Our dialog started with a elementary query — one which will get to the very root of decentralized liquidity:
What impressed the creation of Bancor, and the way did it contribute to the event of DeFi?
Dr. Mark Richardson’s response isn’t nearly Bancor — it’s in regards to the elementary issues that existed earlier than DeFi and the way fixing them led to one of many most- if not the most- pivotal breakthroughs in decentralized finance.
Bancor’s identification as a blockchain undertaking is unattainable to separate from the Bancor Protocol (or, equally, the Bancor System): a steady liquidity worth quoting and account-keeping methodology sometimes called the “fixed product automated market maker” and its related “pool tokens”. The origins of the Bancor Protocol prolong farther into the previous than the appearance of Ethereum and different second-generation blockchains.
The story begins with Metacafe, an early person video sharing web site and competitor to YouTube, based by Eyal Hertzog. Metacafe centered on selling the top-rated and most-viewed movies, whereas YouTube catered to extra area of interest pursuits, permitting its customers to discover the “lengthy tail” of user-generated content material. The latter mannequin proved to be the extra highly effective of the 2, in the end seeing YouTube progress in the direction of whole dominance of user-generated video sharing providers.
After discovering Bitcoin in 2011, Hertzog categorized the phenomenon as “user-generated foreign money”, and reflecting on the success of YouTube’s mannequin, acknowledged the potential for an extended tail of different user-generated currencies. At the moment, we’d determine these as “meme tokens”.
