Bancor Burn Update Turns Protocol Into Ultimate BNT Buyer

By burning vBNT, Bancor will lock BNT in its liquidity pools forever.

Bancor Burn Update Turns Protocol Into Ultimate BNT Buyer

Key Takeaways

  • Bancor will use 5% of all swap fees on the protocol to buy vBNT back and burn it.
  • By burning vBNT, Bancor locks BNT in the protocol forever.
  • This move should have beneficial effects on the price of vBNT and BNT.
  • Bancor has announced that the next update to its Bancor Vortex which will burn part of the protocol’s swap fees of every transaction.

    “Buy-and-Burn” Brings Value, Utility to BNT

    With the latest update to Bancor’s new Vortex mechanism, DeFi’s first AMM will begin burning part of the swap fees accrued on the protocol. While that number has been set to 5% of the entire swap fee revenue, governance could adjust the percentage up to 15%.

    When users stake the platform’s native token BNT on Bancor, they receive an equivalent amount of vBNT as a reward. This vBNT can then be used to vote on governance but must be returned if the user wishes to recover his BNT from the liquidity pools. Users can also choose to sell it against another cryptocurrency if they believe the gains made from that other cryptocurrency will be enough to buy back the vBNT sold and make a profit.

    The protocol will now buy vBNT from the open market and burn it, effectively locking part of the BNT in the liquidity pools forever. This should lead to more stability for the liquidity pools, and a higher price for vBNT as the protocol itself will become a major buyer.

    This buy-and-burn continues to raise awareness around Bancor which has been called “the dark horse of DeFi in 2021” by Wangarian from DeFiance Capital.

    The Bancor Vortex was added in the protocol’s v2.1 update back in October 2020, which has created rising interest. The protocol’s total value locked has skyrocketed in 2021 following this update and the addition of other key features such as a fiat ramp.

    Bancor Burn Update Turns Protocol Into Ultimate BNT Buyer
    Total Value Locked in Bancor. Data from DeFi Pulse.

    Disclaimer: The author held ETH, BNT, and several other cryptocurrencies at the time of writing.

    Disclaimer Read More Read Less

    The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.

    You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.

    See full terms and conditions.


    Popular news...