Re: [ANN] Bancor | Protocol for Smart-tokens, solving the liquidity problem
One of the ways to think about reserves is as "liquidity pools". Reserves are essentially common pools that provide liquidity to their smart token holders. The current solution for liquidity is based on market orders on the different exchanges (and in some cases, in different currencies pairs). If you measure the size of these current "liquidity pools" (aka as "market depth"), relative to the market-cap of the currency, and compare the event where similar amounts are unloaded to the market through the exchanges vs. through a smart token with 10% reserve, you would probably find out that the market behaves in a much more stable way using the smart token, since there is a single common liquidity pool, which is growing relative to the market cap of the smart token.
It can be tricky to wrap the mind around it since this is a model for linking between currencies which is quite different than the one being used today and for a long time now, and I really hope my attempt to explain it was clear enough.
Anyway, I'll be happy to answer any other questions you may have!
And thank you for your interest
I went through all the math and tried out some basic modeling because I am excited and curious how it all works. One question though, the first step that allowed you to make a continuous formula out of the recursive: dR = PdS and then use that equation later, is this some known approach that helps to make continuous formula out of recursive, that I don't know about because of my limited math education, or is it a clever trick that you can credit to yourself?
This is basic calculus.
Alright, given A1, A2, A3 and recursive formula An+An+1/An+2 = An+3, eg A1=1 A2=2 A3=4 therefore A4 = 1 + 2/3 =5/3
Can you show me how to make continuous formula out of it f(x) eg f(4) = 5/3