events
Quarterly AMA (Ask Me Anything) sessions provide an opportunity to interact directly with the development team. We also encourage community engagement through various events and airdrops.
Wallet Guide for Safe BNT Storage
Hardware Wallets (Recommended)
The Ledger Nano X/S and Trezor Model T are the most secure ways to store BNT. They store your private keys offline, making them virtually hack-proof. While the initial setup can be a bit complicated, if you hold a large amount of BNT, we strongly recommend using a hardware wallet.
Software Wallets
MetaMask is the most widely used Ethereum-based wallet, and it allows you to manage your BNT with ease. Trust Wallet is also a convenient option for mobile use.
Security Precautions
Never save your wallet seed phrase (recovery phrase) online, but keep it in a physically secure location. Beware of phishing sites, and always download your wallet through the official website.
Things to know when investing in BNT
Understanding Market Volatility
BNT, like other cryptocurrencies, exhibits high volatility. In particular, it is closely related to the overall mood of the DeFi market, so it can experience large price fluctuations in a short period of time. Therefore, it is important to make an investment plan from a long-term perspective.
Check the project roadmap and development status
Please check Bancor's development progress and roadmap regularly. It is a wise investor's attitude to check the frequency of code updates on GitHub and to keep up with the latest news through the official blog and social media.
Monitoring changes in the regulatory environment
You should pay attention to the impact of changes in cryptocurrency regulatory policies in each country on the price of BNT. In particular, if regulations on DeFi are strengthened, there is a possibility of a short-term price decline.
Importance of diversified investment
Do not concentrate all your assets on BNT alone, but diversify your investments across various cryptocurrencies and traditional assets. The principle of 'don't put all your eggs in one basket' applies equally to cryptocurrency investment.
Bancor (BNT) is an important component of the DeFi ecosystem, and is a project that is expected to continue to innovate and develop in the future. However, cryptocurrency investment always carries risks, so please make investment decisions based on sufficient education and careful judgment. To create a sound investment culture, always remember the DYOR (Do Your Own Research) principle!