Due to their capacity to do away with middlemen and solve the liquidity problem, automated market makers have become widely used in recent years. One of these cutting-edge systems, Balancer, aims to alter how people trade completely. It has taken the role of conventional transaction techniques like order books and makes it easier to swap ERC-20 tokens by using smart contracts. We’ll get right to the heart of what is Balancer and what makes this platform tick.
What is Balancer (BAL)?
Balancer is an automated market-making mechanism (AMM) protocol that allows anyone to create liquidity pools (Liquidity Pools) for any token at an arbitrary ratio (maximum 98/2).
In other words, Balancer is the N dimension of Uniswap, by allowing a maximum of 8 tokens in 1 pool instead of 2 and with a variable rate of 50%: 50% like Uniswap.
At the beginning of February 2021, Balancer launched Balancer V2 version with improvements related to the Pool structure, increased capital efficiency, reduced gas fees, etc.
Background of Balancer
Balancer is an Automated Market Maker (AMM) developed on the Ethereum blockchain and launched in March 2020. They raised a $3 million seed funding round by Placeholders and Holders. The Balancer Protocol is a self-balancing weighted portfolio, price sensor, and liquidity provider. By contributing to customizable liquidity pools, it allows users to profit through recently introduced tokens ($BAL).
This protocol operates several types of groups as follows:
- Private pools give the owner the power to manage the pool and make him or her the sole liquidity contributor to the pool. In addition, the owner can change all the parameters.
- General group for people who want to become liquidity providers (LPs). The liquidity Provider (LP) will be rewarded with Balancer Pool Token (BPT).
- Smart pools are similar to private pools but controlled by a smart contract. They also reward using BPT and allow anyone to contribute liquidity to the pool.
How Does Balancer Work?
The balancer does not use order books to settle transactions. Instead, it introduces the idea of “balancer pools“, which are collections of two to eight different cryptocurrencies that give traders the liquidity they need.
The percentage of tokens in each balancer pool is established when the pool is first created. For instance, a pool might be constructed using ETH, USDT, and WBTC in proportions of 25%, 25%, and 50%, respectively, of its entire value.
This pool is balanced when a user starts a trade. To guarantee that each asset maintains a proportionate value to the rest of the pool, the tokens are subtracted from the pool, and the ratios of the assets are then rebalanced.
As a result, in the example given above, if a user removed half of the Ether from the pool and added twice as much Tether, the ratio of ETH and USDT in the pool would remain the same. Even so, they would each contribute 25% to the pool’s overall value.
The Balancer system will automatically determine the optimum price from the variety of pools accessible when performing a deal. To guarantee that trades generate the best yield while accounting for the volume transacted, fees, and gas expenses, Balancer employs a method known as Smart Order Routing (SOR).
The charge for removing liquidity from a pool can be specified by the pool creator and can range from 0.0001% to 10%. The pool’s liquidity providers split this cost equally.
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What Problems Does Balancer Solve?
The liquidity problem in the Bitcoin market is the main issue that Balancer aims to address.
Finding a buyer or seller who will trade at a fair price can be challenging because many digital assets are not easily traded due to a lack of buyers or sellers. By building a decentralized exchange that can be used to trade a range of assets in one location, Balancer seeks to address this issue.
Users will be able to trade their assets without worrying about finding a buyer or seller because the platform will connect them with a party ready to exchange at a reasonable price.
The Balancer Team
Fernando Martinelli and Mike McDonald founded the Balancer Lab, but it started as a research program at the software company “BlockScience” in 2018. The Balancer project has many smart, qualified fellows. Like-minded with a deep understanding of the DeFi market.
- Fernando Martnelli, a serial entrepreneur and Founders community member, has many years of experience working outside Balancer. He co-founded many other companies before co-founding Balancer with Mike McDonald.
- Mike McDonald is the Co-Founder and Chief Technology Officer (CTO) of Balancer. He is a security engineer and the creator of mkr.tools. He also worked with Fernando Martinelli to build the Balancer platform.
- Kristen Stone, the CEO (COO) of Balancer, has been in the crypto industry for over 5 years. She was a product manager at Coinbase and has built product and engineering teams.
- Timur Badretdinov is a user interface developer and worked on several projects before joining Balancer. He founded a company called “Longcaller”, a platform focused on providing cryptocurrency reviews and educational content about blockchain.
Partnerships
- Lido Finance: A project about Liquid Staking, featuring products such as stETH, bLUNA, bETH, etc.
- Polygon: Balancer has a version on Polygon – Layer 2 of Ethereum.
- Balancer and Gnosis have joined forces to launch BGP, a decentralized exchange that combines the best features of both protocols to offer accurate trading prices and price containment. However, the high gas involved in bidding wars between bots may be a hindrance. The Polkadot ecosystem has also been called upon, with the EVM-compatible Moonbeam project aiming to connect the Balancer protocol to Polkadot by the end of 2021.
Read more: Layer 1 Vs Layer 2 Vs Layer 3: Blockchain Scaling Solutions Need To Know 2023
What Is BAL Token?
BAL is a token of the Balancer ecosystem, operating on the Ethereum platform according to ERC20 standards and used for the following purposes:
BAL holders can participate in governance and vote on platform decisions such as changing costs, adding/removing functions, etc.
BAL used as a reward for Liquidity Providers (LPs) on selected Pools.
Basic Information About BAL
- Token name: Balancer Token
- Ticker: BAL
- Blockchain: Ethereum
- Token Standard: ERC-20
- Địa chỉ Contract: 0xba100000625a3754423978a60c9317c58a424e3D
- Circulating Supply: 10.799.858 BAL
- Total supply: 100.000.000 BAL
Token Allocation
- Liquidity Mining (Liquidity Mining): 65%
- Team and team: 25%
- Ecosystem development: 5%
- Fundraising for token sale rounds: 5%
Token Sale
Balancer did not conduct a public token sale but raised funds through a Seed Round with an amount of 3 million USD, at $0.6/BAL on March 25, 2020.
In addition, BAL was also released in the form of Liquidity Mining on June 1, 2020.
Price of BAL Today
- With a $37,635,467 USD trading volume over the past 24 hours,
- The live Balancer price is currently $6.73 USD.
- Market cap of $288,261,459 USD, CoinMarketCap now ranks #125.
What is BAL Used For?
BAL is an ERC20 token of Balancer Finance. Functions like Liquidity Mining (liquidity mining), governance voting, as well as staking.
- Governance: BAL token holders can participate in proposals and vote on decisions such as adding/removing protocol functionality, changing fees, etc.
- Rewards: BAL is used as a reward for Liquidity Providers (LPs) on selected Pools.
Read more: TOP 10 Best ERC20 Coins To Trade & HODL In 2023: A Full Guidance Of Potential Crypto For Traders
How to Buy BAL Tokens?
It’s more difficult to get some coins than others. One of them is Balance Tokens. It’s not accessible through Coinbase Wallet or the Coinbase app. But don’t worry; we’ve given you some advice to make it easier to choose a method of purchasing Balance Tokens that works for you.
- Check where and with what currencies you can purchase Balance Tokens.
- Choose a platform to place your order on.
- Make the purchase on the platform of your choice.
Read more: Best Crypto Exchanges For Trading In 2023: Centralized Exchanges
How to Store BAL Coins?
It should be noted that the BAL token belongs to the ERC20 message removal. The application selection with its storage must also be compatible with ERC20 tokens. Currently, users can choose from a number of standalone applications such as Metamask, Trust Wallet, imToken if they need to store tokens.
Goals of Balancer
The goal of the project is to create a decentralized exchange for the crypto community that allows for the exchange of multiple cryptocurrencies with low fees. The team behind Balancer coin believes that their product will help to increase the liquidity of the cryptocurrency market as a whole.
Prospect Of BAL
The prediction model developed by Captainaltcoin suggests that the price of BAL in 5 years may be close to $11.92.
Balancer has a strong team behind it, a robust use case, well-designed tokenomics, and an engaged community. These are all requirements for success, and according to our forecast, the Balancer will increase to $35.19 by 2030.
FAQs
How to earn BAL tokens?
Currently, to own BAL, you can trade on the exchanges Uniswap, Binance, Bilaxy, .. to buy Balancer.
The second option is to provide liquidity to the balancer’s liquidity provider pool to receive the reward token.
Read more: What are Difference of Pancake Swap vs Uniswap: Which Is Better 2023?
Should you invest in Balancer?
Potentially. Although Uniswap, Curve, and SushiSwap are among the project’s fierce competitors, it does appear to offer unique features, such as encouraging traders to utilize the platform by giving them BAL.
Investing is a very personal activity that heavily depends on your own investment objectives. Do your homework and stay current on any Balancer ecosystem advancements.
Is investing in BAL risky?
BAL is a somewhat moderate risk investment based on its current risk score. This score will be most helpful to investors who are primarily concerned with risk assessment in order to avoid (or possibly seek out) risky assets.
Read more: Day Trading Cryptocurrency: The Best Strategies for Success
Why is Balancer popular?
The popularity of Balancer coins can be attributed to a few factors. They provide a method to invest in a range of assets without having to buy each one separately, which is one reason. Investors may save time and money by doing this. They are also more likely to remain stable than other varieties of cryptocurrencies, which translates to better long-term value preservation.
Finally, Balancer coins are a desirable alternative for people trying to reduce transaction expenses because they often have lower fees than other varieties of cryptocurrency.
Is it the right time to buy BAL?
The market is constantly shifting. Therefore, there is never a good time to purchase a cryptocurrency. But if you want to buy BAL coins, you should perform your own research to make sure the price is appropriate for you.
What can I buy with BAL?
The primary purpose of the BAL token is to draw liquidity to the platform because Balancer users also receive BAL tokens on top of the transaction % they receive for each asset they add to the pool. To encourage users to stake their assets in Compound, this is identical to how the COMP token operates.
How is Balancer different from other blockchain projects?
A decentralized asset management technology called the Balancer Protocol allows users to automatically pool and manage their digital assets. The protocol is built with performance, security, and compliance in mind. Due to its foundation in the Ethereum blockchain and usage of smart contracts for asset management, Balancer stands out from other blockchain initiatives. In order to accommodate the addition of new features and capabilities, the protocol is also made to be modular and extensible.
Can I convert Balancer coins to other currencies?
Yes, you can convert Balancer coins to other currencies like LINK, DOT, LRC, OSMO, XRP and more.
How can I find more information about Balancer?
The best place to find more information about Balancer is on the Balancer website.
Conclusion
Although it was born after a number of other AMM platforms, Balancer has always strived to demonstrate the potential of the platform and attract the attention of a large number of participants. At the same time, the variety of Balancer’s trading facilities is quite enough to help the project compete directly with other AMM platforms. On the other hand, participants also have more quality options besides existing crypto exchanges.
Above is information about “What is Balancer (BAL)?” and how to effectively trade BAL coin that Covemarkets has compiled. Hopefully, these shares will be useful, helping investors have more suitable choices in their own crypto investment journey. Good luck!
Disclaimer: The information provided in this article is not investment advice from Cove Markets. Cryptocurrency investment activities are yet to be recognized and protected by the laws in some countries. Cryptocurrencies always contain financial risks.
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