Its hard to predict what is going to move a cryptocurrency on any given day. However, after reading the Bancor - White Paper I cant help but wonder if Ether's movement over the last couple of weeks (6/2017) has something to do with this new protocol.
The Bancor blockchain and its native Bancor Network Token (BNT) will be a smart ERC20 token backed by Ether. That is, a portion of the Ether raised during the crowd sale will be used to back the BNT tokens. The white paper does not say specifically how much will be held in reserve but there is an illustration showing a BNT backed by 20% Ether.
After the crowd sale you will be able to buy and sell BNT from a smart contract without going through a centralized exchange.
The protocol allows for the creation of other smart tokens provided they are backed by one or more smart tokens one of which must be BNT.
The simplest smart token is one backed by BNT. Think of a Homeowner Association creating a community token (HAT) that is usable to pay baby sitters, dog walkers, etc...
At time of creation an exchange rate is suggested and a certain amount of BNT is set aside to back the new token. The smart contract modifies the exchange rate after each transaction.
Next up are Token Changers consisting of BNT and one other ERC20 Token. These facilitate exchange of the big boys, think Golom, Gnosis, Basic Attention Token.
Then you have Token Baskets consisting of a portfolio of BNT and two or more ERC20 Tokens.
I would not be able to explain the math but the white paper states that there are economic incentives for arbitrage to maintain the smart token reserves as trade occurs.
Bancor adds liquidity to small market cap tokens, makes it easy to create local tokens, and provides a none centralized exchange mechanism that lifts all ERC20 boats.
I am certainly going to try and invest in this one. Hopefully, it will last longer than 30 seconds.
