What is BNT?
Bancor (BNT) is a decentralized network of on-chain automated market makers (AMMs) with the stated goal of supporting instant, low-cost trading, as well as Single-Sided Staking and 100% Impermanent Loss Protection for any listed token. The protocol is overseen by the Bancor Decentralized Autonomous Organization (DAO), and its mission is to facilitate simple and safe access to decentralized trading and yield.
Bancor protocol was first launched in 2017, and was amongst one of the first Decentralized Finance (DeFI) protocols to be established. Today, it reports generating millions in fees per month for depositors on 70+ tokens such as ETH, WBTC, LINK, MATIC, and more. The protocol is reportedly levered by many DeFI protocols including UMA, Paraswap, Nexus Mutual, KeeperDAO and others.
The Bancor Network Token, or BNT, is an ERC-20 utility token that allows traders to provide liquidity for the pools available on the network. BNT tokens are used as an intermediary currency when tokens are traded, and as such they are key to supporting the protocol’s AMM activity. Notably, the Bancor Network requires a user to lock only one asset in the pool as opposed to most of its competitors like Uniswap, which requires a user to lock a pair of assets. Users may stake their BNT on the Bancor network to generate rewards from providing liquidity, as well as earning fees from trading activity. The BNT token also allows holders to vote on any proposed changes to the network. Please note that governance participation is not available through the Wealthsimple Platform. If you wish to participate, you will need to withdraw your tokens to an external wallet.
Before trading any crypto assets it is important to understand the risks. This overview is a starting point for you to perform your own research prior to investing in a crypto asset.
No securities regulatory authority or regulator in Canada has evaluated or endorsed the Crypto Contracts or any of the crypto assets made available through the platform.
Wealthsimple has performed an assessment of whether BNT can be supported by Wealthsimple’s platform, including whether BNT is a security and/or a derivative and is being offered in compliance with securities and derivatives laws.
We evaluated BNT based on publicly available information, including (but not limited to):
- The creation, governance, usage and design of BNT, including the source code, security and roadmap for growth in the developer community and, if applicable, the background of the developer(s) that first created BNT;
- The supply, demand, maturity, utility and liquidity of BNT;
- Material technical risks associated with BNT, including any code defects, security breaches and other threats concerning BNT and its supporting blockchain (such as the susceptibility to hacking and impact of forking), or the practices and protocols that apply to them;
- Legal and regulatory risks associated with BNT, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of BNT; and
- Statements made by regulators or securities regulatory authorities in Canada and other jurisdictions regarding whether BNT, or generally about whether the type of crypto asset, is a security and/or a derivative.
Wealthsimple monitors ongoing developments related to crypto assets available on its platform for significant changes that may affect Wealthsimple’s original assessment of those assets, including Wealthsimple’s assessment of the application of securities and derivatives laws. Any significant changes relating to BNT may result in changes to this Crypto Asset Statement and/or Wealthsimple’s ability to support BNT.
Like all other crypto assets, there are some general risks to investing in BNT. These include short history risk, volatility risk, liquidity risk, demand risk, forking risk, cryptography risk, regulatory risk, concentration risk, electronic trading risk and cyber security risk. Please review the Wealthsimple Crypto Product Risk Disclosure for additional discussion of general risks associated with the crypto assets made available through the platform.
Additional Risks / Information
BNT may present additional risks relating to the suspension of version 2 of the Bancor protocol’s impermanent loss protection (ILP) feature in November 2021. In November 2021, Bancor protocol faced significant challenges with its ILP feature due to extreme market volatility. The ILP feature was designed to compensate liquidity providers with Bancor's native token, BNT, for impermanent loss (a scenario where the value of deposited assets in a liquidity pool changes unfavorably). The feature came under stress during a market downturn and was temporarily suspended, resulting in losses to users of the Bancor protocol. A class action was commenced in the U.S. courts as a result of the suspension of the ILP feature. A new version of the Bancor protocol (version 3) has since been released.
We emphasize that this Crypto Asset Statement is not exhaustive of all risks associated with trading BNT. Investors should perform their own assessment to determine the appropriate level of risk for their personal circumstances.
Wealthsimple is offering Crypto Contracts in reliance on a prospectus exemption contained in the exemptive relief decision Re Wealthsimple Investments Inc. dated December 18, 2023 (the Decision).
The statutory rights of action for damages and rescission in section 130.1 of the Securities Act (Ontario), and, if applicable, similar statutory rights under securities legislation of other jurisdictions of Canada, do not apply in respect of this Crypto Asset Statement to the extent a Crypto Contract is distributed under the prospectus relief in the Decision.
Last updated: January 1, 2024