What Is Balancer (BAL)?
Balancer (BAL) is an automated market maker (AMM) developed on the Ethereum blockchain and launched in March 2020. It raised a $3M seed round by Placeholder and Accomplice. Balancer protocol functions as a self-balancing weighted portfolio, price sensor and liquidity provider. Contributing to customizable liquidity pools allows users to earn profits through its recently introduced token ($BAL).
The protocol operates a few types of pools:
- Private pools give the owner governance over the pool and make the person the sole liquidity contributor to the pool. Also, all the parameters are mutable by the owner.
- Shared pools are for those who want to become liquidity providers (LPs). The LPs are rewarded with the Balancer Pool Tokens (BPTs).
- Smart pools are similar to private pools but are controlled by a smart contract. They also reward using BPTs and allow anyone to contribute liquidity to the pool.
Who Are the Founders of Balancer?
Fernando Martinelli and Mike McDonald founded Balancer Lab, but it began as a research program at the software firm “BlockScience” in 2018. The Balancer project features intelligent, like-minded fellows with an acute understanding of the DeFi space.
Fernando Martnelli, a serial entrepreneur and Maker community member, has many years of work experience outside Balancer. He co-founded many other companies before starting Balancer with his partner, Mike McDonald.
Mike McDonald is the co-founder and CTO at Balancer. He is a security engineer and the creator of mkr. Tools He joined Fernando Martnelli to build the Balancer platform.
What Makes Balancer Unique?
The Balancer is similar to Uniswap and Curve in that it enables anyone to create pools of tokens. The pool adjusts itself to keep the tokens equally weighted regardless of changes in their price. However, one unique feature of Balancer is that more than one token can be added, and ETH isn’t required.
Although Balancer isn’t the first DeFi protocol to use AMMs, it has brought a new face and approach to liquidity. The unique feature of the protocol is that it allows Liquidity providers to have up to eight assets per market which are weighted by percentage and rebalanced automatically.
With Balancer, users don’t have to deposit 50% of the desired asset but can decide how much of a supported asset they wish to deposit. Another unique feature of Balancer Lab is that users can make a high return on assets that are in low demand through arbitrage opportunities and slippage reduction. You can learn more about how Balancer works here.
How Many Balancer Tokens (BAL) Are There in Circulation?
The Balancer wasn’t launched with a native token. However, in June 2020, they launched a governance token, $BAL, following the success of Compound’s token COMP. The token’s purpose is to allow for more decentralization and as an incentive for LP.
Of the 100M tokens created, 25M were reserved for the team, core developers, investors and advisors. In addition, 5M tokens were allocated for the Balancer Ecosystem Fund, which would be used as incentives for strategic partners. Finally, another 5M were allocated for the fundraising fund. The Balancer will use this fund to support its operation and growth at future fundraisings.
The remaining tokens are mined by liquidity providers on the platform and are released at a rate of 145K per week. Provided the distribution rate is kept constant, it would take approx. 8.6 years to finish distributing the tokens.
How Is the Balancer Network Secured?
For Balancer, security is a top priority, and that is why the protocol has been fully audited three times by Trail of Bits, ConsenSys and OpenZeppelin. As a result, there are no admin keys or backdoors, making it trustless, and the balancer pools are not upgradeable. In addition, Balancer does not support tokens that do not conform to the ERC-20 standard, even though they may be used on some pools.
The tokens held on Balancer pools are not controlled by Balancer but are smart contracts. Nevertheless, that does not remove the inherent risks of smart contracts. The configurable rights pools (CRPs) ensure that tokens with known issues are barred from being used in pools. It further ensures that all other tokens safely interact with the protocol.
Where Can You Buy Balancer Tokens (BAL)?
Balancer allows users to add to liquidity pools to earn $BAL, automatically awarded to the users weekly. Top exchanges that support $BAL include Binance, ZenGo, Global, HBTC, Kraken, OKEx, Huobi.