Bancor V3

Market Making

Bancor is a decentralized exchange that allows anyone to trade crypto assets and provide liquidity to earn trading fees. Bancor V3 makes significnat upgrades to the architecture of the protocol, and introduces several new features including single-sided staking, full impermanent loss protection, auto compounding, and more.

Risk Rating
Watch Out
Protocol Code Quality
Protocol Maturity
Protocol Design
Summary
What we like
Bancor enables users to provide single-sided liquidity to earn trading fees while maintaing 100% exposure to a single asset.
What we like less
Bancor suspended its impermanent loss program due to flaws with the protocol's economic design around the BNT token.
What it means for you
Bancor offers a simple platform for you to earn yield on your crypto assets given its single-sided liquidity pools and auto-compounding rewards feature.
Information
Exploit/Hacks
None
Info
  • Website
  • Token: BNT
  • Tags: Market Making
Key Metrics
  • TVL: $56.9M (Rank #91)
  • TVL Ranking by Market Making: #0
  • Blockchain: Ethereum
  • Chain TVL
    • Ethereum: $56.85M
Risk Assessment
Watch Out
Protocol Code Quality
  • Code reviewed by several experienced auditors including PeckShield and OpenZeppelin
  • Public team promotes accountability
  • No documented protocol hacks since launch
Protocol Maturity
  • Latest protocol version launched in 2022; maturity over one year minimizes technical risk as smart contracts are well battle-tested
  • Top 10% by total value locked reduces risk
  • Multisig wallet controls protocol upgrades
  • Multisig consists of at least 4 signers, which means the protocol is less susceptible to centralization risks
  • No timelock exists or no information documented, which mean a malicious actor could approve upgrades without any delay
  • Low voting power concentration reduces risk
Protocol Design
  • Protocol is susceptible to death spirals
  • This protocol is susceptible to risks related to decentralized exchanges (DEXs), such as impermanent loss
  • Bancor is one of the oldest automated market making protocols in DeFi and offers unique technology to market make with only one asset by pooling all of the protocol`s liquidity in an ""infinite"" pool
Things to know about Bancor V3

How Bancor works

Bancor is an automated market maker (AMM) that supports single-sided liquidity. The decentralized exchange (DEX) uses its native BNT token as the base pair to facilitate all trades within the platform. Each token in a liquidity pool is matched with a proportionate amount of BNT to create pairs. BNT serves as an intermediary asset between trades of two different tokens (first token is swapped for BNT and then BNT is swapped for second token).

How Bancor makes money

The Bancor Vortex Burner contract collects 10% of swap fee revenue or 100 BNT (whichever is lower) and uses it to buy and burn vBNT. vBNT is the protocol's governance token that is issued to users who stake BNT in Bancor liquidity pools. The percentage collected may be adjusted through governance up to 15% of swap fee revenue.

How you make money on Bancor

You deposit single-sided assets into Bancor liquidity pools to earn the trading fees and inflationary protocol emissions which are auto-compounded over time. BNT holders may also stake their tokens into specific liquidity pools to benefit as the deflationary pressure lowers the circulating supply of BNT.