In a blog post, Cornell professor Emin Gun Sirer explained how Bancor, the most successful ICO in the history of the cryptocurrency market that raised $150 million in a matter of hours, is flawed in 29 different ways from its core vision to its technical aspects.
Sirer’s blog post comes after the criticisms of some of the industry’s most prominent security and bitcoin experts such as Andreas Antonopoulos and Augur co-founder Joey Krug. In early June, Antonopoulos and Krug both expressed their concerns over the massive amount of investment raised by the Bancor development team for untested code and project.
Krug, in particular, went as far to describe Bancor as a project concept which was proved to be inefficient in one of Augur’s previous beta tests.
“Dear god the free market just gave $150M to something we found out didn’t work in practice in the Augur beta,” said Krug.
Bancor initially gained popularity amongst investors within the cryptocurrency community after the endorsement of billionaire investor Tim Draper. The development team behind Bancor aimed to create a standardized platform that would grant an increased level of liquidity for ICO tokens and altcoins. The team described Bancor as the “standard for a new generation of smart tokens.”
On June 12, Draper officially announced his involvement in the Bancor network as an investor, stating:
“We’d like for this to be a Smart Token, so it can benefit from continuous liquidity from day 1. We look forward to a long collaboration with the Bancor team on this project, and are excited for what BNT has in store.”
Conceptually, the Bancor network serves as an intermediary between smart tokens or ICO tokens and direct traders. Instead of traders getting access to and purchasing ICO tokens in a direct peer to peer manner, Bancor sets a standard and a platform which in concept is supposed to provide increased liquidity for traders and ICO operators.
However, Sirer explained that the utilization of the network as a standard for ICO tokens is “like stepping into a kid’s swimming pool, placed in an ocean,” which is a fair assessment of the project’s fundamental concept. More importantly, before delving into the controversial technical components of Bancor, Sirer noted that there already exists a currency peg between ICO tokens and traders which is Ethereum’s Ether.
Like Bancor, the vast majority of ICOs are launched on top of the Ethereum protocol, which means that their tokens are fully compatible with Ethereum’s native token Ether. Hence, the necessity of Bancor tokens comes into question when there already exists a currency peg or an interoperable native token in Ether.
“There already exists a common currency through which we can trade. It’s called ether, and we can use it no matter which token pairs we want to trade, because those very tokens are, by definition, implemented on top of Ethereum and were purchased with ether in the first place,” said Sirer.
However, a more important criticism offered by both Sirer and Antonopoulos is how the Bancor development team raised $150 million for 40 lines of untested code.
“It’s only 40 lines of code. Now, there is nothing wrong with raising $3.5M per line of code, if indeed there is a certain technical advantage that those lines of code possess,” said Sirer.
Furthermore, Sirer revealed that the reimplemented math of Bancor had no direct test to cover critical functions executed by the Bancor codebase. He also described Bancor’s codebase as a “mess,” explaining that the Bancor codebase has a distinct javascript quality.
“Well-written code looks like a work of art. It doesn’t matter if it’s C or Go or Ruby or Prolog; in fact, it looks especially like a work of art if it’s well-written C code. But it does matter if it’s Javascript, because well-written Javascript code is like the mythical Yeti: often discussed, with snippets of evidence for its existence, but no one has seen it in its full, corporeal form. This has been the hallmark of badly written smart contracts: they have messy code paths, don’t follow best practices, and happen to work by the skin of their teeth,” criticized Sirer.
Bitcoin pioneer and COO of popular cryptocurrency wallet platform Jaxx Charlie Shrem also commented on the weak security measures of Bancor and whether if it is in need of a blockchain-based network to accomplish its tasks.