At the time of writing this article, there are over 7,000 cryptocurrencies run across unenumerated protocols, on countless decentralised exchanges (DEXs), and counting. At a macro level, that stands to signal good rates of crypto adoption. But, as every crypto trader and his dog knows by now, in DeFi, quantity does not mean quality. Indeed, the real challenge in assessing DeFi projects these days is to find the projects that are so remarkable, so far off the richter scale, so immutable, that you’d be kicking yourself if you passed them up.
Enter Balancer Labs.
Balancer Labs, the Lisbon-born start-up turned $BN+ DeFi platform, offers a DEX of its own, with three remarkable differences: (1) Programmable Liquidity Pools for developers, start-ups and traders, (2) Managed Index Funds for traders, and (3) its Balancer-Gnosis Protocol for unmatched levels of cryptosecurity in its offerings.
Programmable Liquidity Pools
First, if you didn’t already know it, Balancer Labs is the undisputed leader in Programmable Liquidity Pools.
Basically, Programmable Liquidity Pools allow new rules to be implemented in the setup of pooled funds which can impart newfound control, value and benefits to programers, start-ups and traders alike.
Perhaps the most remarkable class of pools within the Balancer Labs Protocol are the Liquidity Bootstrapping Pools (LBPs), which allows start-ups and developers to pre-program and customise liquidity pools, to be able to leverage value from those pools in the way the want, and to fund the growth and development of their projects the way they want.
What does that mean? Just let that sink in for a minute.
It means you can forget crowdfunding, forget ICO fundraising – hell, forget all the other forms of venture capital raising that make most new start-ups quit and avoid traditional finance altogether. With Balancer’s LBPs, start-ups and developers have new levels of control and flexibility to manage their liquidity like they have never had before.
It’s a revolutionary concept. But what do the numbers say?
Well, there are currently 58 LBPs, and last month alone Balancer Labs broke a new all-time high for LBPs, raising $105,576,956 over the course of just three days, lending unmistakable credibility to the cause.
By the way, Dune Analytics gives the figures from this November 2021 LBP surge:
- Total funds raised: $105,576,956
- Total volume: $138,623,586.33
- Total fees paid: $2,772,472
- Tokens sold: 40,976,598 million MC (55% of the total 75 million MC tokens allocated)
- Participants: 3,900
- Total transactions: 6,313
The surge left Balancer with a healthy Total Locked Value (TVL) of ~$3.25 Billion, with liquidity distribution: 56% on V2, 34% on V1, 6% on Polygon, 4% on Arbitrum; with TVL split by Decentralised Exchange (DEX) between Curve (46.7%), Uniswap (28.9%), SushiSwap (16.2%) and Balancer (8.1%).
But developers and start-ups are not the only ones benefiting from Balancer Labs programmable liquidity pools. Traders and investors can lend liquidity to gain great new benefits, like swap fees, to capitalise on high-yield pools.
As at 30 November 2021, total fees earned for Balancer liquidity providers was $72.3m.
Managed Index Funds
The next standout feature from Balancer Labs are their Managed Index Funds for traders, which offer traders portfolios that generate yield and rebalance automatically.
The Co-Founder and CEO of Balancer Labs, Fernando Martinelli, just put out an article explaining the magic and mechanics behind these Managed Index Funds.
In a nutshell, these funds can be compared to weighted index funds in traditional finance (like the S&P 500), which offer investment strategies for traders that focus on holding certain balances of different assets, only without brokers or index fund managers in the picture.
This enables efficient trading by pooling crowdsourced liquidity from investor portfolios and using Balancer’s Smart Order Router to find traders the best available price. For traders this means they can invest with Managed Index Funds, and the fund can automatically trade and re-balance itself from pooled liquidities within the Balancer Labs Protocol, offering a sort of idiot-proof trading tool for traders to trade on autopilot.
As at 30 November 2021, Balancer Labs had 17.5k liquidity providers and $3.4B in total liquidity.
Finally, with all the sophistication that Balancer offers in its liquidity pools, security would have to be front of mind. After all, you could set up the liquidity pools, but what’s to stop bots or hacks from tainting the well?
So, it was prudent to hear that last month Balancer Labs announced their partnership with Gnosis, deploying their Balancer-Gnosis-Protocol.
Again, Fernando Martinelli (Co-Founder, CEO), just published an article explaining this Balancer-Gnosis Protocol, offering a much more detailed breakdown.
The BGP partnership is a marriage in crypto heaven, combining the on-chain liquidity and MEV protection features of Balancer’s V2, with the price-finding, bot-kryptonite mechanisms of Gnosis, to protect traders from front-running bots for instance (a problem worth over an estimated $730 million). The Balancer-Gnosis-Protocol is designed to stop such bot exploits with uniform clearing prices for batch trades.
The BGP is now live as the default protocol within Balancer Labs DEX, giving traders access to on-chain liquidity, MEV protection, better trading prices, and optimized gas costs today.
Balancer Labs has already proven its ability to offer incredible utility with its unique offerings in the DeFi space. The numbers don’t lie – the market has taken very quickly to these offers, something which is sure to only grow from here on out.