Balancer

Balancer is a DeFi Protocol built on Ethereum that serves as both an Automated Portfolio Manager and a trading platform. Balancer is a community-driven protocol. It incorporates much-needed features in the crypto space. These include slashing gas fees, enabling arbitrage with zero-token starting capital, and custom AMMs. The platform is also non-custodial, which means that users retain ownership of their assets at all times.

Balancer exchanges operate on pools of tokens. Balancer Pools contain two or more crypto tokens which users can swap between. Liquidity Providers put their tokens into these pools in order to earn on the pool's swap fees. Pools with a large quantity and variety of tokens possess many swappable token pairs. This makes it more likely for liquidity providers to collect trading fees. Balancer is based on an N-dimensional invariant surface formula. The formula defines an exchange cost function for any token pairs in the Balancer Pool. Balancer's smart contracts make sure that the token proportions in Balancer Pools remain correct. This is maintained even when the market prices of these assets fluctuate.

Balancer also comes with a Flash Loan feature. These are no-collateral loans, that have to be fully repaid (including interest rates) at the moment of borrowing. in case the loan is not repaid, the transaction process gets reverted. This causes the entire amount of borrowed tokens to be returned to the Balancer Vault. The Vault is basically a smart contract, which manages and holds token assets in every Balancer Pool on the platform.

BAL is the platform's native cryptocurrency token, used for governance. BAL token has a maximum supply of 100 million tokens. Instead of locking in purely BAL, to receive voting power in the form of veBAL (vote escrowed BAL), users lock in a combination of BAL and WETH. This is a derivative of the process used on the Curve platform, where users lock in CRV and receive veCRV. The addition of 20% WETH ensures trading liquidity even if a vast portion of BAL tokens is locked.

BAL is also used as an incentive for users on the platform. Users earn BAL tokens in the process called liquidity mining. This means that providing liquidity to Balancer pools rewards users with BAL tokens.