The Way This New Start-Up Raised $153 Million in 3 Hours.

Bancor, the new start-up blockchain built on a Ethereum platform has become one the highest funded crowdfund ever. It raised $153 through ICO in just 3 Hours.

WHAT IS THE BANCOR PROTOCOL?

The Bancor protocol enables built-in price discovery and a liquidity mechanism for tokens on smart contract blockchains. These “smart tokens” hold one or more other tokens in reserve and enable any party to instantly purchase or liquidate the smart token in exchange for any of its reserve tokens, directly through the smart token’s contract, at a continuously calculated price, according to a formula which balances buy and sell volumes.

The ICO was intended to run for an hour, with a funding target of 250,000 ether (the main currency of the Ethereum blockchain), or around $US95 million. Due to difficulties with the network, including supposed delayed transactions, the campaign was extended an additional two hours, resulting in a total of 396,720 ether or approximately $US153 million being raised.

Ethereum protocol is proving to be a popular platform for successful crowdfunds, with seven of the top 10 crowdfunding projects having been based on the platform, including the crowdfund for the platform itself.

Advantages of Smart Tokens
Smart tokens introduce multiple advantages over the traditional exchange model:
1. Continuous Liquidity​ - Since purchasing and liquidating is done through the smart
contract, smart tokens are always liquid, irrespective of their trading volume.
2. No Extra Fees​ - The only mandatory fees applied by a smart token are the blockchain
platform fees (gas) which are relatively low.
3. No Spread​ - Since the price calculation is done algorithmically by the smart token, the
same price applies for purchasing and liquidating the smart tokens.
4. Predictable Price Slippage ​- Smart tokens allow pre-calculation of the precise price
slippage, based on the transaction size, before it is executed.
5. Lower Volatility - ​A smart token with a 10% CRR (for example) is comparable to an
exchange with 10% of the entire supply of a token in its order-book at all times, forming
substantial market depth. In a typical crypto-exchange, the share of the supply in the
market depth at any given moment is well below 1%. The higher the CRR, the lower the
smart token’s price volatility. The lower the CRR, the more “new credit” is created relative
to the original reserve amount

The Bancor Protocol Ecosystem
Different parties can take on different roles in the Bancor network ecosystem. The primary forms
of participation are as follows:
● End-Users ​can receive, hold, transfer, request, purchase and liquidate smart tokens.
● Smart Token Creators ​can issue new, always liquid smart tokens, that may be used for
trading, token changing, as token baskets or as network tokens.
● Asset Tokenizers​ (e.g. Tether-USD, Digix-Gold) can issue ERC20 tokens representing
external assets, thus enabling smart tokens to use these assets as reserve tokens.
(Existing crypto-exchanges that operate under their local KYC regulations are well
positioned to provide asset tokenization services.)
● Arbitrageurs​ are organically incentivized to constantly reduce gaps between prices on
crypto-exchanges and the Bancor network. Smart tokens work similarly to exchanges in
that purchasing them increases their price and selling them decreases it, so that the same
arbitrage mechanics and incentives apply.