BOM Audit Risk Weight Asset Service
Last updated
Last updated
Audit center and asset risk management services
Global audit system
Connecting with local banks for asset appraisal and issuance of collateral.
Streamlining the appraisal process, ensuring authenticity and appropriate risk assessment.
Collaborating to comply with specific legal regulations of each region.
RWA risk management system
Utilizing the Bancor System algorithm and Risk Weight Asset system.
Integrating real data from Chainlink for early warnings and asset fluctuation monitoring.
Maximizing liquidity balance for BOM tokens.
Bancor Protocol
The Bancor protocol enables built-in price discovery and a liquidity mechanism for tokens on smart contract blockchains. These “smart tokens” hold one or more other tokens in reserve, and enable any party to instantly purchase or liquidate the smart token in exchange for one of its reserve tokens, directly through the smart token’s contract, at a continuously calculated price, according to a formula which balances buy and sell volumes.
A smart token utilizes a novel method for price-discovery which is based on a “Constant Reserve Ratio” (CRR). The CRR is set by the smart token creator, for each reserve token, and used in price calculation, along with the smart token’s current supply and reserve balance, in the following way:
This calculation ensures that a constant ratio is kept between the reserve token balance and the smart token’s market cap, which is its supply times its price. Dividing the market cap by the supply produces the price according to which the smart token can be purchased and liquidated through the smart contract. The smart token’s price is denominated in the reserve token and readjusted by the smart contract per each purchase or liquidation, which increases or decreases the reserve balance and the smart token supply (and thus the price) as detailed below.
When smart tokens are purchased (in any of their reserve currencies) the payment for the purchase is added to the reserve balance, and based on the calculated price, new smart tokens are issued to the buyer. Due to the calculation above, a purchase of a smart token with a less than 100% CRR will cause its price to increase, since both the reserve balance and the supply are increasing, while the latter is multiplied by a fraction. Similarly, when smart tokens are liquidated, they are removed from the supply (destroyed), and based on the current price, reserve tokens are transferred to the liquidator. In this case, for a smart token with a CRR less than 100%, any liquidation will trigger a price decrease. This asynchronous price-discovery model works by constantly readjusting the current price toward an equilibrium between the purchase and liquidation volumes. While in the classic exchange model price is determined by two matched orders in real-time, smart token prices are calculated over-time, following every order.
The above formula calculates the current price, however, when a purchase or liquidation is executed, the effective price is calculated as a function of the transaction size. The calculation can be described as if every transaction is broken up into infinitely small increments, where each increment is changing the smart token’s supply, reserve balance, and thus its price. This ensures that purchasing the same amount of smart tokens in a single or multiple transactions would yield the same total price. Additionally, this method ensures that the CRR will be kept constant and the reserve can never be drained. Essentially, the effect of the transaction size on the price (due to its changing the smart token’s supply and reserve balance) is incorporated into the effective price for any transaction. The mathematical functions for calculating price per transaction size are presented further in this document. Using this method, the Bancor protocol can enable liquidity and asynchronous price discovery for existing standard tokens -- through smart tokens holding them in reserve, enabling backward compatibility. This use-case and others are described in detail below.
