Balancer (V2) (Arbitrum)

What is Balancer (BAL)

Balancer is a decentralized finance (DeFi) platform that operates as an automated market maker (AMM) on the Ethereum blockchain. Launched in March 2020, Balancer raised $3 million in a seed funding round led by Placeholder and Accomplice. The platform enables users to profit from its native token, BAL, by contributing to customizable liquidity pools.

The Balancer protocol offers various types of pools, such as private pools, shared pools, and smart pools. Private pools grant the owner exclusive control, allowing them to be the sole liquidity provider and adjust parameters as desired.

Shared pools let users participate as liquidity providers (LPs) and earn Balancer Pool Tokens (BPTs) as rewards. Lastly, smart pools resemble private pools but are governed by a smart contract and reward BPTs to liquidity contributors.

If you are looking to buy Balancer token for your own portfolio, Binance, OKX, CoinW, Bitrue, and Bybit currently list BAL at its current market price.

Who are Balancer's Founders?

Balancer was founded by Fernando Martinelli and Mike McDonald, who began the project as a research program at software firm BlockScience in 2018. Martinelli, a serial entrepreneur with experience in the Maker community, has co-founded several companies prior to Balancer. McDonald, the co-founder and CTO, is the creator of mkr.tools and is also a security engineer.

What makes Balancer Unique?

What sets Balancer crypto apart from other DeFi platforms like Uniswap and Curve is its ability to create pools with multiple tokens, not just one, without requiring ETH. Balancer allows LPs to include up to eight assets per market, each weighted by a percentage and automatically rebalanced.

Users can also decide how much of a supported asset they want to deposit, instead of the standard 50% requirement on other platforms. Additionally, Balancer enables users to earn higher returns on assets with lower demand through arbitrage opportunities and reduced slippage.

In June 2020, Balancer introduced its governance token, BAL, to promote decentralization and incentivize LPs. 25 million out of the total 100 million BAL tokens created were reserved for the team, core developers, investors, and advisors.

Five million tokens were allocated to the Balancer Ecosystem Fund to encourage strategic partnerships, and another 5 million were set aside for the fundraising fund, supporting the platform's growth and future fundraising efforts. The remaining tokens will be mined by liquidity providers and distributed at a rate of 145,000 per week, taking approximately 8.6 years to complete the distribution.

Security is a top priority for Balancer, which has undergone three audits by Trail of Bits, ConsenSys, and OpenZeppelin. The platform is trustless because it has no admin keys or backdoors. Balancer pools are not upgradeable, and the platform does not support tokens that deviate from the ERC-20 standard, even if they are used in some pools.

Smart contracts govern the tokens stored in Balancer pools. The Configurable Rights Pools (CRPs) feature ensures that tokens that have known issues are not allowed to be used in pools while allowing other tokens to interact with the protocol securely and safely.

Balancer Pros and Cons

Pros:

• Enables customizable liquidity pools with up to eight assets per market.
• Users can decide the proportion of supported assets to deposit.
• Offers higher returns on low-demand assets through arbitrage opportunities and reduced slippage.
• Strong security measures, including three audits and a trustless, non-upgradeable platform.
• Facilitates decentralized governance through the BAL token.

Cons:

• Not open source.
• One of the contracts can modify anyone's balance on the blockchain.
• Mint function found.

Balancer Review

Balancer is an innovative DeFi platform that stands out in the increasingly competitive automated market maker space. Its unique features, such as customizable liquidity pools and flexible asset deposits, provide users with greater control and higher earning potential.

However, after doing a thorough review of our security analysis, we have found that its code is not open source which is a critical security risk. This is because the contract has a higher potential of it containing malicious code (since we cannot verify its contents).

Adding to that, one of its contracts also allows the owner to edit anyone's balance on the block. It goes without saying how risky this can be. We've also uncovered a mint function on one of its main contracts. This function can be used to mint tokens at will, thus increasing supply and potentially destabilizing its value. These potential risks are worth taking note of.

Is Balancer a Scam?

Given the platform's track record and team expertise, Balancer does not appear to be a scam. It has undergone multiple security audits by reputable auditors and they implement robust safety measures to protect users and their assets.

As with any investment or financial platform, however, it is crucial to conduct thorough research and consider potential risks before engaging in any investment. This is always your best bet for combatting scams and keeping your funds safe.

Related Pages

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You can also see our review on Yearn Finance (YFI) - an aggregator service for DeFI investors. It uses automation algorithms to allow them to maximize profits from yield farming.

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