Bancor Tokensale Analysis: Shooting For The Stars

Company: BANCOR
Website: https://bancor.network/fundraiser
Year: 2017
Country: N/A
Blockchain competitors: Decentralized cryptocurrency exchanges
Ticker: BNT
Token Sale launch: 06/12/2017
Token Sale end: 07/15/2017 or earlier
Whitepaper: https://bancor.network/static/Bancor_Protocol_Whit...
Blog and updates: https://blog.bancor.network/

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The upcoming Bancor Protocol crowdsale seems to tick all the boxes to spell out “success.” It has a committed and driven team that shares an idealistic vision of the world, one in which anybody, regardless of their technical knowledge, can build a token on the blockchain. To make this vision a reality, they need to solve a pretty major problem. Today’s crypto tokens (apart from superstar ones like BTC and ETH) often exist in silos and are difficult, if not impossible, to use outside of their specific ecosystems. This means that many tokens are either underused, or fail to emerge altogether. Bancor Protocol aims to solve this problem through an elegant technical solution. 

WHAT IS BANCOR? Bancor’s “smart tokens” can hold one or more token in reserve. Anybody can then purchase or liquidate their smart token in exchange for any of the tokens held in reserve. This is done directly through the token’s smart contract. The prices are continuously calibrated using “elegant” formulas, which ensure balance between buy and sell volumes. This balance is build on Constant Reserve Ration. Bancor’s vision is exciting and enticing, grounded in an idealistic vision of the future, but are there any waves that could rock this boat of dreams? 

Tokenguide analyses the pros and cons Bancor’s upcoming token sale. 

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PROs:

• One of the major distinguishing features that sets the Bancor Protocol token sale head and shoulders above most other upcoming token sales is the fact that they aim to accept fiat currency (USD, EUR, etc.). Bancor plans to use Bitcoin Suisse AG to conduct fiat transactions during its token sale. The need to purchase cryptocurrency in order to buy tokens has long been a hurdle which prevented projects from attracting a “non-crypto” audience to their token sales. Hopefully, Bancor will be able to resolve this through their collaboration with Bitcoin Suisse. If this is successful, the Bancor Protocol token sale is sure to attract mainstream investors who reside largely outside of the crypto community. 
• The very concept behind Bancor Protocol is a powerful one, inviting us to rethink the very essence of asset exchange. Bancor themselves describe this concept as solving the “Double Coincidence of Wants Problem” as applied to asset exchange. Instead of making asset exchange peer-to-peer, as was the case thus far, and relying on market makers holding certain assets to ensure liquidity, Bancor Protocol automates this system, thereby automating liquidity as well. In this system, only one party is required to complete a transaction. This could lead to the emergence of a long tail of user-generated currencies and tokens, democratising value creation the same way YouTube democratised broadcasting, for example. Token sales driven by powerful, revolutionary ideas tend to be popular and significant. This is certainly one of them. 
• As we have mentioned previously, the Bancor Protocol is built by a committed and idealistic team. They are driven by their vision of an alternative path to value creation and they have demonstrated time and time again that they want to make the world a better place. Although there are certainly no guarantees in crypto, the team’s history makes us fairly certain that the Bancor Protocol token sale is something significantly larger than a pump-and-dump scheme.   

As with any project, there are certain aspects of the upcoming Bancor Protocol token sale that caught our eye, and not in a good way. For one, we are always a bit wary of projects that change their timelines and, unfortunately, Bancor is one of such projects. We have also several concerns about the project’s accessibility to a wider audience and, since large-scale adoption is essential for Bancor’s success, this could pose a threat. Some not-so-peachy aspects of the financial model didn’t escape our watchful eye either. 

• The Bancor team has been treading carefully from the very start. They published their whitepaper and gathered feedback long before they announced any specific information about the upcoming token sale. However, after they gathered sufficient feedback, they set the date for their token sale: May 30th 2017. This date has since been pushed back, as is made obvious by the fact that the token sale isn’t open yet. At the time of writing this piece, we now know that the Bancor protocol token generation event will take place on June 12 at 10am GMT. Terms will be released 7 days in advance.  
• From a financial standpoint, it is unclear how the Bancor Protocol will deal with the proverbial volatility of the altcoin market. Flash crashes are inevitable, and there is no explanation on how the system will behave under such circumstances. There is a possibility that it could create a synthetic market of derivatives in the form of smart tokens. We could speculate further on how the Bancor Protocol would react to the market’s ebbs and flows, but it would be best if these issues were addressed by the team directly.There is a cornerstone assumption that arbitrage will incentivise market participants to keep the equilibrium of prices, but it is rather unclear what tools the protocol provides for this arbitrage: algo- or robo-trading. 
• Finally, the whole idea behind the project is a simple one, but it is difficult to grasp for the average user. Bancor and the Bancor Protocol are alternatives to existing exchange mechanisms. It takes a lot of digging and reading to get your head around the whole concept, hence the team publishing lengthy FAQs. The project’s difficulty is definitely a barrier to entry for the average user. This is especially concerning, since Bancor Protocol can only work at scale, with either a large number of active users, or arbitrage bots. Making the project accessible and populating the ecosystem with a large number of diverse users is definitely a significant challenge for the Bancor team. 

Tokenguide conclusion

The Bancor Protocol is a visionary and perhaps even revolutionary concept. It will definitely be successful if the team ensures accessible, candid communication with a wider audience. We predict that the Bancor Protocol token sale will close very quickly, and the token price will rise threefold immediately after. The token will experience steady growth going forward.  

P.S. We would like to remind you that all opinions expressed in this piece are our own and are based on the research our team conducted independently. If you are serious about participating in an ICO, token sale or crowdsale of any kind, we strongly recommend that you conduct your own due diligence by familiarizing yourself with the projects, their background, white papers and the market(s) in which they operate. Stay safe!  

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Tokenguide Team