Bancor’s Airdrop to Bring Blockchain into the Future

Decentralized exchange project Bancor (BNT) is now amid the massive airdrop for its token holders, aiming to bring blockchain into the future. Co-founder and Product Architect Eyal Hertzog and Head of Growth Nate Hinduman provided their comments on the airdrop, current trends in decentralized finance (DeFi) and Bancor’s further transformation into a Decentralized Autonomous Organization (DAO).

Engaging the community through an airdrop

The airdrop of ETHBNT was announced in November for those who held Bancor’s BNT token as of January 1. The airdrop is described as 10% bonus on the users BNT holdings in ETHBNT, a “pool token.”

These tokens are a main feature of the Bancor exchange. Unlike standard order book-based services, Bancor runs on an algorithm which calculates the price automatically, depending on the difference in buying and selling. The tokens like ETHBNT form liquidity pools, which are a crucial element of this system. Users can buy pool tokens and stake them in the liquidity pool, receiving a part of the exchange fees. Then they may be changed for ETH, BNT or any other coin at any time.

The users who have non-custodial or a supported exchange wallet will receive the tokens. The airdrop is supported by Binance, and, as of January 16, Poloniex.

Bancor expects that airdrop will attract new users to DeFi by six times, with new 60,000 people joining the ecosystem. However, people who take part in airdrops, normally regard tokens they get as ”free money”, selling them at the first opportunity without really getting involved with the community.

Hindman and Hertzog acknowledged this possibility, stating that it is ”part of the freedom”. Hindman detailed Bancor’s expectations from the airdrop:

“Of course, there’s many people who won’t do it [join the ecosystem], will either sell it immediately or won’t do anything with it. But we’re thinking if we can capture even 20 percent of those new users and get them using this ‘new DeFi asset,’ staking in liquidity pools, utilizing the Zerion interface… that’s how the protocol succeeds.”

Preparing for the airdrop, Bancor created the Zerion interface as a staking dashboard, intended to facilitate funds management and provide a clear view of returns.

Hertzog stated that the main reason for conducting an airdrop is to show people that DeFi is not as scary as some may think:

“For someone that is holding BNT, it may be kind of scary to take the first step and put this BNT in a relay […] It’s a very natural thing that people are concerned about things that they haven’t tried before. But using this airdrop, we created a situation where […] as you look at the wallet and all of a sudden you see a token like ETHBNT, maybe you heard about the airdrop, and then you click on that and you see that you have this amount […] it gives you the experience of participating in DeFi and not just being a holder of a token.”

Bancor’s transformation into a DAO

This year Bancor is set to transform into a decentralized structure. The BNT token will become an inflationary supply model, with the community defining the rate of inflation. But, according to Hindman, it is just a beginning:

“Within the next month or two, there will be a formalized voting and proposal process for the DAO […] We’re very excited to really have the protocol built into this DAO, so that any changes to the token model, any potential improvements can really come from the community.”

Hertzog noted that the DAO transition is what makes sense for projects such as Bancor:

“We think that Bancor, and some other projects, are in this category of not being classic corporations or services. I like to describe services like Bancor, or even like Maker, as a common agreement about a set of rules. As I like to say, it’s the difference between England and English […] England is a real entity and English is just an agreement, a global agreement about the meaning of the words.”

Although some blockchain projects may see loss of control as scary, Hertzog believes that it is the only way to propagate the ecosystem:

“We’re not looking to build a service here, make money and enjoy the revenue, we’re looking to create a standard. We’re looking to create a standard that will be adopted, and our success will come from the adoption of the standard. We don’t want to control it, but because no one has done that before, we cannot create a standard on day one and expect that to work. It’s going to be a process, it’s going to take years to realize what it even should be. I think that the DAO is the final step to when we would say: ‘ok, that’s the standard, we understand how it works.’”

DeFi and blockchain in future

2019 was a year of keen interest in the rise of decentralized finance, though Hertzog noted that Bancor was a DeFi project long before the trend gained popularity.

Talking about the changes in the industry, Hertzog noted:

“DeFi is a great thing and it’s a natural evolution of what I call the ‘industry dogfooding.’ I like to think of the story of when I was young and started to work in an Internet company in 1997. I had an email, I had a browser and I was connected to the Web. But all you could do with it in 1997 was just to use it within the Internet industry. The only people I could email were from other Internet companies. The only things that I could find on the web were technology news that are related to the Internet. I think we are going through the same phases now with crypto.”

While crypto-related projects in 2017 were financed through initial coin offerings, Hertzog compared DeFi to Wall Street’s accessory services of simple buying and selling of shares. Believing that they are beautiful, he is also positive about decentralized alternatives to loans and shares as natural evolution of the industry.

DeFi as technology is rarely found outside the crypto trading market, and Bancor itself is still a major provider of accessory services for trading. Answering the question about some other fields of interest besides DeFi or cryptocurrency space, Hertzog grinned and said:

“We actually are working hard on major partnerships that extend beyond crypto assets. It’s not in the stage of even announcing it […] But definitely we are looking at how those technologies can be leveraged […] Maybe the primary advantage is the transparency that this kind of finance has.”