Bancor network token also is known with the synonym BNT is a type of online currency trading mechanism that is based on tokens that represent a financial value in money terms. The process is made possible by an inbuilt mechanism that enables the discovery and the liquidity of tokens on a smart contract of blockchains. This referred to as smart tokens enables traders to purchase or liquidate any of the reserve tokens through what is referred to as a smart token’s contract. The price is continuously calculated based on the volumes of purchases and sales. The system, therefore, operates like a financial stock market to a certain extent.
The system holds a structure in which demand of any of the smart tokens increases the value of all the tokens in the reserve., enabling an increased e earnings when the tokens are traded
Benefits of the Bancor network token mechanism (BNT)system.
The Bancor network token mechanism is a simple and straightforward mechanism of trading owing to the reduced number of steps that one has to take to make a successful transaction. The Bancor network token mechanism offers the following benefits to traders who operate within the system.
Its is backward compatible-The mechanism allows traders asynchronous price discovery and also enables liquidity of tokens. This option is based on any ERC20 standard token. There is no need for counterparty risk-The system will not require clients to make a deposit so as to make it possible to convert different smart tokens. This provides efficiency into the trading mechanism.
Offers no spread-In the case the prices indicated are calculated internally by the smart tokens, therefore enabling the use of the same price for buying and selling. This prevents traders from influencing an unfavorable that favors one party and greatly disadvantages another one.
Availability of lower volatile-The available reserves ensures that the smart tokens are endowed with a significant level of market depth. This, therefore, leads a lower price volatility, therefore, makes the system to ensure esteem cases of difference in prices is kept to a minimum or a done away with completely
A predictable price slippage-The Price slippage, in this case, is calculated based on the level of transactions made which is then incorporated into the current price. The level of predictability allows clients to be able to plan for any trading possibilities.
There is no counterparty risk-There is no need to make a deposit in an exchange to enable the transactions of smart tokens. This reduces the number of processes to be taken when making exchanges, therefore, making the system convenient and efficient.
