Quote
Does the Bancor protocol price discovery mechanism add to the price
volatility, compared to crypto-exchanges?
On the contrary. By holding a reserve balance which preserves a constant ratio to the
market-cap, the price volatility of smart tokens is not subject to the current market depth
since the reserve functions as a predictable and controlled alternative to the traditional
order book which normally provides market depth. We’ve seen that regular exchanges
generally hold around 1% market depth, meaning that any smart token with a CRR above
1% could be relatively more
volatility, compared to crypto-exchanges?
On the contrary. By holding a reserve balance which preserves a constant ratio to the
market-cap, the price volatility of smart tokens is not subject to the current market depth
since the reserve functions as a predictable and controlled alternative to the traditional
order book which normally provides market depth. We’ve seen that regular exchanges
generally hold around 1% market depth, meaning that any smart token with a CRR above
1% could be relatively more
This is total BS! According to your own formula, at 1% fractional reserve, changing supply by 1% will change the price by 150%. Is not this volatile??? Yeah right, the formula for price change is deterministic, but a trade is a random event, and any function of random event is a random variable. With low fractional reserve your tokens are going to be as volatile as any low volume tokens on exchanges.
Okay, what would happen if, say, someone bought 1% of the supply of Bitcoin? That would be a ~$370 Million USD purchase.
I imagine that too would change the BTC price in a volatile way. Any 1% purchase/liquidation of any currency would.
