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 not possible to separate from the Bancor Protocol (or, equally, the Bancor Formulation): a steady liquidity value quoting and account-keeping methodology also known as the “fixed product automated market maker” and its related “pool tokens”. The origins of the Bancor Protocol lengthen farther into the previous than the arrival 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 complete dominance of user-generated video sharing companies.
After discovering Bitcoin in 2011, Hertzog categorized the phenomenon as “user-generated forex”, and reflecting on the success of YouTube’s mannequin, acknowledged the potential for a protracted tail of different user-generated currencies. Immediately, we’d establish these as “meme tokens”.
