Token liquidity dApp, Bancor (BNT) announced that they intend to expand their offerings to the EOS blockchain. This would increase their token pool, but also position them to take advantage of a growing market share. While their originally network supports all ERC20 standard tokens through backwards compatibility, adding an entire additional blockchain comes with larger repercussions.
As EOS positioned their project to directly compete with Ethereum (ETH), it stands to reason that Bancor would want to get involved early. Integrated tokens offer a more advantageous exchange rate compared with legacy tokens on the Ethereum blockchain – the earlier that they offer this ability on EOS (EOS), the better for all sides.
What is Bancor?
Bancor’s liquidity network is not all that different than Ripple (XRP) in functionality. The key difference lay in the currency exchanged – RippleNet and the associated product suite deals with fiat currency, where Bancor provides inter-token liquidity. Users can make transfers based on predictable exchange rates through the Bancor Network Token – itself an ERC20 token. This may necessitate a new token for use on the EOS version of the network – now titled BancorX. The combined network will fully support Ethereum to EOS token trades.
The system is powered by smart contracts – the cornerstone of both the Ethereum and EOS blockchains. These automatically executed code snippets ensure that the network continues to run smoothly without third-party arbitration. Thus far, Bancor has not outlined which EOS-based tokens their new system will support. However, the scope of their original Ethereum network includes all standard ERC20 tokens – and one would expect them to support similar numbers for EOS.
Upsides and Downsides for the Market
Bancor’s liquidity solutions provide a much-needed method for users to quickly switch between different coins. As is, exchanges can be a burdensome process fraught with high fees and slow transaction times. The ability to quickly swap between ERC20 tokens helps to stabilize the entire Ethereum market – something that ETH is in desperate need of, given their recent value woes.
On the other hand, there are reasons to be wary of Bancor’s network protocol. Even before their work with EOS, they’ve engineered their smart contracts to allow for third-party termination. While ostensibly existing to prevent massive fraud and theft, the ability to retroactively cancel a transaction often leaves a sour taste in most crypto-enthusiasts mouths. This may not centralize the system itself, but it certainly centralizes power – a fact utterly against the spirit of blockchain software. Still, this ability has proven useful – preventing a massive theft of BNT in July of 2018. EOS itself came under fire for using a similar system to lock potentially compromised accounts.
Article By: Adam Stone