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.
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).
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.
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.