The Enjin Coin Token Relay is a system that many people have trouble understanding, so let’s dive into what it is and how it works!
You can think of a Token Relay as a vending machine for two token types. Our Enjin Coin “vending machine” will hold both ENJ and BNT tokens.
While our token relay will allow for many other conversions such as ETH/ENJ, let’s look at a simple case, BNT (Bancor Network Token) to ENJ (Enjin Coin).
Jeremy the Game Developer wants to purchase a few Enjin Coins.
He sends BNT to the Token Relay, which would buy an intermediate token called ENJBNT. This ENJBNT token would then be exchanged again for ENJ.
The conversion fee for each of these conversions would be 0.1%, and since two transactions took place the total fee would be 0.2%.
The Token Relay has a stock of each of the tokens (ENJ & BNT), and they are priced based on the quantity of each token in the contract. If Enjin users see ENJ priced slightly cheaper than market value, they’ll have an incentive to purchase it, shifting the pricing back up to normal. If BNT is cheaper in comparison, then users may sell their ENJ at a premium.
Who provides the supply? People that own ENJ or BNT tokens can transfer them into the Token Relay, and receive an “IOU” token called ENJBNT.
The ENJBNT smart tokens have a special property: over time, they collect a portion of those 0.2% conversion fees from any trades in the Token Relay. Anyone can place some of their long-term holdings of ENJ or BNT into the Token Relay and provide liquidity while watching their holdings grow.
With this knowledge, you could earn passive tokens simply by placing some of your long-term ENJ in the Token Relay and withdrawing at a later time!
Bancor Network Tokens
You might be thinking to yourself, “That’s great, but why BNT tokens?” Bancor Network Tokens allow us to take this system one step further and tap into the entire Bancor Network. This is a collection of other Token Relays that each contain BNT as well as their own currency.
Using a transaction path you can essentially trade between ENJ and any other token supported by Bancor! Even Ether is possible, with the following path:
Conversion fees of 0.1% are charged between ENJBNT steps, but the ETH/BNT stage is free, so the total conversion fee continues to be 0.2%
The exact same pathway could also be used in reverse to convert ENJ to ETH!
Conclusion
When our Enjin Coin Token Relay launches later this month, it will provide anyone with the ability to purchase ENJ directly from the Bancor web app, and also provide an interesting passive income opportunity for anyone wanting to become a liquidity provider.
Visit the Enjin Coin website if you’d like to participate in our public crowdsale and pick up some ENJ for yourself — the remaining quantities are limited as the crowdsale moves closer to the finish line daily!
