Bancor Protocol behind Fomo3D and EOS RAM
Centralized exchanges feature security and efficiency. However, the exchanges have been hacked frequently: Mt.Gox was hacked and the company went bankrupt in 2014, Bitcoin worth $72M was stolen in Bitfinex exchange hack in Hong Kong. Two years later, Coincheck lost more than 500 million for the hack. The lack of security in these centralized exchanges gradually decreases the confidence and trust of users.
Recently, a series of popular themes are emerging, such as EOS RAM trading, Fomo3D, and P3D, which all adopt the Bancor algorithm, letting strangers exchange tokens without centralized exchanges in a trust-free environment.
About Bancor Protocol
Bancor was established in August 2016, and raised more than $150 million in less than three hours in June 2017, setting a world record at that time. Banchor protocol provides the standard for the creation of Smart Tokens, which realizes continuous liquidity and adjustable price sensitivity. Users can easily make transactions without cryptocurrency exchanges. In addition, the Smart Tokens can solve the problem of the long tail of small-scale tokens.
Operating Theory of Bancor Protocol
After the Second World War, the Bretton Woods system was established. The US dollar-centered monetary system replaced the Gold Standard system. The US dollar is linked to gold, and other currencies are linked to the US dollar. The US dollar has become a relay currency, forming an adjustable exchange rate with national currencies. The prerequisite for countries to exchange gold is to exchange dollars.
After the breakdown of the Bretton Woods system, the dollar was decoupled from gold, and the issuance of currency was endorsed by national credit. While the Bretton Woods system offers a prototype for Bancor Protocol, in which a relay currency is used for other currency exchange in a fixed exchange rate.
The difference is that the exchange process of Bancor Protocol is guaranteed by smart contracts. There is a formula written in the smart contract. There is a Smart Token as relay currency like US dollar. The tokens are exchanged through smart contracts. The code automatically calculates the exchange ratio between the Smart Token and the other token. The whole process is conducted by machine, so there will not be problems with transaction matching and fund management. Both the buyers and the sellers can exchange their tokens at a fair price.
Problems Solved by Bancor Protocol
The exchanges profit by quoting different prices to buyers and sellers, earning the difference (known as the spread) over time. While the Bancor Protocol solves this problem from two angles:
Security: Bancor protocol transaction is essentially a direct transaction between people, avoiding the risk of escrow.
Liquidity: When a user issues a new token, he does not have to pay much to list the token on exchanges and can enjoy the market liquidity for free. The greater liquidity will bring about the release of dividends from the long tail, increasing the value of small tokens.
PalletOne’s Innovations
As a better trading mechanism, Bancor allows the value of the blockchain to flow freely, providing greater value to the blockchain. PalletOne also provides an innovative mechanism for the development of blockchains.
Through the Token Abstract Layer, Jury consensus mechanism and other technologies, Dapps, smart contracts and the underlying blockchains can fully be decoupled, realizing the seamless transfer of value between different public blockchains. On the other hand, it establishes a consensus mechanism where different parties are connected through multiple interests, benefiting all the participants.
PalletOne proposes Mediator and Jury to achieve value transfer between different blockchains. The Mediator is responsible for the overall security of the PalletOne network. Its core obligation is to complete the implementation of the entire system by maintaining the Jury’s deposit, deploying smart contract templates, randomly selecting Jurors to form Juries, providing signatures for multi-sign wallets, and witnessing the generation of units in distributed storage. Whilst Jury is the basic unit for maintaining the security and integrity of PalletOne. It’s responsible for conducting smart contracts, managing multi-signature accounts, doing all the operations, and increasing the activity of the entire network.
Mediator and Jury guarantee the value transfer between different blockchains can be unimpeded. And PalletOne is aimed at becoming the IP protocol of the blockchain world, maximizing the value of the blockchain network.
Conclusion
In the future, the value of the blockchain will become greater significantly. We need to provide innovative proposals for the industry through trial and error to release the full potential of blockchain technology. This is not like the current Chinese housing market which is lack of liquidity, and the value is only on paper.
The mechanism innovation empowers the blockchain. Let us work together to maximize the value of blockchain and create the future of mankind.
For more information:
Official website: https://pallet.one/
E-mail: contact@pallet.one
Telegram: https://t.me/PalletOneOfficialEN
Github: https://github.com/PalletOne
Twitter: https://twitter.com/PalletOne_org
Wechat official account: Pallet
