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Bancor is an Automated Market Maker protocol (AMM) attempting to reinvent the current way liquidity pools operate. Current liquidity pools such as @Uniswap use @ethereum (EHT) as a trading pair for the token (TKN) liquidity providers (LP's) stake which can cause
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impairment loss (opportunity cost of holding TKN used to provide liquidity instead of holding ETH) for the LP's if the price of ETH were to jump.
Bancor's protocol attempts to solve this issue while maintaining the balance between LP's, Traders, & Arbitrageurs
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Bancor's protocol attempts to solve this issue while maintaining the balance between LP's, Traders, & Arbitrageurs
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Bancor's solution is in their Token ecosystem which mints and destroys BNT TKN's with fluctuations in Supply/Demand in the liquidity pools. So how are are the LP's, Traders, and Arbitrageurs balanced out? 
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LP's: Impairment loss is reduced and LP's are able to receive trading fees. LP's are essential to the system as they provide the liquidity to traders and opportunity to arbitrageurs.
Traders benefit from a reduction in slippage (delta between price traded and assigned).
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Traders benefit from a reduction in slippage (delta between price traded and assigned).
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Arbitrageurs: Are generally incentivized by skimming the bid/ask in an arb opportunity but instead Bancor promotes an active strategy where the arbitrageurs hold BNT and take profit as the BNT pool expands/contracts with BNT being minted/burned.
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I think this is correct, but would love to catch up more on it. Still looking into the drawbacks vs. competing protocols. Few spots are more nuanced, but character limits force brevity haha. Hope you and yours enjoyed V-day!
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