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Bancor becomes a RISK as investors flee bad politics!

 


When the cryptocurrency market started collapsing, many projects became very risky. Blockchain companies tend to over-capitalize cryptocurrencies. In bear markets, cryptocurrencies become less valuable, so these companies also become less valuable. To fight for survival, they begin to cut back on services and benefits to reduce their risk and exposure. Bancor is one of those crypto projects that today is removing the very feature it used to lure thousands of investors. Is Bancor risky or safe? Why are Bancor investors cautious and considering liquidating their positions? Let's examine that.


What is bancor?

Bancor is a decentralized protocol that launched in 2016. It allows users to convert digital tokens without the need for a central exchange. The protocol compensates users who stake their tokens on the platform after using their assets to facilitate trading for other users. Users who contribute assets to the pool are rewarded with fees paid by those who trade with them.


Bancor acts as an Automated Market Maker (AMM) in the crypto market and provides liquidity. However, Bancor goes one step further and rewards users for building and managing these pools of wealth. The main benefit of betting on Bancor is that it protects users from Impermanent loss. The network's primary and useful token is the Bancor Network Token (BNT), an ERC-20 token. It also serves as the network's reserve currency for all smart tokens.

How does bancor work?

Bancor works similarly to a decentralized exchange (DEX) and allows users to trade numerous tokens in one pool. Each pool has a pair of tokens as well as a BNT coin reserve. However, unlike other DEXs, Bancor's AMM services are run by its users. Consequently, depositors dominate the protocol as their funds enable Bancor's global trading. Depositors therefore benefit from their holdings on the platform. Traders who trade tokens on the exchange, on the other hand, pay fees to the network to make money. These fees are paid to depositors under the protocol.

Why is Bancor under fire from the community?

In a sudden move, Bancor announced that they will be pausing their Impermanent Loss protection. This feature was one of the main reasons investors flocked to this protocol. The reason for this announcement was that the cryptocurrency market has been very volatile lately.


However, the crypto market has always been volatile and this is not news. Most investors got angry and said they would liquidate as soon as they had the opportunity. This event would most likely drag BNT prices lower.

Bancor Forecast - What are the Targets of the Next Crash?

The BNT Prize has already taken a heavy toll since November 2021. Prices dropped more than 89% as most cryptocurrencies hit their ATH prices in the crypto market. If the crypto market continues its downtrend, we could see BNT prices drop towards the $0.20 strong support price. This is where Bancor price has lingered the most between 2018 and 2020.

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