How BancorX Works: From Ethereum to EOS and Back Again
BancorX enables automated conversions between Ethereum-based and EOS-based assets without users having to deposit funds on an exchange and without the need for order-matching between buyers and sellers. Anyone can integrate an Ethereum or EOS token with BancorX by staking an amount of those tokens in a smart contract which they own and manage.
Behind the scenes, BancorX is based on the ability to move BNT — the Bancor Network Token — between blockchains. BNT is designed to function concurrently on both EOS and Ethereum in order to enable cross-chain conversions.
A key component of this cross-chain functionality is the unique ability of BNT, the world’s first Smart Token, to automatically issue and destroy itself simultaneously on multiple blockchains. Any BNT that moves between chains is removed from circulation on the originating chain and sent to an address on the destination chain. This ensures that throughout the cross-chain conversion process, the circulating supply of BNT remains unchanged.
- WATCH: How to convert ETH to EOS using BancorX
- Convert EOS tokens on the Bancor EOS Liquidity Network
- Move BNT between Ethereum and EOS using BancorX
When a user converts an Ethereum-based token into an EOS-based token via BancorX, the following occurs:
- The Ethereum token is converted into BNT.
- The BNT is sent to the BancorX smart contract on Ethereum, which also receives account information for the destination chain (EOS).
- Once the BNT and destination account are sent to the BancorX contract, the BNT is removed from circulation on Ethereum.
- Oracles watch the BancorX contract on Ethereum and report the BNT amount and destination wallet address to the BancorX contract on EOS.
- The BancorX contract on EOS then issues BNT on the EOS blockchain.
- This BNT can be converted into EOS or the desired EOS-based token through Relays on the Bancor Network.
Conversions from EOS-based tokens into Ethereum-based tokens similarly occur via BNT, but in the opposite direction:
- The EOS token is converted into BNT.
- The BancorX smart contract on EOS removes the BNT from circulation and receives account information for the destination chain (Ethereum).
- Oracles watch the BancorX contract on EOS and report the BNT amount and destination wallet address to the BancorX contract on Ethereum.
- The BancorX contract on Ethereum then sends BNT to the destination wallet address on the Ethereum blockchain.
- This BNT can be converted into ETH or the desired Ethereum-based token through Relays on the Bancor Network.
Anyone can view the corresponding transaction hashes of a cross-chain conversion via BancorX — meaning every token amount that moves through the system is permanently recorded on the blockchain and fully verifiable on both chains.
As an added layer of protection, a transfer quota is built into BancorX smart contracts, setting the maximum amount of BNT that can be transferred at any given time. As transfers deplete the quota, the quota is incrementally restored with each new block produced.
As BancorX goes live and the first BNTs flow from ETH to EOS and back again, Bancor will aim to remove friction, unify the user experience and ensure the system’s continued decentralization and utility. With real blockchain interoperability, the possibilities for token-powered applications proliferate dramatically. We are thrilled to introduce this new tool — and to see what you do with it. Please share your developments with our team on our social channels, and join us on Telegram with your thoughts and questions. We look forward to learning with and from the community as we all forge ahead into possibility and production.
To interoperability and beyond,
The Bancor Team