/biz/ - Business & Finance

And just like that Bancor will never, ever, untill the heat death of the universe, be below 7$

god i'm so excited for us all.

Bnt chads, are you buying the last dip before 7$?

Breaking up the 5$ limit today boys, towards weekend 1B market cap.
Write up

>BAAAAANCCCCCCOOOOOOORRRRRRRRRR

why it it mooning so violently

OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO

i am financially decimated

i am financially ruined

Why is Bancor BNT going to turn into a Black Hole that sucks all liquidity up?

Let's start in 2017. Bancor basically invented the idea of Liquidity Pooling/AMM. Other AMM's "copied" their code and released it, and rose to prominence.
So #Bancor spent the last couple years developing something that no other DEX is doing -
1) Single-sided liquidity pooling
2) Impermanent Loss protection
First I have to give you a quick rundown on what IL is, and why Bancor is going to become a black hole that sucks all liquidity into the protocol...
If you want to provide liquidity to Uniswap/Sushiswap/Balancer/any of these AMM Dex’s, you earn a portion of the trading fees which is sick.

But when you pool tokens on Uniswap etc, you have to do it in pairs. So you have to pool equal parts, for example, ETH & RSR.
There’s two problems with this: #1: You have to essentially keep equal parts ETH locked up.

Which as you can imagine, if I have say $10k worth of RSR, I also need to have $10k worth of ETH locked up in that liquidity pool
But the second reason is a lot more painful. If one side of those pairs moons, or rises too fast, you get this thing called impermanent loss.

Basically, you lose a portion of the initial liquidity that you provided.
So for coins that are really stable, or during a bear market, it’s not a huge deal.

But during a bull market, one side of that pair might go 10X. And you may lose a significant portion of your underlying asset, on one side.
Now you do get back SOME of the other side, but not the full equal USD value.

So for example, I’m farming BAO right now, and I pooled 1M token in Uniswap along with .3 ETH, and I am down to only 400k BAO, and .5 ETH, with a total P&L of -$600.
Now my farming gains make up for this, but it’s still shitty to lose your underlying asset.

So Bancor had this concept that they allocated a good portion of the ICO funds to re-buy the tokens through a smart contract.
Regardless of what the price was on exchanges, you could always sell the tokens for like 0.01 ETH or whatever price back to a smart contract, that had a gaint chunk of ETH to support it.

For a while it kept stable well above the smart contract price, but then at some point it reached it and the smart contract got emptied and collapsed in an instant.

How did this exactly happen?

I remember some people saying that once the price goes near the "guaranteed" price on exchanges, whales will empty the contract funds immediately, but didn't really understand what they mean.

how did so many people sell below that price on exchanges, when they could have gotten more ETH for their bucks through the smart contract?