- What is The Balancer Platform and how does it work?
- Advantages of the Balancer exchange.
- Balancer’s past, present and future price positions.
The Balancer Platform
Balancer is an automated market maker (AMM), it was developed on the Ethereum blockchain, it was launched in March of 2020. Balancer managed to raise a $3million seed round by Accomplice and Placeholder. The Balancer protocol functions as a weighted portfolio that is self-balancing, liquidity provider and price sensor. Balancer allows users to earn profits through its $BAL (its newly introduced token) by contributing to customisable liquidity pools.
The pools that the protocol operates:
- Private pools: this gives the users of the platform governance over the pool and makes the user the sole contributor of the liquidity pool.
- Shared pools: for the users who wish to become liquidity providers (LPs) , these liquidity providers are rewarded with the Balancer Pool Tokens (BPTs).
- Smart pools: the smart pools are similar to the private pools, however, they are controlled by a smart contract, they also reward using BPTs and allow anyone to contribute to the liquidity pool.
The current market capitalization for Balancer is more than $202 million, there is a maximum supply of 96,150,704 BAL tokens, 40,808,048.66 of those tokens are currently in circulation.
Security is an important priority for Balancer, hence, the protocol has been audited three times, fully by ConsenSys, OpenZeppelin and Trail of Bits. It is a trustless system as there are no admin keys or backdoors and the balancer pools are not upgradeable. Balancer does not support tokens that are non-conforming to the ERC-20 standard, even though they may be in use on some pools.
The tokens held on Balancer pools are actually not controlled by Balancer itself, instead they are smart contracts. However, that fact does not remove the inherent risks of smart contracts. The configurable rights pools (CRPs) ensure that tokens with known issues are banned from being used in pools. It further ensures that all other tokens safely interact with the protocol
What makes Balancer unique?
The Balancer platform is similar to Curve and Uniswap, in that it enables anyone to create token pools. The pool adjusts itself to keep the tokens equally weighted, regardless of any price changes. However a major differentiating feature of Balancer is that more than one token can be added and using ETH is not required.
Although Balancer is not the first Decentralised Finance protocol to make use of AMMs they have brought a new approach and face to liquidity. The unique feature of the Balancer protocol is that it allows Liquidity Providers to have up to 8 assets per market, which are weighted by % and automatically rebalanced.
When it comes to Balancer, users are not required to put down a 50% deposit of the desired asset, they are however, able to decide how much of the supported asset they wish to deposit. There is another unique feature of Balancer Lab, users are able to make a high return on the assets which are in low demand through arbitrage opportunities and slippage-reduction.
Advantages of the Balancer platform
- High security.
- No deposit required when desiring an asset.
- Balancer supports DeFi.
- Any users can create token pools on the Balancer platform.
- Operates 3 different kinds of pools.
Past, present and future prices of The Balancer network (BAL)
At the start of July during 2020, the price of BAL began to rise, reaching its 2020 high of $31.79 in August. The first two quarters of 2021 indicated the price of BAL was on the rise, reaching its all time high of $69.42 in early May. Since then the price has staggered in both the upward and downward directions, the crypto has seen much volatility, which is a normal trend for the volatile nature of the crypto market.
Over the past few months, the global markets have been facing strong investor risk-off sentiment in the wake of the geopolitical tensions, Covid-19 lockdowns in China and supply chain issues. The cryptocurrency market has followed the trends of the greater market during these times, therefore the price of most cryptocurrencies have been falling, BAL does fall under this category.
According to some analysts, the future price of The Balancer network (BAL) could reach up to $33.49 by 2025 and could see a price of more than $214.77 by 2030. However, it is important to remember that this future price prediction is based solely on data and does not take into account factors such as investor sentiment and the ever changing market conditions, both of which make it difficult to make accurate future price predictions.
BAL Price Chart
Sources: finance.yahoo.com, coinmarketcap.com, swapspace.co, FXMAG.com