Balancer is an automated market maker, decentralized exchange, and liquidity pool protocol built on Ethereum that allows users to provide liquidity for multiple assets simultaneously. More broadly, a traditional market maker/liquidity provider buys and sells financial instruments, providing liquidity to a market and profiting from the spread between the bid and ask prices. What makes Balancer unique is that the protocol supports up to eight assets per market, along with custom trading fees set by the creator of the pool. Users who provide liquidity to a Balancer pool then earn a portion of the trading fee paid to the network for the use of their funds, and are rewarded with a custom cryptocurrency called BAL. These deposits are essential to the network, providing the liquidity needed for users to buy and sell cryptocurrencies on the platform. This means Balancer must incentivize both sizes of its market in order to operate – crypto users who might wish to make some of their holdings available to be traded, and traders seeking the best possible price for an asset. The long-term earning potential is +157.64% in one year.
Original author – Fernando Martinelli
Initial release – 1 October 2020
Development status – Active
Website – balancer.finance