Hi, can anyone help me understand what stops someone from selling their smarttokens back to the smart contract to the point that all of the ETH backing BNT disappears (I guess something akin to a bank run)?
It cannot happen thanks to the Bancor Protocol Formula. If someone is selling even a huge amount of BNT, the Bancor Protocol formula would adjust the conversion price to make sure that in any case, you still have a steady 10% amount of ETH backing the BNT balance. That is one of the advantages of the Bancor Protocol.
Just read the Bancor white paper if you want to have the full description of the Bancor Protocol and to check the maths.