Balancer (BAL) – Crypto news in French

Balancer (BAL) - Actualités crypto en français

Balancer is software running on Ethereum that aims to incentivize a distributed network of computers to run an exchange where users can buy and sell any cryptocurrency.

Balancer is an emerging decentralized finance (DeFi) protocol and uses a combination of cryptoassets to provide this service and enable trading without a financial intermediary like an exchange.

It might be useful to think of Balancer as a sort of index fund, where users create funds based on the cryptocurrencies in their portfolios. These funds are called balancer pools, and any user wishing to provide liquidity to a pool can do so by simply depositing an asset.

Users who provide liquidity to a balancing pool then earn a portion of the trading fees paid to the network for using their funds and are rewarded with a personalized cryptocurrency called BAL.

These deposits are essential to the network and provide the liquidity users need to buy and sell cryptocurrencies on the platform.

This means that Balancer must create incentives for both sizes of its market in order to work – crypto users who may want to make some of their inventory available for exchanges and traders who seek the best possible price for an asset.

In this way, Balancer works similarly to other decentralized exchanges (DEXs) such as Uniswap (UNI) and Curve (CRV). Balancer, however, offers additional features, including the ability to group up to eight tokens into pools.

Balancer started in 2018 as a research project at a software consulting company called BlockScience, founded by Fernando Martinelli and Mike McDonald.

The project later raised $3 million in funding independently in 2020 as Balancer Labs. During this funding round, approximately 5 million BAL tokens were sold to investors and 25 million tokens were allocated to shareholders and employees (out of a total of 100 million tokens).

An additional 10 million BAL has been set aside, with half reserved for a fund that will be used for contributors to the balancer ecosystem, and the other half reserved for sale to future investors.

Just like an index fund can be made up of different stocks, balancer pools are made up of up to eight different cryptocurrencies.

The value of a balance pool is determined by the percentage of each token it contains, a weighting chosen when the pool is created.

Self-balancing index funds

Balancer uses custom programs, called smart contracts, to ensure that each pool maintains the correct proportion of assets, even though the prices of different coins in the pools may vary.

For example, a balancing pool could start with 25% ETH, 25% DAI, and 50% LEND. If the price of LEND doubles at any point, the pool automatically reduces the amount of LEND it holds, allowing it to retain 50% of the pool value.

Where is LEND going? Balancer's smart contracts make them available to traders who want to buy LEND when prices rise.

Remarkably, liquidity providers still earn fees while their index funds are rebalanced, compared to traditional index funds where investors pay fees for rebalancing services.

Clearing pools

Balancer offers private and public pools that cater to users with different risk tolerance levels.

Public pools allow each user to provide liquidity by adding or withdrawing assets. Public pool settings are set before launch and cannot be changed.

This means they can be useful to users with small stocks who want to earn fees from the most popular – and most liquid – pools.

A private balancing pool is one in which only the creator of the pool can add or remove assets. It can also adjust all other pool settings, such as fees, weightings, and the type of assets accepted.

Private pools are useful for asset managers who have a large portfolio and want to earn fees for their specific assets.

Finally, smart pools are a kind of private pool held by smart contracts. This feature allows pools to be programmed to perform additional functions, such as changing weighting or creating an index fund replicating a real estate portfolio.

Why is BAL valuable?

Balancer's cryptocurrency, BAL, will be essential for the distribution of its operations, to ensure that no central party can make decisions regarding the operation of the platform.

Additionally, it also functions as an incentive mechanism, since users who deposit assets into balance pools earn BAL tokens. Although there are no defined rights or uses for the token as of 2020, BAL holders can ultimately set rules for how Balancer operates.

BAL holders may be able to vote in the future on the weekly BAL distribution rate, balancer protocol fees, or even the ability to launch balancers on other blockchains.

As with many other cryptocurrencies, the supply of BAL tokens is limited, meaning there will always only be 100 million BAL.

While 15 million BAL was distributed or stored during the creation of Balancer, the remaining 65 million tokens are distributed to Balancer users who provide liquidity to the protocol.

Balancer plans to distribute 145,000 tokens per week to users, meaning the entire supply will be distributed by 2028.

Why should I use BAL?

Balancer may be interesting if you are an existing cryptocurrency investor with an inactive wallet that you want to use.

It can also be useful if you are an active trader or portfolio manager, as it allows users to buy units in creatively constructed indices present in the journal.

Holding a BAL is useful in the long term if you want to influence the development of the platform by voting on important decisions regarding some of its features.

Users can also invest in BAL if they believe that decentralized cryptocurrency trading will gain popularity in the future.