In one fell swoop, Bancor’s upcoming airdrop could create over 60,000 new DeFi users.

We announced earlier this month plans to airdrop BNT’s entire ETH reserve in the form of “BNTETH” — a token which generates fees from every ETH conversion in the Bancor Network.

This action will dramatically increase the number of liquidity providers on the network from roughly 200 to 60,000+, while also improving the resilience of Bancor’s multi-blockchain infrastructure. Bancor will emerge from the airdrop as a more decentralized and community-driven protocol, with thousands of new users passively generating liquidity provider fees.

In this post, we’ll explain the mechanics of the airdrop and share the thinking behind this exciting development.

Before we dig into the details, here are the basics:

  • What: An airdrop of BNT’s entire ETH reserve in the form of “BNTETH” — entitling holders to fees from every ETH conversion on Bancor.
  • Who this affects: All BNT holders, including existing liquidity providers & Relay owners.
  • How to get the airdrop: Simply hold BNT at the time of the snapshot in a non-custodial wallet, or a custodial wallet/exchange supporting the airdrop.
  • When: The BNT holder snapshot will occur some time in December 2019. We will announce as soon as the snapshot is performed.
  • Why you should care: As soon as the airdrop is completed, you can immediately start collecting fees, or instantly convert your BNTETH into other liquidity pools (“Relays”) or any token on Bancor including ETH, DAI, OMG, EOS & more.

Ok, now for the longer answers:

How much is being airdropped?

This depends on the market cap of BNT at the date of the snapshot.

BNT currently holds in its reserve an amount of ETH which is equal at all times to 10% of BNT’s market cap. If the airdrop occurred today, it would amount to $2.0 million, based on today’s $20 million BNT market cap. However, the total amount of the airdrop could rise or fall leading up to the airdrop, as users buy and sell BNT and increase or decrease its ETH reserve.

How will the airdrop work?

A snapshot of all BNT holders on the Ethereum and EOS blockchains will be performed this coming December 2019. Users holding BNT at the time of the snapshot will receive the airdrop directly in their wallets in proportion to their BNT holdings. For example, someone holding .05% of the total BNT supply at the time of the snapshot will receive .05% of the airdropped tokens. This includes existing liquidity providers, such as Relay and Liquid Token owners.

At the time of the snapshot, the Bancor Liquidity Network will be upgraded so that the liquidity to ETH will be provided via a Relay of equal parts BNT and ETH as opposed to the current system which relies on a single ETH reserve. All the ETH previously held in BNT’s single reserve will exist on one side of the BNTETH Relay. On the other side of the Relay, there will be an equal value of BNT, funded by the Bancor Foundation.

The new BNTETH Relay will be functionally identical to the current BNTEOS Relay on the EOS blockchain, which holds an equal value of BNT and EOS, and is used to process BNT conversions on EOS.

The token being airdropped on BNT holders is BNTETH, a Relay Token which entitles its holders to a share of the liquidity in the BNTETH Relay. BNTETH holders will also be entitled to a pro-rata share of all fees generated from all ETH conversions on Bancor. In other words, recipients of the airdrop will instantly become liquidity providers in the BNTETH Relay.

To prevent trader manipulation, the exact date and time of the snapshot will not be shared. Immediately after the snapshot is taken in December, we will announce it has been completed. Then, after the completion of the snapshot, the airdrop will occur over the course of the following two weeks.

To avoid price changes, the airdropped BNTETH tokens will not be convertible until the airdrop is fully completed.

Over the course of the airdrop, users holding BNT in a non-custodial wallet, such as MetaMask, Scatter or the Bancor Wallet, will see BNTETH tokens automatically appear in their wallet. The airdropped BNTETH token will also automatically appear in major custodial wallets and exchanges supporting the airdrop. We will announce soon custodial wallets and exchanges supporting the snapshot and airdrop.

Once the airdrop is completed, the airdropped BNTETH will be convertible for any ERC20 or EOS token in the Bancor Network, including ETH, DAI, EOS & more. The airdropped BNTETH token will also be convertible for other Bancor Relay Tokens, such as DAIBNT, BATBNT, BNTIQ, BNTESDT, allowing users to spread their liquidity to other fee-generating Relays in the network.

What is the purpose of the BNT upgrade?

As mentioned, BNT currently holds in its reserve an amount of ETH which is equal at all times to 10% of the BNT market cap. Today, new BNT is created by sending ETH to the BNT smart contract.

These mechanics have allowed for BNT to be constantly liquid from day one outside of exchanges, while reducing the volatility of BNT through the reserve. Yet as a result of its ETH reserve, BNT has exhibited a strong correlation with ETH fluctuations.

Since BNT will no longer hold a reserve of ETH, the dependency on a single blockchain will be reduced, as Bancor evolves into a multi-blockchain liquidity network. Moreover, BNT holders will now have greater freedom to determine the level of liquidity on a given blockchain.

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The Bancor Airdrop Is Coming
The Bancor Airdrop Is Coming
The Bancor Airdrop Is Coming
The Bancor Airdrop Is Coming

The Bancor Airdrop Is Coming

The Bancor Airdrop Is Coming