SMTs Automatic Market Maker? Powered By An Idea Similar To Bancor

When I parsed and looked into the whitepaper, it is mentioned:

Immediate Liquidity
By leveraging a recently designed automated market maker concept [2], SMT-based ICOs allow a portion of STEEM tokens received to be sent into an SMT’s on-chain, off-orderbook market maker in order to provide liquidity to the SMT at a specified reserve ratio. Beyond the social and specialized distribution mechanisms of SMTs, this feature advances the concept of automated market makers by pairing it alongside SMT’s decentralized markets, which also facilitate bids and asks by human participants. The combination of these two markets enables on-chain and trustless exchange opportunities for market makers while enabling liquidity for token users.

The little [2] links to the bancor's network protocol whitepaper. At first I thought that steem would be using the bancor network for SMTs but it is not the case.

What's the difference between bancor and the SMTs liquidity protocol?

Thanks to @inertia to help me find out more about the distinction between the two:

Bancor takes the convention that in this example, the market maker destroys tokens in its interaction with Alice, and creates tokens in its interaction with Bob. The Bancor convention suggests the market maker is not an ordinary actor, but needs system-level “special powers” – specifically, the privilege to operate the token printing press – in order to function.

In this paper, we adopt the convention that the tokens sent by Alice to the market maker are not destroyed, but are instead added to the inventory (balance) of the market maker. Likewise, the tokens sent to Bob by the market maker are not created out of thin air; they already exist and are merely transferred from the inventory of the market maker to Bob. Thus, we show that the market maker is essentially an ordinary economic agent acting according to a deterministic algorithm – it doesn’t actually need “special powers”!

Check out this video for a short explainer to understand how we don't need a buyer and a seller in order to create liquidity!

Does that mean that I should invest in Bancor?

No, you don't. Since SMTs will be running directly on the STEEM blockchain. The concept was inspired by Bancor but differ on some points. So just hold on to your STEEM!