What Is Balancer.finance? (BAL) Complete Guide Review About Balancer.finance

About Balancer.finance

Balancer.finance is an automated market maker (AMM) that was developed on the Ethereum blockchain and launched in March 2020. It was able to raise a $3M seed round by Placeholder and Accomplice. The protocol functions as a self-balancing weighted portfolio, price sensor and liquidity provider. It allows users to earn profits through its recently introduced token ($BAL) by contributing to customizable liquidity pools.

A Pool is an automated market maker with certain key properties that cause it to function as a self-balancing weighted portfolio and price sensor. The turns the concept of an index fund on its head: instead of paying fees to portfolio managers to rebalance your portfolio, you collect fees from traders, who rebalance your portfolio by following arbitrage opportunities. This is based on a particular N-dimensional surface which defines a cost function for the exchange of any pair of tokens held in a the Pool.

Balancer coin approach was first described by Buttering[0], generalized by Alan Lu[1], and proven viable for market making by the popular Unisa[2] dapp. They independently arrived at the same surface definition by starting with the requirement that any trade must maintain a constant proportion of value in each asset of the portfolio. They applied an invariant-based modeling approach described by Arkham et al[3] to construct this solution. They will prove that these constant-value market makers have this property.

Balancer.finance Basic Points Table

Features

Simulate Trades

Preview an expected trade price for two assets given existing liquidity and slippage.

Smart Order Routing

Trades are split through an SOR which performs an optimization across all pools for best price execution.

Fees

The pools charge a percentage of the input amount traded for each trade. The fee is customizable per pool and goes entirely to the pool liquidity providers.

Unstoppable Interface

Frontends are open-source and will be made available through IPFS. Trade any tokens without need for whitelisting or approval.

Service

Generalized AMM

Customizable number of assets and weights within a pool

Global Liquidity

Trade against all pools in the Balancer ecosystem for best price execution

Smart Pools

Pools controlled by smart contracts can implement any arbitrary trading strategy or logic

Balancer useful for You

Balancer.finance Instead of paying fees to portfolio managers to rebalance your portfolio, you collect fees from traders, who rebalance your portfolio. You can earn returns by providing liquidity or as a trader swap between any assets in the global liquidity pool.

Protocol

They Up to 8 tokens. Any weights. And programmability through smart-contract owned pools. Private pools where only you can add or remove liquidity Dynamic swap fees to adjust based on the underlying volatility Adjust weights continuously over time for dynamic strategies Earn trading fees on top of cDai in a rebalancing smart pool Join a multi-token pool with a single asset Use Balancer Pool Tokens within new pools for liquidity exposure

Value

The bedrock of exchange functions is a surface defined by constraining a value function  a function of the pool’s weights and balances — to a constant. they will prove that this surface implies a spot price at each point such that, no matter what exchanges are carried out, the share of value of each token in the pool remains constant.

Tokens

Balancer coin Pools can aggregate the liquidity provided by several different users. In order for them to be able to freely deposit and withdraw assets from the pool, Protocol has the concept of pool tokens. Pool tokens represent ownership of the assets contained in the pool. The outstanding supply of pool tokens is directly proportional to the Value Function of the pool. If a deposit of assets increases the pool Value Function by 10%, then the outstanding supply of pool tokens also increases by 10%. This happens because the depositor is issued 10% of new pool tokens in return for the deposit.

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