What are Bancor pool weights?

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The Bancor Protocol is made up of a series of smart contracts designed to perform algorithmic token trades and pooling of on-chain liquidity.

Liquidity pools hold reserves (balances) of ERC20 tokens. The “weights” of a liquidity pool refer to the percentage exposure of each token in the pool.

All of Bancor 3 implementation of a liquidity pool is one with 2 tokens and 50/50 weights. Such a pool adjusts the prices of its reserve tokens so that each reserve always makes up 50% of the pool’s total value. Key points to note:

All tokens on the Bancor Network are stored in a single secure vault. The liquidity pools do not contain tokens; they are a logic layer above the vault that dictates the exchange of assets between the vault and a user. The pools are modular. At launch, each pool is a standard constant product bonding curve; however, modified pools with customized behavior can be substituted to serve novel use cases. The effective slippage is determined by the virtual balances reported by each of the liquidity pools, which is a subset of the total liquidity available from the vault, therefore the liquidity pool depth is bounded by the token balance of the vault, but can report an effective trading liquidity that is smaller than this number.

  • The BancorDAO determines the available liquidity for trading, through adjustment of the “BNT funding limit” parameter.
  • TKN liquidity contributions following the exhaustion of BNT funding continue to be accepted into the vault, and pool token issuance and redemption continues as normal.
  • Therefore, the capacity for staking on the Bancor Network is unlimited.

 

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