Bancor

This report shares about Bancor and its token design model, as part of the economics of token engineering (aka token economics).

Bancor SUMMARY

Read the Full Report

This report shares about Bancor and its token design model, as part of the economics of token engineering (aka token economics).

Bancor is part of the decentralised finance (DeFi) movement as it acts as an automatic market maker. To be an automatic market maker, Bancor allows for instant and continuous liquidity of less traded tokens that exist in Bancor ecosystem. The prices and supply of the token is defined mathematically, governed by a smart contract

There are two types of tokens in the ecosystem, a liquid token (utility function) that provides liquidity in the ecosystem and a relay or array token that represents the reserve pool.

Some areas can be more technical, and an ELI5 (explain like I’m 5) section is created to support a more basic understanding of the topic.

Section 1 is a high-level introduction to Bancor and what its objectives, understanding the tokens in the ecosystem and use-cases are in the decentralised finance (DeFi) industry. Section 2 recaps what token design is, and what are the factors to consider when designing tokens. Section 3, 4 and 5 will go in-depth on how Bancor designs its token economics according to the three sections of token design: token policy, financial incentives and architecture. All the math in Bancor is discussed in section 5.3. Section 6 concludes this report.