What Is Bancor?

Bancor drew attention with its 2017 token sale and became one of the first on-chain liquidity protocols to use formula-based pricing instead of an order book. In the early versions, the protocol's native token BNT was included in every pool as an intermediate asset, and swaps between two different tokens were routed through BNT. This approach pioneered the AMM model that protocols such as Uniswap later popularized.

Bancor was also known for innovations such as protecting liquidity providers against impermanent loss and providing single-sided liquidity. These features aimed to let users deposit a single token into a pool instead of two tokens and to compensate, under certain conditions, for losses arising from price changes.

However, during the sharp market downturn of 2022, impermanent loss protection became unsustainable and the protocol suspended this protection. The incident is cited as an example of the risks that protection mechanisms funded by newly minted tokens carry under market stress. The project has since focused on new products such as Carbon DeFi. BNT is Bancor's governance and ecosystem token.