Maybe you could clear up something I've been wondering as someone new to cryptocurrencies. In the ICO, Bancor exchanges their own, newly created coins for Ethereum and the 'investors' are hoping that the new Bancor coins value will go up? So the Bancor team raised ~150 million dollars (in Ethereum) with no strings attached -- ie, no investors, debt, etc? Do I have this right?
This is accurate, all of the ether that bancor owns it can do whatever it wants with - the investors get nothing except a centralized token (BNT) that Bancor can control completely (create, delete, etc, see https://medium.com/unchained-reports/bancor-unchained-all-yo... ), the investors do not get equity or insurance or any other similar guarantees.
So, unless I'm grossly misunderstanding things, during the ICO, Bancor BNT tokens were purchased representing some fraction of the 150M contributed. Those tokens can now be exchanged by participants in Bancor's exchange, and purchased or liquidated freely to the underlying held cryptocurrency.
The ether raised during the ICO are used 1) fund various Bancor operations, and 2) fund an ether reserve to support liquidity.
But note, that reserve is just a fractional reserve. If there's a run on BNT, some people will lose if the reserve dries up! In their whitepaper example, of 200k ether raised, they mention a 30% fractional reserve.
You might ask yourself, why not just buy/sell ether directly? Well, the novelty, here, is that Bancor tokens could represent other cryptocurrencies or even baskets of currencies (though how the subsequent transactions on those other blockchains are handled, I have no idea, and their whitepaper doesn't go into it).
So yeah, I'd say your general description is accurate. If things go bad for Bancor, there's gonna be a lot of people losing out.
