Difference between revisions of "Balancer"

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Balancer is a decentralized exchange and automated portfolio management of tokens.
Balancer is a Decentralized Exchange (DEX) and automated portfolio management of tokens.  


= What is Balancer Protocol? =
The team behind the Balancer Protocol (Balancer Labs) has been in the DeFi space for several years and started Balancer as a research project in early 2018<ref>https://www.kraken.com/en-gb/learn/what-is-balancer-bal</ref>. The company has around 30 employees.
Balancer Pools contain two or more tokens that traders can swap between. Liquidity Providers put their tokens in the pools in order to collect swap fees.  
[[File:Balancer.png|thumb|Balancer]]
The protocol has its own governance token BAL which has a veModel similar to [[Curve Finance]] , with the exception that users are locking 80/20 BAL/WETH BPT instead of just BAL.


Balancer adopts powerful features to slash gas costs, super-charge capital efficiency, unlock arbitrage with zero-token starting capital, and open the door to custom AMMs.
== Chains ==
 
==== How is Balancer Protocol useful? ====
There are two categories of users who can benefit from the Balancer Protocol:
 
Liquidity Providers - Who own Balancer Pools or participate in shared pools, and traders - who buy or sell the underlying pool assets on the open market. Anyone with two or more ERC20 tokens can be a liquidity provider.
 
Traders can choose from a diverse set of pools, each presenting a unique set of investment opportunities and challenges through its particular configuration of tokens, weights, and fees. The interplay between these settings, pool volume, and external prices generates market forces which incentivize traders to maintain stable token ratios, thereby preserving asset value for liquidity providers.
 
There are three main categories: "Retail" traders seeking to exchange tokens with low slippage at favorable rates. Arbitrageurs seeking profit through leveling market inefficiencies between DEXs or CEXs. Ethereum smart contracts seeking liquidity for a variety of reasons, such as liquidating positions on other protocols, trading on behalf of users, etc.
 
==== Is there a Balancer Governance Token? ====
Yes, Balancer Governance Token, BAL, can be used to vote on proposals and steer the direction of the protocol. Every week 145,000 BALs, or approximately 7.5M per year, are distributed to liquidity providers. They are typically distributed directly to liquidity providers on Tuesdays at 2300 UTC.
 
25M BAL tokens were initially allocated to founders, stock options, advisors and investors, all subject to vesting periods.
 
5M were allocated for the Balancer Ecosystem Fund. This fund will be deployed to attract and incentivize strategic partners that will help the Balancer ecosystem grow and thrive. BAL holders will ultimately decide how this fund is used over the coming years.
 
5M were allocated for the Fundraising Fund. Balancer Labs raised a pre-seed and seed round. This fund will be used for future fundraising rounds to support Balancer Labs' operations and growth. BAL tokens will never be sold to retail investors. The remaining 65M tokens are intended to be mostly distributed to liquidity providers in the coming years.
 
==== What are the Highlights of V2 compared to V1? ====
-Protocol Vault for all Balancer pool assets
 
-Custom AMM formulas
 
-Improved gas efficiency
 
-Flash Loans
 
-Flash Swaps (arbitrage trading with no initial tokens)
 
-Internal User Balances (like a personal "wallet" inside the Vault)
 
-Low-gas-cost and resilient oracles
 
-Community-governed protocol fees
 
==== How is Balancer V2 more gas efficient? ====
Balancer V2 consolidates each pool’s assets in the Vault, which holds the assets for all Balancer pools. Even though trades can be carried out in batches against multiple pools, only the final net token amounts are transferred from and to the vault, saving a significant amount of gas in the process. While previous multi-hop trades would have required as many token transfers as hops, the Vault simplifies the trade by only transferring the input and final output tokens; all other swaps are performed by adjusting pool balances within the Vault.
 
==== What type of fees are ? ====
Trading fees: A small percentage of the trade paid by traders to pool LPs, set by the pool creator or dynamically optimized by Gauntlet. Additionally, Balancer governance can vote to introduce a Protocol Trading Fee, which is a percentage of the Trading Fee.
 
For instance, if a pool had a 1% fee, and governance introduced a 1% protocol fee - the total swap fee to the trader would remain at 1%, but now 0.99% would accrue to the pool's LPs, and 0.01% would accrue to the protocol fee collector contract.
 
Flash Loan fees: A small percentage of assets that are used for flash loans from Balancer’s vault. This is the protocol fee - it accrues to the protocol, for allocation by governance.
 
Note: All protocol fees were set to zero at launch, and in Dec 2021, were set to 10% by a governance vote.
 
==== Main principles? ====
The core tenets of Balancer V2 are security, flexibility, capital efficiency and gas efficiency.
 
''Secure'' — Extreme care was taken in guaranteeing the vault architecture keeps internal balances isolated among pools.
 
''Simple'' — All interactions with Balancer V2 will be done through one single access point: the Vault. Only one token approval will be necessary for users to trade or invest liquidity in any Balancer pool.
 
''Gas efficient'' — Trading against both standard and stable pools will cost a little over 100k gas, which is on par with Uniswap V2. Trades will cost even less if internal balances are used. Trading with many pools at the same time only marginally increases the gas costs.
 
''Capital efficient'' — Pools can enable Asset Managers, which have full control over the underlying pool tokens they add to the vault. This opens up vast design space to improve capital efficiency and for other use cases like using underlying tokens to vote.
 
''Flexible'' — Balancer welcomes other teams to innovate on top of V2, creating a thriving ecosystem and network effect. Grants and bounties will be given to contributors who create new successful pools.
 
==== What networks does Balancer Protocol run on? ====
Balancer is deployed on Ethereum, Polygon, and Arbitrum. It's also deployed to the Kovan, Goerli, and Ropsten testnets.
Balancer is deployed on Ethereum, Polygon, and Arbitrum. It's also deployed to the Kovan, Goerli, and Ropsten testnets.


Additionally, there is a friendly fork on Fantom. (https://vote.balancer.fi/#/proposal/0x95db8e797145ad590b467f8dbecb23404c25c2a7090aa8a8d65428ad9f7373fc)
Additionally, there is a friendly fork on Fantom which was approved by the Balancer DAO<ref>https://vote.balancer.fi/#/proposal/0x95db8e797145ad590b467f8dbecb23404c25c2a7090aa8a8d65428ad9f7373fc</ref>.
 
There are no implementations on Tron, or any other networks. Balancer Labs has awarded grants to teams developing on Near and Algorand; however, these are exploratory grants, and does not imply that there are working versions of Balancer Protocol on these systems.
 
==== Who is behind Balancer Labs? ====
The team behind the Balancer Protocol (Balancer Labs) has been in the DeFi space for a while, and started Balancer as a research project in early 2018.
 
Currently there are ~30 Balancer Labs employees, consisting of developers, integrations, marketing, business development, and more.
 
 
Website: https://balancer.fi/
 
Discord: https://discord.balancer.fi/
 
Medium:  https://medium.com/balancer-protocol
 
Twitter: https://twitter.com/BalancerLabs


Github: https://github.com/balancer-labs/
== Tech==
Balancer V2 is a generalized AMM that separates pool logic from token management and accounting.  All assets in Balancer pools are handled by a single contract, the [https://etherscan.io/address/0xba12222222228d8ba445958a75a0704d566bf2c8 Balancer Vault]. 


Forum: https://forum.balancer.fi/
=== Pool Types ===


== Sources: ==
* '''Weighted Pools''' - A generalization of the xy=k constant product invariant which allows for more than two tokens at custom asset weightings.
* '''Stable Pools''' - Designed for assets that trade at near parity, uses the stableswap invariant popularized by Curve.
* '''Liquidity Bootstrapping Pools (LBP's)''' -  An extension of weighted pools, LBP's dynamically adjust asset weightings over a period of time to facilitate price discovery for token launches.  There is no Balancer UI for LBP's, nor are any LBP's run by Balancer. Instead, independent projects such as [https://copperlaunch.com/ Copperlaunch] or Prime Launch handle the user interface. 
* '''Metastable Pools''' - Facilitates trades between assets that trade at a known exchange rate.  An example would be the [https://app.balancer.fi/#/pool/0x32296969ef14eb0c6d29669c550d4a0449130230000200000000000000000080 wstETH/WETH pool] on Ethereum mainnet. 
* '''Boosted pools''' - An innovative pool type that utilizes nested BPT to enable a portion of the pool's liquidity to be in yield bearing strategies, such as AAVE or Yearn.  There is currently an AAVE stable boosted pool on mainnet that earns an additional 2-4% organic yield from AAVE while still having the base tokens to facilitate trading without the need to route through AAVE.  More info in the [https://docs.balancer.fi/products/balancer-pools/boosted-pools docs], or [https://beethovenxio.medium.com/boosted-pools-the-future-of-liquidity-provision-reimagined-7f99113ab2a2 this great article] by Beethoven X, the aforementioned friendly fork on Fantom that heavily utilizes Boosted pools in their strategy. 
* '''Custom Pools''' - Anyone can tap into the Balancer Vault and build a custom pool type that uses any invariant that controls how assets in the pool relate to one another.  An example would be Element Finance's [https://docs.element.fi/element/element-smart-contracts/custom-balancer-curve/convergent-curve-pool Convergent Curve Pool] which facilitates trades for assets that converge in value over time. 


# https://balancer.gitbook.io/balancer/getting-started/faq
==Sources:==
# https://docs.balancer.fi/getting-started/faqs/v2-in-a-nutshell
<references />
# https://docs.balancer.fi/
[[Category:DEX]]
[[Category:Protocols]]

Latest revision as of 09:44, 26 April 2022

Balancer is a Decentralized Exchange (DEX) and automated portfolio management of tokens.

The team behind the Balancer Protocol (Balancer Labs) has been in the DeFi space for several years and started Balancer as a research project in early 2018[1]. The company has around 30 employees.

Balancer

The protocol has its own governance token BAL which has a veModel similar to Curve Finance , with the exception that users are locking 80/20 BAL/WETH BPT instead of just BAL.

Chains

Balancer is deployed on Ethereum, Polygon, and Arbitrum. It's also deployed to the Kovan, Goerli, and Ropsten testnets.

Additionally, there is a friendly fork on Fantom which was approved by the Balancer DAO[2].

Tech

Balancer V2 is a generalized AMM that separates pool logic from token management and accounting. All assets in Balancer pools are handled by a single contract, the Balancer Vault.

Pool Types

  • Weighted Pools - A generalization of the xy=k constant product invariant which allows for more than two tokens at custom asset weightings.
  • Stable Pools - Designed for assets that trade at near parity, uses the stableswap invariant popularized by Curve.
  • Liquidity Bootstrapping Pools (LBP's) - An extension of weighted pools, LBP's dynamically adjust asset weightings over a period of time to facilitate price discovery for token launches. There is no Balancer UI for LBP's, nor are any LBP's run by Balancer. Instead, independent projects such as Copperlaunch or Prime Launch handle the user interface.
  • Metastable Pools - Facilitates trades between assets that trade at a known exchange rate. An example would be the wstETH/WETH pool on Ethereum mainnet.
  • Boosted pools - An innovative pool type that utilizes nested BPT to enable a portion of the pool's liquidity to be in yield bearing strategies, such as AAVE or Yearn. There is currently an AAVE stable boosted pool on mainnet that earns an additional 2-4% organic yield from AAVE while still having the base tokens to facilitate trading without the need to route through AAVE. More info in the docs, or this great article by Beethoven X, the aforementioned friendly fork on Fantom that heavily utilizes Boosted pools in their strategy.
  • Custom Pools - Anyone can tap into the Balancer Vault and build a custom pool type that uses any invariant that controls how assets in the pool relate to one another. An example would be Element Finance's Convergent Curve Pool which facilitates trades for assets that converge in value over time.

Sources:

  1. ↑ https://www.kraken.com/en-gb/learn/what-is-balancer-bal
  2. ↑ https://vote.balancer.fi/#/proposal/0x95db8e797145ad590b467f8dbecb23404c25c2a7090aa8a8d65428ad9f7373fc
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