Bancor is a platform built on Ethereum that enables anyone to launch tokens, called “SmartTokens” in the protocol, backed by crypto-token reserves (initially ETH and others in the future). These SmartTokens can be freely traded and even used as the crypto-token reserves for issuing other tokens. The reserves are locked in a smart contract. Users will be able to specify the ratio of the SmartTokens total value to that of their reserve tokens, when launching configurable SmartTokens. The price at which the smart contract will issue new SmartTokens (if the reserve grows) or redeem SmartTokens (in exchange for reserve tokens) is a function of the following: the fixed ratio of SmartToken to reserve values, the existing supply of the SmartToken, and the quantity of funds held in a corresponding reserve. The smart contract underneath each SmartToken functions essentially like a distributed “central bank” with predictable monetary policy.