Balancer (BAL)
Balancer Protocol, established in 2018 by Fernando Martinelli and Mike McDonald, is an open-source, automated portfolio manager and liquidity provider. It allows users to trade tokens, create liquidity pools, and invest in existing pools to earn yields from trades. The protocol is known for its self-rebalancing liquidity pools and operates on Ethereum, Polygon, Arbitrum, and specific testnets.
Expansion and upgrades
In August 2021, Balancer expanded to Arbitrum, a Layer 2 scaling solution, to reduce gas costs and enhance liquidity scaling. By June 2022, Balancer launched on the Layer 2 rollup network Optimism, introducing features such as smart wallet EOAs and decentralization of transaction sequencing.
Automated market maker protocol
Features of Balancer
Balancer functions as an automated market maker (AMM), offering unique liquidity pools that can accommodate multiple assets. Unlike other AMMs, Balancer pools can be programmed via smart contracts to implement custom rules and strategies. In October 2020, Balancer partnered with the NEAR protocol to explore performance on a scalable chain.
| Ticker | BAL |
| Category | Decentralized Exchange (DEX) |
| Website | https://balancer.finance/ |
| @Balancer | |
| Contract Addresses | |
|---|---|
| ethereum | 0xba...3d Copied! |
| xdai | 0x7e...17Copied! |
| polygon-zkevm | 0x12...d6Copied! |
| optimistic-ethereum | 0xfe...21Copied! |
| near-protocol | ba...arCopied! |
| base | 0x41...f1Copied! |
| harmony-shard-0 | 0xdc...0fCopied! |
| huobi-token | 0x04...0fCopied! |
| polygon-pos | 0x9a...a3Copied! |
| arbitrum-one | 0x04...b8Copied! |
| avalanche | 0xe1...c3Copied! |
| energi | 0x9b...d6Copied! |
Balancer protocol governance token (BAL)
Initially launched without a native token, BAL tokens were introduced on June 1, 2020, allowing holders to vote on protocol developments. The token distribution includes allocations for founders, advisors, and strategic partners, with a significant portion distributed through liquidity mining.
Liquidity pools and rebalancing
Balancer allows users to create or contribute to liquidity pools with weighted assets and trading fees, enabling self-balancing index funds or investment in others' portfolios. Pools can support up to eight tokens with custom weight distributions.
Funding and partnerships
Funding rounds
In March 2020, Balancer Labs secured $3 million in seed funding, followed by additional investments from Pantera Capital, Alameda Research, and others through subsequent funding rounds.
Partnerships
Balancer has formed strategic partnerships with various organizations. Notable collaborations include the development of the Balancer-Gnosis Protocol (BGP) with Gnosis in April 2021, and a partnership with Certora in October 2022 to enhance code security for builders on Balancer.
Balancer V2
Key features
Launched in February 2021, Balancer V2 introduced enhancements such as Protocol Vault, improved gas efficiency, customizable AMM logic, and community-governed protocol fees. The Protocol Vault centralizes asset management, while customizable AMM logic allows for innovative strategies.
Gas efficiency and asset management
Balancer V2 reduces gas costs by optimizing trade processes and allows users to hold internal token balances. Asset managers can improve yield by lending tokens to external protocols, with Balancer partnering with Aave for the first V2 Asset Manager.
Oracles and governance
Balancer V2 features resilient oracles resistant to manipulation, offering instant and resilient price options. Governance by BAL token holders includes managing protocol-level fees like trading, withdrawal, and flash loan fees.
The Balancer ecosystem launchpad
The 8020 initiative
Introduced on July 6, 2023, the 8020 Initiative proposes using an 8020 pool BPT token as a governance token, offering benefits such as deep liquidity and efficient incentive programs.
LST liquidity hub and boosted pools
Balancer's Composable Stable pools and Boosted Pools enhance liquidity growth and user incentives by integrating external yield-generating protocols. Boosted Pools, for instance, combine Liquidity Pools with single-sided yield markets for dynamic positions.
A base layer to build
Balancer encourages developers to build efficiently using its base layer. The Gyroscope protocol, for example, utilized Balancer's tech stack to create a concentrated liquidity model, facilitating significant swaps.
Partnerships and ecosystem growth
Collaboration with Polygon zkEVM
In June 2023, Balancer deployed its technology onto Polygon's zkEVM Mainnet Beta, enhancing scalability and liquidity growth across the ecosystem.
Balancer x Avalanche and Base
In August 2023, Balancer launched on Avalanche, providing a flexible tech stack for DeFi. Shortly after, Balancer partnered with Base, an Ethereum Layer-2 platform powered by Coinbase, to expand DeFi across its ecosystem.