When Bancor went live in 2017, there was a wide range of potential use-cases for its automated liquidity protocol. Now, two years later, the protocol’s mission is clearer and more focused than ever — to serve as a fundamental building block in decentralized financial applications.
Third-party applications drive usage of the Bancor Protocol and, in turn, more liquidity and bigger rewards for ecosystem participants. In fact, the protocol doesn’t even need a central UI. Its purpose is to exist as public infrastructure that can be composed with other protocols to create new on-chain financial products and services.
This sharpened focus on developing the protocol in service of many interface implementations creates a natural division of labor between 4 key groups of Bancor ecosystem participants:
- Protocol developers who focus on optimization of Bancor smart contracts.
- Ecosystem developers who utilize Bancor infrastructure to build applications & data services.
- Users who provide liquidity to the protocol in exchange for liquidity provider fees.
- Token teams who leverage the pooled liquidity to deploy incentives to their token holders.
As protocol developers optimize the contracts, advancements on the protocol-level empower ecosystem developers to build on-chain financial products and data services that give users easy access to token trading, liquidity provision and portfolio management.
Token teams are incentivized to drive their token holders to these interfaces, as they attract more liquidity to the token by empowering and incentivizing holders to act as market-makers in just a few clicks.
As a public utility, Bancor is designed to offer contract-accessible liquidity and turn pooled market-maker liquidity into a fungible asset (“pool tokens”).
As more developers expose this functionality to users, we are excited for the transformative products and services that will emerge — creating guardrails for everyday users to get sophisticated with DeFi money management.