What is Balancer?
Balancer is a decentralized exchange focused on allowing users to provide liquidity for rewards while swapping tokens on the Ethereum network.
Decentralized finance (DeFi) enables a transaction without a financial broker like an ecosystem known as Balancer.
Balancer can be thought of as an index fund in which investors generate a mix of cryptos for the investors. The balance of these funds is regarded as a liquidity provider, which can be provided by depositing an asset.
The most active users are incentivized to provide liquidity and receive a part of the fees charged to the Balancer and are compensated with BAL cryptocurrencies.
It uses related methodologies like other DEXs like Uniswap (CRV). An advantage to Balancer, though, is that it can organize and control eight tokens in one pool.
How does Balancer Work?
A Balancer pool may be created by anybody to add liquidity to the protocol. What makes Balancer pools so special is that you aren’t limited to pools with the traditional 50/50 split of two tokens.
Up to 8 tokens with custom deployments may be assisted via balancer pools. For eg, one pool might be made up of 30% WETH, 30% MKR, 30% USDC, and 10% LINK, whereas another pool could be made up of 80% WETH and 20% DAI.
Smart order routing (SOR) is used by Balancer to redirect users’ trades to the pools that, when combined, have the best cost.
Balancer V1 has no native token when it first released, however with this new release, the Balancer Protocol Governance Token has been included (BAL).
BAL investors will shape the direction of the Balancer protocol, deciding on things like new functionality, proposed transaction payments, and perhaps longer-term proposals like layer 2 scaling and/or contract deployment on other blockchains.
25 million BAL tokens were distributed to owners, key developers, consultants, and investors out of a total availability of 100 million BAL tokens, all of which are subject to vesting periods.
The remaining 75 million BAL tokens would mostly go to consumers who supply liquidity to Balancer pools in a method known as liquidity mining.
What is the History of Balancer?
Balancer Labs, the project’s spin-off, raised $3 million in financing in 2020. Investors received 5 million BAL tokens, while owners and staff received 25 million tokens (out of a total supply of 100 million tokens).
Balancer started as a research project at BlockScience, a tech consultancy company established by Fernando Martinelli and Mike McDonald in 2018.
An extra ten million BAL were set aside, half of which was set aside for a fund for Balancer ecosystem donors and the other half was set aside for potential investor purchases.
How do I hold Balancer?
BAL is an ERC20 token. You can hold it on any common Ethereum wallet, such as Metamask or MyEtherWallet.