ESZCoin Joins the Bancor Network

EtherSportz is excited to announce it will integrate the Bancor Protocol to provide instant liquidity for holders of its ESZCoin (ESZ) with low fees and no trading spread! To understand more about how this works read our new post “ESZCoin + Bancor Token Relay Explained”.

What is the Bancor Network?

Bancor is an automated decentralized liquidity network that allows all token launchers, large and small, to bring their innovations to market despite a challenging liquidity barrier. Liquidity is the lifeblood of any currency, and with a growing number of tokens and increased complexity and fragmentation around exchanges, an autonomous smart contract-based solution is the next evolution for a modern crypto economy to thrive.

The Bancor Protocol uses their own network token BNT as a connector to all other tokens in the network. Importantly BNT can be instantly converted to ETH at practically no costs*. This way users of the Bancor Network are not forced to hold any BNT and can trade directly to ETH or any other token in the network if they prefer to. Trading against any token other than BNT is just doing two trades in one step and has the same costs as doing both steps separately.

Why is the rate on Bancor always a fair market rate?

The big innovation of the Bancor system is that you do not need a second party to take the other side of your trade. It is designed to always move towards a fair market rate, and to reduce the friction and costs you’ve come to expect from normal exchanges. There is no order book, nor are there trades or offers that are not matched with each other. Instead investors can only trade with the smart contract that always offers the same rate for buying and selling to everyone.

For the ESZ/BNT trading pair, there will be a smart contract that always holds a balance of both ESZ and BNT in a constant 50/50 ratio. Neither of these balances can ever be fully depleted because as the supply of one balance is reduced, the exchange rate between the two sides increases so that it will never reach zero. The price of ESZ will increase with more buys and decrease with sells. So, for example, if users bought more ESZ than they sold, then the ESZ balance would shrink, resulting in a higher price relative to BNT. If the price of ESZ is ever out of sync with prices on external exchanges,users are incentivized by profitable trades to push the price back to a more moderate position. For this reason, there are many opportunities for arbitrage.

Why will ESZCoin use Bancor Network?

Users within the ESZ community pointed out that there is a high spread (often 5–20%) when buying or selling ESZ on IDEX. On Bancor, there will only be a small fee of 0.2% for buying and selling, resulting in a combined spread of 0.4% for the ESZ/BNT trading pair. This fee is collected by the liquidity providers and works as an incentive to provide further liquidity to the system.

Since every ESZ/BNT trade via the Bancor system changes the ESZ/BNT conversion rate in favor of the opposite trade, more liquidity results in better conversion rates for everyone.

Bancor is best for small and medium conversions by users who just want to change their coin at a fair market price. It gives users the ease of not having to compare prices between different exchanges, and avoids hidden exchange fees by market makers.

*price slippage and gas fee for a $10,000 trade between ETH and BNT costs less than $3 (=0.03%) at the moment. For smaller trades price slippage is much smaller, but the fixed gas fee of around $1 is more significant but still very low.

When our ESZCoin Relay Token launches, it will provide anyone with the ability to purchase ESZ directly from the Bancor web app. In the following days we will publish more in-depth info about how Bancor works and how to use it.

Learn more about EtherSportz & ESZCoin
EtherSportz is being developed as an online based eSports tournament platform for popular games. Competitors can participate in prize pool tournaments by registering for EtherSportz hosted events and paying a Cash or Crypto entry fee. The top tournament winners will receive the majority of the prize pool generated by the entry fees!

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About Bancor
Bancor Protocol is a standard for the creation of Smart Tokens™, cryptocurrencies with built-in convertibility directly through their smart contracts. Bancor utilizes an innovative token “connector” method to enable formulaic price calculation and continuous liquidity for all integrated tokens, without needing to match two parties in an exchange. Smart Tokens interconnect to form token liquidity networks, allowing user-generated cryptocurrencies to thrive. To convert tokens instantly, visit the Bancor Web App or join the Bancor Telegram group for more information.