In the 1940s, British economist Keynes proposed the idea of using about 30 representative commodities as value anchors to issue the international currency Bancor. Other countries or institutions then use Bancor as the value anchor to issue their own currencies. Since there was no decentralized blockchain system at that time, it was difficult for this program to be actually implemented and implemented. Instead, the U.S. dollar became an international currency. After the emergence of the Ethereum system, the Bancor algorithm received strong support for technical implementation.
In the transaction process, the matching method of buying and selling orders in the exchange (the counterparty must be required) is not used in the transaction process. Token holders interact with the smart contract to make transactions with the entire Token market. The Bancor algorithm is derived from the mathematical tools of calculus. Regardless of the number of transactions, every purchase will push up the price of the token, and every sale will lower the price of the token and the parameters in the contract. The state always reflects the market supply and demand situation and maintains the price balance.