In the ever-evolving world of decentralized finance (DeFi), innovative projects continue to emerge with the goal of solving real-world challenges in cryptocurrency trading and liquidity. One such project is Bancor, a decentralized protocol designed to bring seamless, on-chain liquidity to smaller and emerging tokens. While many investors focus on major cryptocurrencies like Bitcoin and Ethereum, altcoins with lower market caps often struggle with liquidity issues—making them harder to trade and less attractive to investors. Bancor aims to change that.
This comprehensive guide explores the Bancor ecosystem, its native BNT token, how it works, and why it matters in today’s DeFi landscape.
What Is Bancor?
Bancor is a decentralized liquidity network built on blockchain technology that enables automated, on-chain trading for ERC-20 tokens. Unlike traditional exchanges that rely on order books or external market makers, Bancor uses smart contracts to provide continuous liquidity for tokens—especially those with low trading volume.
At its core, Bancor operates as an open-source protocol that allows any token to become liquid without depending on third-party intermediaries. It achieves this through automated market maker (AMM) mechanisms, where liquidity pools are backed by reserve tokens, including its native BNT.
The project was launched in 2017 during the initial wave of DeFi innovation and has since evolved into a robust ecosystem focused on improving capital efficiency, reducing slippage, and protecting users from common threats like MEV (Miner Extractable Value) attacks.
The Founders Behind Bancor
Bancor was co-founded by Galia Benartzi and Guy Benartzi in 2017. With a vision to democratize access to liquidity, the team introduced a novel approach to token trading that didn’t depend on high-volume markets or centralized exchanges.
During its initial token sale, Bancor raised $153 million, making it one of the most successful token offerings of that year. The sale attracted over 11,000 investors, highlighting strong community interest and belief in the project’s long-term potential.
Notably, renowned venture capitalist Tim Draper of Draper Fisher Jurvetson (DFJ) supported the project early on, adding credibility and visibility to Bancor’s mission.
How Does Bancor Work?
Bancor leverages its advanced Carbon DeFi protocol to enable sophisticated trading strategies directly on-chain. This next-generation system moves beyond basic swap functionality and introduces features typically found only on centralized platforms—such as limit orders and range trading—but executes them in a fully decentralized manner.
Key Features of the Carbon Protocol
- On-Chain Limit Orders: Users can set specific price points at which they want to buy or sell tokens. These orders execute automatically when market conditions are met.
- Range Orders: Traders can define a price range for buying or selling assets, enabling them to “buy low” within a target zone and “sell high” as prices rise.
- MEV Protection: Carbon’s design makes it resistant to sandwich attacks—a common exploit in DeFi where malicious actors manipulate transaction order for profit.
- Irreversible Execution: Once an order is triggered, it cannot be reversed, ensuring reliability and trustless execution.
- Adjustable Strategies: Users can modify their active orders without needing to cancel and re-deploy funds, enhancing flexibility and user experience.
These capabilities allow both novice and experienced traders to automate their strategies while maintaining full control over their assets—without relying on custodial services.
Bancor’s Native Token: BNT
The BNT token is the backbone of the Bancor ecosystem. Launched in June 2017 as an ERC-20 token, BNT plays a critical role in maintaining liquidity, securing the network, and enabling governance.
As of June 2023:
- Total Supply: 161.19 million BNT
- Circulating Supply: 153.03 million BNT
- Maximum Supply: No hard cap — BNT is inflationary by design to support ecosystem growth
This flexible supply model allows Bancor to adapt to changing market demands and incentivize participation across its platform.
👉 Learn how native tokens power next-gen DeFi ecosystems and unlock new earning opportunities.
BNT Token Use Cases
BNT is more than just a speculative asset—it serves multiple functional roles within the Bancor network:
1. Liquidity Provision
Users can stake BNT in liquidity pools alongside other tokens. These pools enable automated trading and generate fees for liquidity providers (LPs), offering passive income opportunities.
2. Trading Medium
BNT acts as a connector token between different assets. Instead of requiring direct trading pairs (e.g., Token A → Token B), users can trade through BNT (Token A → BNT → Token B), simplifying cross-token swaps.
3. Staking Rewards
By staking BNT or participating in designated pools, users earn rewards in the form of additional BNT or partner tokens. This incentivizes long-term holding and active participation.
4. Governance
BNT holders have voting rights on key protocol upgrades, parameter changes, and treasury allocations. This decentralized governance model ensures the community shapes the future of Bancor.
BNT Token Distribution
Transparency in token distribution is crucial for trust and decentralization. Here's how BNT was originally allocated:
- 50% – Issued to contributors during the fundraiser (public sale participants)
- 20% – Reserved for partnerships, public bounties, and community development grants
- 20% – Allocated to the Bancor Foundation for long-term operations and ecosystem growth
- 10% – Assigned to founders, team members, advisors, and early contributors
This balanced distribution helped ensure broad ownership while supporting sustainable development over time.
Why Bancor Matters in DeFi
In a space dominated by large-cap cryptocurrencies, Bancor fills a vital niche: empowering small-cap and emerging tokens with reliable liquidity. Without sufficient liquidity, even promising projects can fail to gain traction due to poor tradability and high slippage.
By offering automated market-making tools and secure trading infrastructure, Bancor lowers barriers to entry for both developers launching new tokens and traders seeking exposure to innovative projects.
Moreover, its focus on MEV resistance and capital efficiency aligns with broader industry trends toward safer, more user-centric DeFi solutions.
Frequently Asked Questions (FAQ)
What is the purpose of the BNT token?
BNT serves as the primary utility and governance token in the Bancor network. It enables liquidity provision, facilitates trades across token pairs, powers staking rewards, and grants voting rights in protocol decisions.
Is BNT a good investment?
As with any cryptocurrency, investing in BNT carries risks. However, its utility within the DeFi ecosystem, ongoing protocol improvements like Carbon, and strong community governance make it a compelling option for those interested in decentralized liquidity solutions.
How does Bancor prevent sandwich attacks?
Bancor’s Carbon protocol is engineered to be MEV-resistant. By using customizable on-chain orders that execute predictably and irreversibly, it minimizes opportunities for front-running and sandwich attacks common in other AMMs.
Can I earn yield with BNT?
Yes. Users can earn yield by staking BNT in liquidity pools or providing liquidity to supported token pairs. Rewards are distributed in BNT or other tokens based on pool performance and incentives.
Where can I buy BNT?
BNT is available on major cryptocurrency exchanges that support ERC-20 tokens. You can also interact directly with the Bancor platform via its decentralized application (dApp) to swap or stake tokens.
Does Bancor have a maximum supply?
No, BNT does not have a maximum supply. Its inflationary model supports continuous ecosystem development and incentive programs.
With its innovative approach to on-chain trading and strong commitment to user security, Bancor continues to play a pivotal role in advancing the DeFi ecosystem. Whether you're a trader, developer, or investor, understanding Bancor’s technology and vision offers valuable insights into the next phase of decentralized finance.