Bancor Use Case

Defi is one of the greatest financial revolutions ever since the introduction of paper money. Defi is specifically exciting since it decentralizes economic services, including financial markets like exchanges. Unlike any other time, there is a rise of fully decentralized exchange platforms (DEXes), allowing investors to exchange one asset for another. 

However, one problem with most DEXes is they only allow exchanges within one chain. The Bancor Network introduces a decentralized trading platform supporting cross-chain exchanges.

What is Bancor?

The Bancor Network is popularly designed to allow seamless on-chain conversion of tokens. This platform is among the first to swap tokens without leveraging an exchange network. Its liquidity pools connect the different tokens supported, thus making the transfer between ERC20 tokens and across other chains possible. 

The Bancor Network has a token called Bancor Network Token(BNT). BNT powers the entire Bancor network by offering a vast collection of use cases. This guide explores the four main use cases of BNT, within and without the Bancor network. Keep reading for more.

Bancor Use Case: Reserve Token for ERC20 Swaps

One of the primary roles of the BNT token in the crypto space is to enable on-chain token conversion. It serves as a conversion asset through swapping and across different blockchains. 

Currently, there are many liquidity pools available in the Bancor network. Most of these liquidity pools hold different types of assets. However, according to their page, the BNT token is available in almost all liquidity pools. It’s majorly held to strengthen swap options.

The BNT token in the Bancor network acts as an intermediary asset for pools within the Bancor network. For instance, when an individual wants to swap Dai for BAT, the BNT is the intermediary asset. The trade will follow the DAI>BNT>BAT. Therefore, Being a smart token, BNT held as a reserve helps in all cross-chain transactions and swaps of ERC20 tokens.

Bancor Use Case: Swapping Across Chains

On top of helping in ERC20 token swaps, the BNT token also helps in cross-chain transfers. According to their page, BNT creates and burns itself across different blockchains to enable cross-chain asset transfer. 

When writing this report, the Bancor network supported cross-chain swapping across two leading chains, Ethereum and EOS. Hence, the BNT token gets a use case as a cross-chain conversion asset. Bancor Network allows you to trade between over 110 Ethereum and EOS-based tokens. 

For instance, you want to convert the Ethereum based UNI into EOS. When Swapping, the network will first convert your UNI into BNT. Afterward, BNT is transferred to the EOS network. It’s burnt in Ethereum and recreated in the EOS chain. The final step involves converting the token from BNT to EOS in the EOS network. Same when converting from EOS network into Ethereum Chain. 

While this entire process may seem long, the transfer only needs to put out a single trade, and the bancor network executes the rest. Hence, the BNT token becomes relevant in swapping across chains.

Bancor Use Case: Minting of the Governance Token

Another one of the most popular use cases ofBNT is the network’s governance. The Bancor Network launched its governance system Bancor DAO where participants can vote for different project and pool developments.

This gasless voting DAO launched in April 2021. The BNT token has a direct connection to the BancorDAO. According to the network, individuals must first stake the vBNT governance token to vote. Users can vote based on their stake. So, how is vBNT linked to BNT? 

vBNT, as mentioned earlier, is the governance token. However, to create vBNT, an investor must stake the BNT token. Hence, to participate in voting, you must stake BNT to generate a vBNT token. 

The governance protocol allows the vBNT token holders to vote for any developments connected to the project. In most cases, the development concerns the legal protection of liquidity and listing new tokens and pools.

More project tokens are being added to the Bancor swap platform to provide deeply liquid on-chain pools using the governance DAO. Hence, BNT is staked to vote and can be unstaked after voting.

Bancor Use Case: Staking and Rewarding

As an internal token of this entire ecosystem, BNT gains another prevalent use case, staking and rewarding. The Bancor Network allows the investors to stake BNT tokens to mint other tokens. The need to mint more tokens is because of the increasing demand for the token as pools increase. 

Hence, staking is another major use case of this token. Once you stake, you participate in powering this entire ecosystem. 

Of course, when staking, the result for investors is to gain rewards. According to their network, persons who stake their BNT on Bancor pools will stand a chance of getting rewards in the same token. These rewards will come as the newly minted BNT tokens. The rewarding opportunities give the investors an excellent way to make an income.  

Hence, in the end, the BNT token is both used for staking to power the network and rewarding active participants.

Bancor Use Case: Governance and Swapping

The BNT token is an asset of many use cases like swapping ERC20, cross-chain swapping, minting the governance, staking, and rewarding investors. Because of the use cases, many analysts predict that Bancor will perform exceptionally in the coming years. 

This platform’s growth can only be limited if they stick to two chains, EOS, and Ethereum. Imagine if Bancor could allow cross-chain transfers to BSC, Cardano, Solana, and other platforms. If the network developers find a way to expand to those blockchains, investors can have even higher expectations. However, as its stands, the growth of the platform is limited to the increase in Ethereums Defi space.

The Future of BNT

The BNT token is an asset of many use cases like swapping ERC20, cross-chain swapping, minting the governance, staking, and rewarding investors. Because of the use cases, many analysts predict that Bancor will perform exceptionally in the coming years. 

This platform’s growth can only be limited if they stick to two chains, EOS, and Ethereum. Imagine if Bancor could allow cross-chain transfers to BSC, Cardano, Solana, and other platforms. If the network developers find a way to expand to those blockchains, investors can have even higher expectations. However, as its stands, the growth of the platform is limited to the increase in Ethereums Defi space.

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