Serious issue concerning Bancor, get rid of all BNT

[Zev777]

I will just start boldly. The Bancor business model is pretty close to a scam. I am sure you will not take my word for it, because this is my first post. In fact, I made this account because I find it bizarre that no one is talking about this. Let's be honest, which one of you truly tried to comprehend their mathematical proof? Not a single person who invested at least, because otherwise they would not have wasted their money. I will try to explain a little.

They collected pretty close to 400k ether. Essentially what they do, is keep .8*400k ETH = 320k ETH to themselves, and call the remaining 80k reserves. They will express this 80k in a different coin, called BNT. They assign 100 BNT to 1ETH that they received. That means there is 500BNT for every 1ETH in the reserves. Essentially, if everyone would want to convert their BNT back to ETH, they would get 1/500 ETH per BNT. Wait you say, in the white paper it says that the starting price of 100BNT will equal 1 ETH! This is true, this is where the mathematics uses a trick to hide what is going on. Their pricing formula, P=R/(S*F) ensures that the first BNT sold will be sold at a 'fair' value, namely equal to the amount of ETH you spent to buy it in the first place. After the first sell, things get worse rather quickly. Let's illustrate this by a little example:

Lets say that 10% of people who own BNT sell it back to ETH via the smart contract. For the initial price we get: P = 80k/(40m*.2) = 0.01. All looks fair. Then after the sell we get 40m*10%*0.01 = 40k,  P = 80k-40k/((40m-4m)*0.20) = 0,00556. Ouch, the price almost dropped to half value from the 10% sell-off (this is different if there are many small transactions but I will get to that later).

If people buy the same amount of BNT, this is what happens: P = 120k/(44m*0.20) = 0.01364. The increase in price is not nearly as interesting for the next person. But again, this will be lower for many small transactions.

I created a plot assuming transactions are made in small batches of BNT coins. We find that the BNT value drop VERY quickly when people start selling, and does not rise nearly as fast. Essentially this just makes BNT an undesirable coin. Another weird thing about their system is that it does not consider convexity. This means that big transactions will get very different prices than many small ones. This just does not make sense, but they don't care as they simply took your money.
http://imgur.com/a/f9yLy

If you are still not convinced, consider this. They literally admit to taking 80% of your money. All they give back is some mathematical trick based on 20% of the ether that you gave them. Do you really believe they just generated x5 value out of thin air? Sorry, but math does not work that way. I would recommend getting rid of your BNT asap, or you end up all the way on the left side of the graph. I am sorry that this news comes a bit late for some of you... I didn't read their methodology until last night

Maybe now you can start to add up why the ICO was strange in various ways.

As final words, don't just believe whatever I say. Think about it for yourself. I gain nothing by convincing you of whatever I write here, I am simply sharing thoughts.

[2bfree]

I didn't invest in this one maily becuase I didin't understand it. But from what I noticed about people is they don't give a shit about the truth they demand you tell them the lie they want to hear! (99% of people). So you are probably wasting your time here if you are telling the truth which I can't understand.

[European Central Bank]

Probably all correct. No one's interested in thinking about it.

They will one dark day that's for sure but we're now in full cult territory.

[NavySeals]

I don't have information about its technical aspects, but the contributors, participants and investors are not thiking like you. They claim bancor to be the best project ever on blockchain.

[virasog]

The nature of crypto and Bitcoin makes many new business models scam-like.  Bitcoin itself started as a downloadable wallet, you synced up, made setgenerate true and a few minutes later you had probably 50 BTC, days later hundreds.  Hold that wallet from then to now and you have a fortune by simply running your PC a few hours years back.  That is a miracle scam formula right there, but it is true.

[taxmanmt5]

The nature of crypto and Bitcoin makes many new business models scam-like.  Bitcoin itself started as a downloadable wallet, you synced up, made setgenerate true and a few minutes later you had probably 50 BTC, days later hundreds.  Hold that wallet from then to now and you have a fortune by simply running your PC a few hours years back.  That is a miracle scam formula right there, but it is true.

Take a business model and add the anonymous, uncontrolled methods of crypto and you remove a lot of the safeguards that make FIAT businesses identical in nature seem safe and now they are scammy without the safeguards.  Lastly, a customer or client pays for a service or product and they have very little recourse if not happy or never receive their purchase.  No forced refunds, no chargebacks, just sorry about your luck.  These things make a lot of sites and projects look bad

[Nipperkin]

haters gonna hate and those that missed out create long rants to justify their actions...why are you wasting your time with this, go out and do something productive...surely your not posting this from your yacht.

[cryptowoman555]

We need to stop calling these a "scam" and rather just point out the bad business plan. There are true scams and no one is listening when we point out bad business and pump and dump fake coin forks as the same thing.

BANCOR IS NOT A SCAM.

However, they would have to be VERY successful for you to make your money back given the ICO size.

They have a neat tech and the fundamentals of increasing liquidity through their token process is all good. The bad side? I just don't see how they will ever be popular enough to make back the money raised for the investors. The pump of ETH has really set everything down stream into a hype frenzy.

We wouldn't care about 400k ETH being raised if ETH was at a mature value. But currently, there is a good market high and a 30%+ correction will come, wiping that fiat value out of BANCOR with it.

[Zev777]

We need to stop calling these a "scam" and rather just point out the bad business plan. There are true scams and no one is listening when we point out bad business and pump and dump fake coin forks as the same thing.

BANCOR IS NOT A SCAM.

However, they would have to be VERY successful for you to make your money back given the ICO size.

They have a neat tech and the fundamentals of increasing liquidity through their token process is all good. The bad side? I just don't see how they will ever be popular enough to make back the money raised for the investors. The pump of ETH has really set everything down stream into a hype frenzy.

We wouldn't care about 400k ETH being raised if ETH was at a mature value. But currently, there is a good market high and a 30%+ correction will come, wiping that fiat value out of BANCOR with it.

I would say Bancor already IS very successful, considering the amount of value they acquired. There is just no reason why this would translate to a high value of BNT. The ICO size has nothing to do with this. Even if only 10ETH had been transferred to Bancor, BNT would still be a bad coin to buy under the provided structure. This has everything to do with the purpose of the coin. Something that people indeed don't seem to care for, as 2bfree and ECB point out. Astonishing really. It will be very interesting to observe how this develops.

[cryptowoman555]

We need to stop calling these a "scam" and rather just point out the bad business plan. There are true scams and no one is listening when we point out bad business and pump and dump fake coin forks as the same thing.

BANCOR IS NOT A SCAM.

However, they would have to be VERY successful for you to make your money back given the ICO size.

They have a neat tech and the fundamentals of increasing liquidity through their token process is all good. The bad side? I just don't see how they will ever be popular enough to make back the money raised for the investors. The pump of ETH has really set everything down stream into a hype frenzy.

We wouldn't care about 400k ETH being raised if ETH was at a mature value. But currently, there is a good market high and a 30%+ correction will come, wiping that fiat value out of BANCOR with it.

I would say Bancor already IS very successful, considering the amount of value they acquired. There is just no reason why this would translate to a high value of BNT. The ICO size has nothing to do with this. Even if only 10ETH had been transferred to Bancor, BNT would still be a bad coin to buy under the provided structure. This has everything to do with the purpose of the coin. Something that people indeed don't seem to care for, as 2bfree and ECB point out. Astonishing really. It will be very interesting to observe how this develops.

Fair enough.
So still the same point...
Maybe not a good investment, but not scam.

We need to be able to differentiate scams and poor investments.

[Zev777]

We need to stop calling these a "scam" and rather just point out the bad business plan. There are true scams and no one is listening when we point out bad business and pump and dump fake coin forks as the same thing.

BANCOR IS NOT A SCAM.

However, they would have to be VERY successful for you to make your money back given the ICO size.

They have a neat tech and the fundamentals of increasing liquidity through their token process is all good. The bad side? I just don't see how they will ever be popular enough to make back the money raised for the investors. The pump of ETH has really set everything down stream into a hype frenzy.

We wouldn't care about 400k ETH being raised if ETH was at a mature value. But currently, there is a good market high and a 30%+ correction will come, wiping that fiat value out of BANCOR with it.

I would say Bancor already IS very successful, considering the amount of value they acquired. There is just no reason why this would translate to a high value of BNT. The ICO size has nothing to do with this. Even if only 10ETH had been transferred to Bancor, BNT would still be a bad coin to buy under the provided structure. This has everything to do with the purpose of the coin. Something that people indeed don't seem to care for, as 2bfree and ECB point out. Astonishing really. It will be very interesting to observe how this develops.

Fair enough.
So still the same point...
Maybe not a good investment, but not scam.

We need to be able to differentiate scams and poor investments.

Apparently they changed the reserve ratio to 10% rather than 20%. They take 90% of investors money while giving nothing useful in return. The liquidity you speak of shows no sign of being easier to trade with than Ethereum.

When John Law pulled this same trick 300 years ago, people tried to murder him (although it took a few years until people understood they were getting screwed). However, back then at least it did help a little because trading with actual gold and silver as people did back then is actually quite inconvenient. Despite that, he had to flee for his life and died a poor and lonely man in his 50s according to the history books. Did he scam the townsfolk? I don't blame you for saying either yes or no. In the end it is up to your perception.

[Harry Callahan]

I don't have information about its technical aspects, but the contributors, participants and investors are not thiking like you. They claim bancor to be the best project ever on blockchain.

If you have invested in it,then you should probably think about having the best project because no one wants to loose their money,i agree with the calculations you made,but if you look closely at most of the ICO they all do the same.

[ethersphere]

I will just start boldly. The Bancor business model is pretty close to a scam. I am sure you will not take my word for it, because this is my first post. In fact, I made this account because I find it bizarre that no one is talking about this. Let's be honest, which one of you truly tried to comprehend their mathematical proof? Not a single person who invested at least, because otherwise they would not have wasted their money. I will try to explain a little.

They collected pretty close to 400k ether. Essentially what they do, is keep .8*400k ETH = 320k ETH to themselves, and call the remaining 80k reserves. They will express this 80k in a different coin, called BNT. They assign 100 BNT to 1ETH that they received. That means there is 500BNT for every 1ETH in the reserves. Essentially, if everyone would want to convert their BNT back to ETH, they would get 1/500 ETH per BNT. Wait you say, in the white paper it says that the starting price of 100BNT will equal 1 ETH! This is true, this is where the mathematics uses a trick to hide what is going on. Their pricing formula, P=R/(S*F) ensures that the first BNT sold will be sold at a 'fair' value, namely equal to the amount of ETH you spent to buy it in the first place. After the first sell, things get worse rather quickly. Let's illustrate this by a little example:

Lets say that 10% of people who own BNT sell it back to ETH via the smart contract. For the initial price we get: P = 80k/(40m*.2) = 0.01. All looks fair. Then after the sell we get 40m*10%*0.01 = 40k,  P = 80k-40k/((40m-4m)*0.20) = 0,00556. Ouch, the price almost dropped to half value from the 10% sell-off (this is different if there are many small transactions but I will get to that later).

If people buy the same amount of BNT, this is what happens: P = 120k/(44m*0.20) = 0.01364. The increase in price is not nearly as interesting for the next person. But again, this will be lower for many small transactions.

I created a plot assuming transactions are made in small batches of BNT coins. We find that the BNT value drop VERY quickly when people start selling, and does not rise nearly as fast. Essentially this just makes BNT an undesirable coin. Another weird thing about their system is that it does not consider convexity. This means that big transactions will get very different prices than many small ones. This just does not make sense, but they don't care as they simply took your money.


If you are still not convinced, consider this. They literally admit to taking 80% of your money. All they give back is some mathematical trick based on 20% of the ether that you gave them. Do you really believe they just generated x5 value out of thin air? Sorry, but math does not work that way. I would recommend getting rid of your BNT asap, or you end up all the way on the left side of the graph. I am sorry that this news comes a bit late for some of you... I didn't read their methodology until last night

Maybe now you can start to add up why the ICO was strange in various ways.

As final words, don't just believe whatever I say. Think about it for yourself. I gain nothing by convincing you of whatever I write here, I am simply sharing thoughts.

They do factor in the size of transactions when calculating liquidation price. Here's a quote from their whitepaper:

"The above formula calculates the current price, however, when a purchase or liquidation is
executed, the effective price is calculated as a function of the transaction size. The calculation
can be described as if every transaction is broken up into infinitely small increments, where each
increment is changing the smart token’s supply, reserve balance, and thus its price."

The scenario where one person sells off a large amount to get a good price (at the expense of others) might not really happen since they are using "effective price".

[Zev777]

I will just start boldly. The Bancor business model is pretty close to a scam. I am sure you will not take my word for it, because this is my first post. In fact, I made this account because I find it bizarre that no one is talking about this. Let's be honest, which one of you truly tried to comprehend their mathematical proof? Not a single person who invested at least, because otherwise they would not have wasted their money. I will try to explain a little.

They collected pretty close to 400k ether. Essentially what they do, is keep .8*400k ETH = 320k ETH to themselves, and call the remaining 80k reserves. They will express this 80k in a different coin, called BNT. They assign 100 BNT to 1ETH that they received. That means there is 500BNT for every 1ETH in the reserves. Essentially, if everyone would want to convert their BNT back to ETH, they would get 1/500 ETH per BNT. Wait you say, in the white paper it says that the starting price of 100BNT will equal 1 ETH! This is true, this is where the mathematics uses a trick to hide what is going on. Their pricing formula, P=R/(S*F) ensures that the first BNT sold will be sold at a 'fair' value, namely equal to the amount of ETH you spent to buy it in the first place. After the first sell, things get worse rather quickly. Let's illustrate this by a little example:

Lets say that 10% of people who own BNT sell it back to ETH via the smart contract. For the initial price we get: P = 80k/(40m*.2) = 0.01. All looks fair. Then after the sell we get 40m*10%*0.01 = 40k,  P = 80k-40k/((40m-4m)*0.20) = 0,00556. Ouch, the price almost dropped to half value from the 10% sell-off (this is different if there are many small transactions but I will get to that later).

If people buy the same amount of BNT, this is what happens: P = 120k/(44m*0.20) = 0.01364. The increase in price is not nearly as interesting for the next person. But again, this will be lower for many small transactions.

I created a plot assuming transactions are made in small batches of BNT coins. We find that the BNT value drop VERY quickly when people start selling, and does not rise nearly as fast. Essentially this just makes BNT an undesirable coin. Another weird thing about their system is that it does not consider convexity. This means that big transactions will get very different prices than many small ones. This just does not make sense, but they don't care as they simply took your money.
http://imgur.com/a/f9yLy

If you are still not convinced, consider this. They literally admit to taking 80% of your money. All they give back is some mathematical trick based on 20% of the ether that you gave them. Do you really believe they just generated x5 value out of thin air? Sorry, but math does not work that way. I would recommend getting rid of your BNT asap, or you end up all the way on the left side of the graph. I am sorry that this news comes a bit late for some of you... I didn't read their methodology until last night

Maybe now you can start to add up why the ICO was strange in various ways.

As final words, don't just believe whatever I say. Think about it for yourself. I gain nothing by convincing you of whatever I write here, I am simply sharing thoughts.

They do factor in the size of transactions when calculating liquidation price. Here's a quote from their whitepaper:

"The above formula calculates the current price, however, when a purchase or liquidation is
executed, the effective price is calculated as a function of the transaction size. The calculation
can be described as if every transaction is broken up into infinitely small increments, where each
increment is changing the smart token’s supply, reserve balance, and thus its price."

The scenario where one person sells off a large amount to get a good price (at the expense of others) might not really happen since they are using "effective price".

Yes, I indeed see that they bothered to solve the curvature issue. Thank you for commenting on content. The main issue is that the coins are backed by a small portion of the investors money though.

[btbrae]

Just ridiculous, firstly you have to be an idiot to sell it back for that price. It acts as a floor only. Secondly, if you do decide to sell it back then the fact you're not using an exchange tells us you're getting a better return than if the buyback didn't exist in the first place.

You just can't please some people.

Waste of forum space.

[dominic25]

I tried to be part of the ICO but wound up not getting any BNT. I like holding coins long term. Good or bad it worked for LTC when I was mining it was $2 a coin. I would like to try to buy some BNT if anyone would want to get rid of some. Thanks

[AmarO]

They put a false sense of security.

[DVrij]

Just ridiculous, firstly you have to be an idiot to sell it back for that price. It acts as a floor only. Secondly, if you do decide to sell it back then the fact you're not using an exchange tells us you're getting a better return than if the buyback didn't exist in the first place.

You just can't please some people.

Waste of forum space.

So let me get this straight. You think it is a waste of forum space that OP posted a thread about content form a project? Or are you talking to some other user? It is a bit unclear.

I for one am very happy people in the community try to do the calculations and try to act as a check on claims projects make. It is very valuable to have a sceptical community that actually argues over content instead just screams SCAM and then leave again. If other projects would have gotten more analysis by critical users on this forum, maybe we wouldn't have had this wave of hype ICO's...

So thank you OP for trying to start a discussion about the actual contents of a whitepaper of a very popular ICO!

[2bfree]

Just ridiculous, firstly you have to be an idiot to sell it back for that price. It acts as a floor only. Secondly, if you do decide to sell it back then the fact you're not using an exchange tells us you're getting a better return than if the buyback didn't exist in the first place.

You just can't please some people.

Waste of forum space.

So let me get this straight. You think it is a waste of forum space that OP posted a thread about content form a project? Or are you talking to some other user? It is a bit unclear.

I for one am very happy people in the community try to do the calculations and try to act as a check on claims projects make. It is very valuable to have a sceptical community that actually argues over content instead just screams SCAM and then leave again. If other projects would have gotten more analysis by critical users on this forum, maybe we wouldn't have had this wave of hype ICO's...

So thank you OP for trying to start a discussion about the actual contents of a whitepaper of a very popular ICO!

I second that!

[De Selby]

This is interesting. However, won't BNT be traded on an exchange like Bittrex where supply and demand determine the price?