Re: [ANN] Bancor | Protocol for Smart-tokens, solving the liquidity problem

Quote

Does the Bancor protocol price discovery mechanism add to the price
volatility, compared to crypto-exchanges?
On the contrary. By holding a reserve balance which preserves a constant ratio to the
market-cap, the price volatility of smart tokens is not subject to the current market depth
since the reserve functions as a predictable and controlled alternative to the traditional
order book which normally provides market depth. Weve seen that regular exchanges
generally hold around 1% market depth, meaning that any smart token with a CRR above
1% could be relatively more

This is total BS! According to your own formula, at 1% fractional reserve, changing supply by 1% will change the price by 150%. Is not this volatile??? Yeah right, the formula for price change is deterministic, but a trade is a random event, and any function of random event is a random variable. With low fractional reserve your tokens are going to be as volatile as any low volume tokens on exchanges.

Okay, what would happen if, say, someone bought 1% of the supply of Bitcoin? That would be a ~$370 Million USD purchase.

I imagine that too would change the BTC price in a volatile way. Any 1% purchase/liquidation of any currency would.

Exactly. Then what's a point in your token if it is not any different?

Edit: and by the way, $300M is about a daily trade volume for bitcoin, and it does not change bitcont price by 150%. Your token is actually not going to be like bitcoin, with low fractional reserve it is going to be same as those illiquid and highly volatile tokens out there.

There's a big difference between a daily trading volume of 1% and someone either buying or selling 1%. You know this. My argument holds, because ANY currency which experiences a 1% buy/sell will experience huge fluctuation as a result.

The point of the BNT token is simple: to be the default reserve currency of smart tokens on the Bancor network, tying them all together so that all token-changers work as one (so you can exchange any currency for any other) and so that a raise in value of any token on the network raises the value of BNT and therefore of every token holding BNT in reserve. As for Bancor being the same as a illiquid token, it will be liquid for ETH from day 1.

Holding a fractional reserve token in reserve? Are you kidding me??? Who in good mind will do this?

I dont think you should look at the tokens as fractional reserves, the reserve is merely a tool for liquidity and usually when speaking about fractional reserve the reserve is the thing that gives the value to the coin which in this case it isnt. its just the market depth for liquidity in this case or atleast thats how i see it from what i read