Decentralized Token Changer

Token Changer is a decentralized liquidity pool of multiple cryptocurrencies, encapsulated in Bancor’s Smart Tokens. Token Changers will hold reserve of those currencies with CRR of 100%.

This will provide a decentralized and automated solution for exchanging tokens hold in Token Changer’s reserve, with no (human) counter-party.

Let’s make an example: We plan to create a Token Changer and use Token A & Token BNT as reserve. We name it Token ABNT.

Token ABNT is a Smart Token created using Bancor Protocol therefore this Token ABNT can be purchased & liquidated instantly through the smart contract.

The holders of Token ABNT will benefited from a small service fee that will be charged by the system after each conversion because it is automatically added to the reserve, thus increasing the total reserve and in the end increasing the value of Token ABNT.

Creator of Token ABNT can set a conversion fee for each purchase or liquidation activity. So the more conversions or transactions that take place, the higher the price of its token since the fees will be accumulated in the token changer’s reserve.

Larger transactions will move the price sharply but high reserve balance will also reduce volatility.

This Token Changer ABNT can also be used to instantly exchange between Token A to Token BNT, and vice versa. Since BNT also holds ETH (ethereum) as its reserve then the Token Changer can also facilitates instant conversionbetween Token ABNT – ETH.

Because it is a decentralized Token Changers, then there is no need to deposit funds and there is no transaction limits. Token Changers do not rely on any 3rd party thus removes the counterparty risk from the process.

There are a few Token Changers under Bancor Protocol that will be released soon, some of them are Gnosis/Bancor and Indorse/Bancor:

GNOBNT = Gnosis (GNO) / Bancor (BNT)

4,000 GNO and 400,000 BNT (~$1,000,000 value each) tokens will be deposited in a Gnosis-Bancor multisig wallet.

INDBNT = Indorse (IND) / Bancor (BNT)

Indorse will deposit 500,000 IND tokens (worth 500 ETH in the sale) in an IND/BNT token changer and an equivalent value of BNT into the contract.

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Author: Albert D Stone

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