Case Study: Bancor
Lessons from the ICO that raised 153 million $ in 3 hours
Bancor: the company provides continuous liquidity and asynchronous price discovery for Tokens through their Smart contracts - “Smart Tokens”
Crowdsale period: June 12, 2017 - June 12, 2018. The crowdsale went for 3 hours.
Funds raised: $153 million (396,720 ETH). The funds raised made Bancoe the third largest ICO in the history of the crypto market to date.
Country: Israeli based team. The Bprotocol Foundation is based in Zug, Switzerland.
Native token: Bancor token (BNT)
Time: investment history details are missing.
Team: the team has 21 members. The Bprotocol Foundation has 4 members. The council president is Bernard Lietaer, “the world’s top currency trader” according to Businessweek. He is known as the “Architect of the Euro” for designing the ECU. Lietaer is an author of several titles on finance, including The Future of Money and New Money for a New World. The CEO of the project is Guy Benartzi, who was also a CEO of Mytopia, AppCoin. Another foundation member is Eyal Hertzog, co-founder of AppCoin and Founder of a video sharing site MetaCafe.
There are 8 software developers, employees of a Tel Aviv based company LocalCoin LTD.
The Advisory board includes 9 members. Among the key players - Brock Pierce Director of the Bitcoin Foundation, Yoni Assia, CEO of eToro, the world’s largest social investment network, and John Henry Clippinger, research scientist at the MIT Media Lab Human Dynamics Group.
Bancor partners include social enterprise Qoin, Status and TokenCard.
About the project:
Bancor is a company aimed at creating a new protocol that will allow participants to create liquid “smart tokens”. They are called “smart tokens” because they are based on Ethereum’s smart contracts. Bancor is suggesting to use them as a conversion standard of tokens that doesn’t involve second parties to exchange with. This means that the “smart tokens” calculate their own prices using a special formula, not matching-bid and ask orders. The price will automatically and constantly change according to the purchase and liquidation amounts.
Apart from funding and exchanging the tokens can be used as decentralized token baskets (asset baskets) and Network tokens (network of multiple and related tokens).
The philosophy behind the Bancor project lies in the idea of creating a universal reserve currency. It was inspired by John Maynard Keynes’ proposal to create a supranational currency that has reserves based on the currencies of all participating nations.
The first important feature of the Bancor project is that it offers an open source protocol meaning that participants can build tokens on the Bancor platform and implement changes in these tokens. Moreover “smart tokens” can be bought or redeemed at any time. Bancor doesn’t require fees from users.
The second important feature of the Bancor project is that “smart tokens” hold reserves for issuing other tokens. They work much like “central bank”. This means that reserves are locked in a smart contract. Bancor-enabled tokens will be backed by reserve tokens. The reserve tokens will provide liquidity using a special mathematical mechanism. Those who want to launch a token specify the price at which the smart contract will create new smart contracts or redeem “smart tokens” for the reserve tokens. This is needed to stabilize the value of the currency.
The third important feature of the Bancor protocol would be arbitrage. It is needed to balance the price of smart tokens and their reserve tokens and make them correspond with their prices in external exchanges. Gaps between prices on crypto-exchanges and the Bancor network: purchasing smart tokens increases their price and selling them decreases it. The founders expect that participants will play the role of arbitrageurs, but also suggest that bots may perform this work.
Bancor ICO features:
Why was Bancor attractive for investors?
- Bancor protocol is using an innovative and unique price discovery mechanism. This means that the project has no current rivals on the market and suggests never-seen-by-public solutions.
- The project can be a break-through in the crypto currency market, since it is solving the liquidity problem, which couldn’t be solved by other participants of the market.
- The Bancor app was finalized before the launch of the ICO. Developers made a full demo available on the testnet. The entire project was released to testnet before crowdsale.
- There are low risks in purchasing the BNT token, since they hold ETH in its reserve, and will always be exchangeable for ETH via smart contract. So BNT will be as liquid as ETH is.
- The team of the project is professional, the white paper looks clear and the site of the project contains a roadmap that clearly and publicly indentifies the next stages of work and project development.