Bancor DEX On Ethereum Blockchain Review 2022 | ERC-20 BNT Tokenomics, Liquidity Pools and Impermanent Loss Explained

6 min read

Despite its infancy, decentralized finance (DeFi) offers capabilities unlikely to be rivaled by centralized finance (CeFi). 

Blockchain wallets and cryptocurrency exchanges are home to billions of dollars of assets. These assets are sitting idle as their holders wait for prices to appreciate. Bancor helps you make the most of your portfolio. 

What Is Bancor Network on Ethereum Blockchain?


Bancor, a decentralized exchange protocol founded by Galia Benartzi in late 2016, is powered, owned and governed by its community (users). It rewards you for providing cryptocurrency tokens to its app, and uses your tokens to facilitate trades for users across the globe. Bancor protocol’s unique selling proposition is that it prevents impermanent loss when you stake your crypto tokens on its platform.

Bancor is currently the only decentralized staking platform that allows single-sided deposits (more on this below). Using Bancor, depositors can earn rewards monthly by staking their idle tokens, such as Wrapped Bitcoin (WBTC), Ether (ETH), Polygon token (MATIC), and Chainlink crypto (LINK).

What Is Bancor Network’s ERC-20 Coin BNT?

The Bancor Network Token (BNT) is a native ERC20 token for the Bancor protocol. Based on Ethereum, it offers immense utility throughout the Bancor ecosystem. Additionally, it serves as the default reserve currency for all smart tokens built on the Bancor platform.

What Is Bancor Network Token (BNT) Used For?

Every token on the Bancor platform is paired with the BNT token — e.g., ETH/BNT, LINK/BNT, etc. 

Users can stake their BNT into any trading pair pool available on the Bancor network to earn rewards and a portion of trading fees. You can earn the best possible rewards by simultaneously staking BNT and another crypto, such as ETH, on the Bancor platform. By staking BNT, you’re entitled to receive 70% of the rewards. Conversely, staking ETH or any other crypto in the pair yields you only 30%. 

BNT also acts as a governance token. Holders and stakers of the BNT token get to vote on proposed changes or updates related to the Bancor platform. 

How Bancor DEX Works

Fundamentally, Bancor is a decentralized exchange where users can swap one crypto for the other. However, there are significant differences between Bancor and other DEXs. For starters, Bancor is powered by its depositors. The funds you deposit are used to facilitate trades placed by traders across the world. Anyone can deposit their crypto tokens into the Bancor platform, and anyone can swap their tokens (i.e., place trades).

As a depositor (staker), you receive rewards for contributing to the smooth functioning of the platform. Traders are charged to perform their swaps on the Bancor exchange. The fee that’s charged is used to pay the depositors who make their trades possible. 

You might be wondering: How is Bancor different from DEXs like Uniswap or PancakeSwap? 

The difference lies in the concept of single-sided deposits. Let’s say you have idle ETH in your wallet and want to make passive income from it. On any other available Decentralized Exchange (DEX) is a crypto exchange platform that is built upon blockchain technology and negates the need …, there’s no option solely to deposit your ETH. DEXs are built so that each trading pair is part of a pool of two crypto assets, and any deposits into this pool must include both of those assets in equal amounts. In other words, each trading pair gets half of the deposit.

However, this method gives rise to the possibility of impermanent loss. In simple terms, this means that there’s a chance your deposits will lose value when vested in a liquidity pool. 

Bancor obviates this issue by offering single-sided deposits. You can simply deposit your ETH, and Bancor deposits BTN as a second asset in the trading pair. This allows you and the Bancor DEX to earn money from users paying exchange fees. Bancor uses the fees it earns to reimburse you — the depositor — for any impermanent loss. In order to get total protection — that is, to receive the same amount you deposited when you withdraw — you must lock your funds on the platform for at least 100 days. 

Key Features of Bancor

Many key features of the Bancor network are discussed above. Now, let’s take a closer look at Bancor 3, arguably one of the biggest and most exciting proposed updates in store for the Bancor network. 

Instant Impermanent Loss Protection

The introduction of Bancor 3 will offer complete impermanent loss protection from the very beginning. As discussed, in the previous version of Bancor, complete impermanent loss protection is possible only if you lock in your tokens for at least 100 days. With Bancor 3, however, this is achieved right from day one.

Dual-Sided Rewards

With the launch of Bancor 3, third-party protocols are also allowed to offer rewards on their pools. Therefore, depositors are entitled to receive dual-sided rewards, in the form of BNT and the token they choose to stake. Both these rewards are protected from impermanent loss.


Bancor 3 allows users to stake their BNT in a single pool and earn rewards from the entire Bancor network. This simplifies the incentive process by eliminating the need to move your BNT across different pools. It also reduces transaction costs for trading or staking your tokens on the network. 

Infinity Pools

As there are no deposit limits for Bancor liquidity pools, anyone can contribute their preferred amount without having to wait for slots to open up.

BNT Tokenomics

Source: CoinMarketCap

Note: The figures below are accurate as of this writing, and are approximated up to two decimal places.

Total Supply — 244.2 million BNT tokens

Circulating Supply: Circulating supply is the number of cryptocurrencies or tokens that are publicly available and circulating in the crypto… — 244.2 million (100% of total supply)

Market Capitalization: The market capitalization (or market cap) of a cryptocurrency is a measurement of its market value. In other words, it… — $571 million 

24-Hour Trading Volume — $29 million

Price — $2.34 per BNT token

Bancor Network Review : Pros and Cons

The unique workings of the Bancor protocol avoid impermanent loss for liquidity providers (depositors) while they’re staking their tokens. Crypto or Decentralized Finance (DeFi) takes the decentralized concept of blockchain and applies it to the world of finance. Build… novices may find the Bancor platform difficult to use.
The Bancor network supports numerous tokens on the Ethereum network, enabling you to stake your idle crypto assets in various available liquidity pools. Bancor doesn’t support fiat deposits.
Bancor allows single-sided deposits, which eliminates the need for market makers and takers. Therefore, you don’t need to worry about the bid and ask prices of your crypto asset. Technical traders are forced to use third-party trading platforms, as Bancor doesn’t provide one. Also, the network doesn’t offer margin trading, as some of its competitors do.
Bancor offers lucrative rewards to depositors for offering liquidity, and the rewards for BNT depositors are even higher. 

Is Bancor (BNT) a Good Investment? 

The Bancor protocol is resolving the problem of impermanent loss, one of the most pressing issues in the DeFi world. This unique platform is reaping millions in rewards for crypto holders globally, while offering them peace of mind. We see great potential in the project. Moreover, as the Bancor platform grows, the value of the BNT token will likewise increase. 

WalletInvestor algorithms are also bullish on BNT’s price, predicting 93% growth for the token in the upcoming year. BNT’s value could grow from $3.25 to $6.33 within a year, and is expected to reach $16.80 by 2026.

How to Buy BNT

You can purchase the BNT token on many notable cryptocurrency exchanges. The fastest and easiest way to buy BNT is on the Bybit exchange. Follow the simple steps outlined below to acquire BNT today.

Step 1

To buy or sell any crypto token on Bybit, you must be a registered exchange member. (If you already have an account with Bybit, please skip to the next step.) Account creation is a straightforward process that takes only a few minutes. Visit the official Bybit website and click on Register in the top right corner. Enter the information requested, create a password and click on Continue. Complete the quick verification process to start making transactions on the exchange.

Step 2

As the BNT token is paired with USDT on Bybit, you need to hold USDT tokens in your wallet to buy BNT. Visit the Buy Crypto section on the exchange and pick your preferred fiat currency to purchase USDT. Enter the number of USDT tokens you want to purchase, and complete your transaction. Once the transaction is successful, USDT tokens will be transferred to your Bybit wallet.

Step 3

Now, visit the Trade –> USDT section and search for the BNT/USDT pair. You’ll be redirected to a trading terminal page, as seen in the screenshot below.

Source: Bybit | BNT/USDT

On the right, you’ll notice a Buy/Sell zone where you can enter the number of USDT tokens you want to purchase. You can use a limit, market or conditional order to place your trade. We recommend using a limit order. Once the trade is filled, the corresponding BNT tokens will be transferred to your Bybit wallet. 

Step 4

Depending on what you want to do with your tokens and the amount you’ve purchased, you can store your tokens on Bybit or transfer them to cold storage. If you’re looking to purchase a large number of tokens, we recommend using a hardware wallet to keep your tokens secure. 

We recommend using a Take Profit/Stop Loss (TP/SL) order to protect your account from crypto volatility. Risk management is crucial, and ignorance in this area could cause liquidation and result in substantial loss in any adverse scenario. 

Bancor Network Worth Investment In 2022?

Although novices may find the Bancor platform a tad difficult to navigate, it’s a breeze to trade on once you get used to its interface. By automating liquidity in its network, Bancor doesn’t experience most of the problems traditional DEXs grapple with. 

Trading with Bancor is a win-win: not only can developers build various exchange applications easily, but users also get to access a wide variety of tokens on the Ethereum network. By rewarding depositors and allowing easy swaps on the exchange, Bancor can be considered as one of the finest innovators in the DeFi space and cryptocurrency market. If you’re looking to get the most from your crypto, you’ll surely appreciate what Bancor has to offer.


Chris Munch

Chris Munch is a professional cryptocurrency and blockchain writer with a background in software businesses, and has been involved in marketing within the cryptocurrency space. With a passion for innovation, Chris brings a unique and insightful perspective to the world of crypto and blockchain. Chris has a deep understanding of the economic, psychological, marketing and financial forces that drive the crypto market, and has made a number of accurate calls of major shifts in market trends. He is constantly researching and studying the latest trends and technologies, ensuring that he is always up-to-date on the latest developments in the industry. Chris’ writing is characterized by his ability to explain complex concepts in a clear and concise manner, making it accessible to a wide audience of readers.