Crypto Society Ama Recap with Bancor -20th October 2021.
Bancor is an on-chain liquidity protocol that enables automated, decentralized exchange on the Ethereum and across blockchains.
The Bancor Network is a set of smart contracts that manages the conversion flow between tokens, including tokens on different blockchains. These contracts also manage access to the liquidity pools that connect the different tokens in the network. Relevant Links
Bilo | Crypto Society
I would like to welcome everyone to our AMA with Bancor
@MB_Richardson It’s our pleasure to have you with us today. I would like to welcome you here on behalf of our entire community.
Mark Richardson | Bancor
Thanks for having me here ❤️
Bilo | Crypto Society
Could we begin with a brief history of yourself and your team, and your roles at BANCOR and what you were doing before BANCOR?
Mark Richardson | Bancor
I am a relatively recent addition to the Bancor team. I began a full-time position in January and was made the head of research shortly thereafter.
Before that I was a research scientist; my fields were organic synthesis, nanotechnology, immunology, chemical biology, among other things.
Bilo | Crypto Society
Wow, that’s a handful of highly complex fields. How and where did you first encounter crypto Mark?
Mark Richardson | Bancor
I received my PhD from the University of Melbourne and completed my first postdoctoral stint at UCI in California, where I was also a professor of chemistry for two years (well, lecturer).
During 2020 I was supposed to go to Berlin before the pandemic started.
My flight was about a week after Australia closed its borders.
This wiped out about 12 months of work, and I found myself with some free time.
So, I studied crypto.
Bilo | Crypto Society
Hahaha. Sounds like a familiar story for many. Love it!
Mark Richardson | Bancor
I was involved in a bunch of communities at the start — this was around DeFi Summer of 2020.I was everywhere — Uniswap, Kyber, Aave.
Bilo | Crypto Society
Excellent. Happy to have your great mind added to our crypto jungle.
Mark Richardson | Bancor
I came to settle down on Bancor as I felt that it had a philosophy and community values structure that I didn’t really find anywhere else.
I dedicated a lot of early effort to helping the DAO get established in October of last year.
Bilo | Crypto Society
Excellent; Can you tell us about why you the team thought BANCOR needed to be built and what problem it solves?
Mark Richardson | Bancor
Bancor started out in the community currency space, way before it was the DEX we know today.
This was back in the days when Bernard Lietar was our chief economist (he is best known for inventing the Euro, by the way).
The problem we saw was that while it was possible to establish community currencies in areas, which could sustain their own economies — it was impossible to know the value of a community token outside of its region.
This is a problem as old as civilization.
What is the price of a fish?
A piece of fruit?
You need a marketplace to determine value of things — cryptocurrencies included.
Bilo | Crypto Society
Really like where this is going 🙂
Mark Richardson | Bancor
The problem is, crypto is founded on trustlessness, and traditional markets are not trustless.
The stock market, for example, is facilitated by sophisticated professionals called market makers.Market makers have a lot of responsibility in keeping assets liquid, but the price of each (their exchange value) is really something of a judgement call.
This means there is a trusted entity at the centre of everything, and that entity is corruptible.
Eyal Hertzog, one of the Bancor founders, envisioned an algorithmic solution to pricing, which we now call the bonding curve. The bonding curve decentralizes the pricing of any two assets inside the AMM, thus removing the trusted nature of the traditional marketplace. And it is generalizable.
DeFi is still, essentially, in its prototype phase. The AMM has proven its metal in the most punishingly volatile environment that exists.
Bilo | Crypto Society
For those who don’t know; AMM = Automated Market Maker
Mark Richardson | Bancor
We can reliably price different cryptocurrencies without recourse to a financial overlord.
This means that we have an opportunity to pass on the revenues of the market to its participants — namely the liquidity providers (who earn fees), and the traders (who aren’t exposed to a spread).
However, there is a problem -
Liquidity providers earn fees, yes, but the AMM algorithm means that they slowly lose exposure to the most performant asset.
Bilo | Crypto Society
Great explanation that explains LP (liquidity pools & providing) for those unaware. Thanks
You mean impermanent loss?
Mark Richardson | Bancor
This loss of value as the prices of the assets diverge is called “impermanent loss”, and it can be devastating.
If you want to see what I am referring to.
https://twitter.com/NateHindman/status/1450774550933823492?s=20
Nate Hindman
At one point $SPELL was driving a big chunk of Sushiswap’s total trading volume The pool was printing triple-digit APRs and churning out fees. Same on Uniswap V3 So how did users who had their $SPELL in these pools actually perform? Let’s take a look👇 twitter.com/danielesesta/s…
Essentially, Liquidity providers can make less money using an AMM, then if they did nothing at all.
Our competitors seem content to just let liquidity providers wear that loss.
But Bancor thinks it is unacceptable to have those that sustain the market, must pay a toll for it.
There is an incentives problem, and it should be addressed. Bancor is unique in that it insures your capital.
Bancor v2.1 was the start of blending the exchange and insurance primitives together in a single product. So those who are participating have the peace of mind that their value is always protected — in essence, they will always beat the HODL position.
This is a unique product offering and makes Bancor the most profitable AMM anywhere in Defi.
We have been quiet in our marketing efforts during 2021, because we are working on something much bigger! Expect to hear more from us during 2022.
Bilo | Crypto Society
👀
Very briefly, how would you describe BANCOR if you were talking to someone unfamiliar with digital assets?
Mark Richardson | Bancor
I tell my smooth-brain friends that Bancor is kind of like those high-interest online savings accounts from the early 2000s.
In Australia, I remember when ING Direct launched its internet banking product for the first time, and it was a learning curve then as well.
People were confused.
“What do you mean there is no branch? “Why can’t I get a cheque book? “etc.
Bilo | Crypto Society
Hahaha. So true
Mark Richardson | Bancor
But now internet banking is just taken for granted.
Bilo | Crypto Society
What chain is Bancor built on and why did you make that choice and Is Bancor interoperable and if so on which chains?
Mark Richardson | Bancor
I see a lot of these blockchain products as just the next logical step in that same narrative.
Bancor is currently on Ethereum, for the main reason that Ethereum is the most economically, financially, and technically secure chain — save maybe for BTC. But the gas is prohibitive and there are other problems.
Gone are the days where we can rely on Ethereum for normal user interactions. So — we are looking to both alternative L1 and Ethereum Layer2 scaling solutions.
Mark Richardson | Bancor
We have not made the move yet, as we are waiting to finish our version 3. The Bancor protocol right now is very cumbersome, and we are in the process of making it more portable.
When V3 hits, it will be more gas efficient on Ethereum, and also allow for rapid deployment on other chains.
I am personally hoping to see Bancor deployed on all Layer 2s — polygon, Arbitrum and Optimism, but let’s wait and see what the climate is like in 2022.
As for other layer 1s, some are looking better than others.
Bilo | Crypto Society
Awesome news.
Mark Richardson | Bancor
Personally, I like the look of the older, more established chains with a little more diversity of capital on them.
However, Avalanche has certainly shown us it has the ability to punch above its weight and that should count for something.
In general — we are very security-focussed.
Hype is nice, but it dies out. When it does, we want to make sure the chain we are left on has the technical and economic fundamentals to justify remaining there.
Bilo | Crypto Society
Makes a lot of sense. Thanks
What is the BANCOR token used for? Can you describe the Tokenomics?
Mark Richardson | Bancor
BNT is a utility token. We work very closely with the swiss regulator (Bancor Foundation is established in Switzerland), and BNT is classed as a utility token (non-security). BNT (Bancor Network Token) is required to power the Bancor ecosystem.
It is the base asset in every pool and is the numeraire to which all other assets are compared. This is an extremely helpful property for an exchange, as it makes any swap easy to evaluate.
For example, a user may wish to sell ETH for BTC. Bancor can calculate how much BTC the user will receive, because the price of both ETH and BTC is always expressed in terms of BNT.
Bilo | Crypto Society
Great thanks
Mark Richardson | Bancor
You can learn more about how BNT works here:
Bancor ELI5 (Second Conversation)
This is the second of two related conversations, where I use animated graphics to explain Bancor V2.1 to someone with no existing knowledge of cryptocurrency or Defi. The presentation is identical to the first video, but the dialogue is changed because I was speaking with a different person.
Bilo | Crypto Society
Why did you decide to keep Bancor open source and permission-less? And how do you mitigate the risk of foul play?
Mark Richardson | Bancor
Open-source and permissionless use are mainstay values of the cryptocurrency movement. Being open source is important for building confidence; users should have the right to view every line of code in any smart contract they are using- period.
Permissionless interaction is still something of a regulatory minefield. Bancor began as a fully permissioned protocol. This was in the ICO era, and our lawyers were basically telling us we have invented an exchange, and the normal exchange regulations apply. This was horrible.
If you wanted to make a pool — we sent you some forms, did KYC etc, its inefficient.
Bilo | Crypto Society
Tell us about your liquidity mining program, and some of the projects you support and if you’re planning on adding more.
Mark Richardson | Bancor
The Bancor DAO can choose to activate an incentives program on any asset it chooses. The process begins on our discourse page and is then pushed to our Snapshot page where voters can determine the outcome.
Bilo | Crypto Society
Niceeeeee
Mark Richardson | Bancor
At the moment, the liquidity mining program is active on WBTC, ETH, LINIK, USDC, USDT, DAI, EDEN, FARM, and eRSDL.
If you are staking those tokens, the LM rewards are as high as 26%.
Bancor has long been viewed as the best farming opportunity for stablecoins on Ethereum. If you are a BNT holder, the rewards are much higher.
Currently, the rewards rate seems to equilibrate at about 60% on new mining pools, and because you are protected from impermanent loss these rewards are 100% profit.
In contrast to mining programs on some of our competitors, where the rewards are used partially to offset the losses. On Bancor you don’t need to worry about that.
Bilo | Crypto Society
That’s really great.
Mark Richardson | Bancor
It’s just set-and-forget. Simplicity is a big part of our mantra.
Bilo | Crypto Society
Can you please give an overview of your governance protocol, and how it works?
Mark Richardson | Bancor
We have a governance token — but it’s not BNT
Instead, when a user stakes BNT in the protocol, they receive an equal number of vBNT — or “voting BNT”, which they can choose to stake in the governance contract.This system ensures that anyone who is voting on proposals has something to lose if a bad decision is made.
Again, this is in stark contrast to many other governance tokens that have little or no relationship with the protocol they govern.
Mark Richardson | Bancor
We use Snapshot for gas-free voting.
We have an excellent relationship with Snapshot labs and have helped to build some of the features.We are now the most active government on Ethereum, and/or Snapshot (save maybe for MakerDAO)
We have very stringent policies for validating a vote. For a proposal to pass, it must garner 66% supermajority, and 40% quorum.
Bilo | Crypto Society
No filibusters I hope 🤣
Mark Richardson | Bancor
These are among the highest benchmarks in the ecosystem and make it very difficult for a single controlling influence to dominate the community.
Mark Richardson | Bancor
haha
Bilo | Crypto Society
Only Americans will get that
Mark Richardson | Bancor
If anyone is interested, please see our discourse page for more info on Bancor Governance,
Governance forum for Bancor Protocol
> If you are browsing
check out the Vote Delegation threads.
Bilo | Crypto Society
If there was one thing you could hope to see Bancor achieve next year, what would it be?
Mark Richardson | Bancor
I want Bancor to become the #1 go-to DeFi option for people with regular jobs, and other commitments that make it impossible to manage the kind of high-fidelity strategies we are seeing explored elsewhere in DeFi.
If anything happens next year that could make me feel like we are getting close to our first target.
Bilo | Crypto Society
Mark Richardson | Bancor
It would be to hear someone on a train or a bus, or at a cafe tell their friend “if you are getting started in DeFi, just use Bancor — it’s safe, and the yields are better than almost anywhere else”
Bilo | Crypto Society
Is there any exclusive breaking news about Bancor that you could share with us here today?
Mark Richardson | Bancor
There is so much I want to tell you, but we are waiting for the right time.
I recently dropped a few breadcrumbs at the Chainlink Smartcon event.
If you are paying attention to our community calls, you might find the picture is slowly coming into focus.
Mark Richardson on Bancor’s Chainlink Integration | SmartCon 2021
At SmartCon, Mark Richardson, Senior Research Associate at Bancor, gave a presentation about the history of Bancor and its integration with Chainlink. Mark explained how Bancor mitigates impermanent loss and also gave an overview of Bancor v3.
Chainlink is the industry standard oracle network for powering hybrid smart contracts. Chainlink Decentralized Oracle Networks provide developers with the largest collection of high-quality data sources and secure off-chain computations to expand the capabilities of smart contracts on any blockchain.
Learn more about Chainlink:
Website: https://chain.link
Twitter: https://twitter.com/chainlink
Mark Richardson | Bancor
But now that I have you guys on speed-dial, I’ll be happy to come back after our V3 release (or just before) to tell you all about it.
Bilo | Crypto Society
Definitely Sir!
So now that I’ve finished asking you about Bancor, and since you’re a medical scientist, tell us about this COVID-19 thing we keep hearing about…
Mark Richardson | Bancor
haha
Bilo | Crypto Society
Just kidding….
Do you wish to let us know anything else that was not covered in the questions above?
Mark Richardson | Bancor
Just that our app is here:
https://app.bancor.network/eth/data
Bancor Network
Trade tokens and earn interest on your favourite tokens by staking them in Bancor’s decentralized exchange.
If anyone wants to reach out to me for a follow-up conversation, I welcome DMs
Bilo | Crypto Society
Thank you for your time in answering our questions here today. We are all very appreciative of your time and of the answers you have provided
With this, we will open the chat for those who wish to personally thank you for your time with us here today.
Hendra sico
Hi Mr. @MB_Richardson
The main problem in most of ‘’DEX’’ is Liquidity. How does Bancor solve liquidity problem?
Mark Richardson | Bancor
here are several issues facing liquidity provision. Perhaps the most important are 1) exposure to Impermanent loss and 2) being forced to hold multiple assets. Bancor alleviates both of these problems by protecting users against IL and allowing them to stake only one token if they so desire. This ameliorates some of the obstacles facing normal DeFi participants and helps to attract more TVL. Over the course of V2.1 we have increased TVL from $20M to nearly $2B, so the attraction is certainly there.
Huyen Cao
Hi @MB_Richardson
For non-English speakers and south east Asia market do you have any community who don’t understand English?
Mark Richardson | Bancor
Yes! Absolutely. I recently participated in a panel discussion exclusively for Asia, which was transcribed into Japanese, Korean and Chinese: you can get the video here: https://twitter.com/MBRichardson87/status/1447985000104677378?s=20
Oip
As we all know, NFT is now very popular in the crypto world. Will there be any projections for working on the NFT project in the future?
Mark Richardson | Bancor
Maybe. I personally think that NFTs as a vehicle for speculating on artwork probably has a limited shelf life. It is super cool, and many of these NFT project has nothing but a bright future — but I think the market will become more selective and the opportunity will narrow over time. However, NFTs can power other financial instruments, and certainly you should expect Bancor (and others) are already planning for the future in this regard.
Ismail Ahmed
What are your future goals in the next 5years? and what security measures have been provided to guarantee users from hackers?
Mark Richardson | Bancor
Bancor is among the safest projects in DeFi. As the first ever DeFi protocol, we have the most experienced developers and auditors in the space, and have a slightly better instinct for contract security than the status quo. We are maintaining active bug bounty programs and will always embrace open-source software as a means to galvanize the code against potential antagonists. That said, the risk is never zero, and for that reason we have collaborations with Nexus Mutual to offer additional smart contract insurance for users at the lowest possible premiums.
Jayden
‘STAKING’’ is one of the STRATEGIES to ATTRACT USERS and HOLD Them long term.
Does your GREAT PROJECT have plan about Staking??
Mark Richardson | Bancor
Absolutely. One of the many opportunity costs of providing liquidity is that there may be a “native staking” option somewhere else for your tokens. At smartcon (see video above) I announced that our V3 will allow users to do both of these things, although I have not yet revealed the specifics of when we will achieve it. Stay tuned for our V3 release notes!
Jumanji
Is your project backed up by any investors or ventures? who are your strategic partners, and do you have enough funds?
Mark Richardson | Bancor
The project is backed by ICO funds from our fundraising campaign in 2017. The funds were organized into a Swiss non-profit, which will continue to support the development and marketing needs of the protocol for many, many years. There are no token-lock ups expiring, the BNT token is fully distributed.
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Links
⚜️ BANCOR Website: https://bancor.network/
⚜️ BANCOR Telegram: https://t.me/bancor
⚜️ BANCOR Twitter: https://twitter.com/Bancor
⚜️ Crypto Society Chat: https://t.me/cryptosocietyy
⚜️ Crypto Society Announcements: https://t.me/CryptoSocietyyy
⚜️ Crypto Society Twitter: https://twitter.com/cryptosocietytg
