Balancer Labs Announces $3M Seed Round for Programmable Liquidity
Many have come to acknowledge that one of many core drivers of DeFi is that of liquidity. Whether or not it’s within the type of DEX development from tasks like Kyber or Uniswap to incentives from tasks like Synthetix, we’ve seen tons of various initiatives which have pushed the depth of liquidity swimming pools in DeFi at giant.
We are extraordinarily excited and grateful to announce we closed our seed spherical!https://t.co/Qb9turhw1i
— Balancer Labs (@BalancerLabs) March 24, 2020
What is Balancer?
“Balancer allows any token holder to provide liquidity with 100% of their assets by turning their portfolio into a Balancer pool or adding it to existing pools. Balancer allows pools with up to 8 tokens, with any custom %-distribution of value for each of them. Anyone can now create their own self-balancing index fund, or invest in someone else’s.”
In essence, Balance supplies instruments for dApps, funds and even DAOs to diversify their portfolio with the reassurance that the weights of that portfolio will at all times be the identical. However, as an alternative of paying fund managers to do that, all of it occurs algorithmically.
“Thanks to carefully designed mathematical properties and the alignment of incentives with arbitrageurs, Balancer pools will always hold the same ratio of value in each token — even if their relative prices change. This is why we consider Balancer to be a self-balancing portfolio management tool.”
Balancer turns the idea of an index fund on its head: as an alternative of paying charges to portfolio managers to rebalance your portfolio, you accumulate charges from merchants, who rebalance your portfolio by following arbitrage alternatives.
— Balancer Labs (@BalancerLabs) September 22, 2019
Why Does This Matter?
Across the board, we’re beginning to see an increasing number of alternatives for merchants to democratize entry to liquidity. We’ve beforehand lined tasks like Curve and iEarn – each of which offer earnings alternatives utilizing the Yield Protocol.
With Balancer, we are able to envision much more advanced use-cases to emerge. The fundamental premise is that of asset administration, particularly mitigating impermanent loss and aiding in capital optimization due to automated rebalances, just like these provided by Set Protocol.
“By exploring multidimensional invariant surfaces, we came up with a powerful mathematical framework that enables any portfolio to continuously self-rebalance while also generating fees.”
Perhaps extra vital is the power for customers to contribute capital on to a pool with out having to separate it 50/50 as we see on Unsiwap immediately. What this enables for is deeper liquidity which is now not restricted to DEXs, however that complete ecosystem at giant.
“As extra traders are drawn to Balancer’s promise to pay folks for their property, these swimming pools will develop, and we anticipate them to grow to be a few of DeFi’s most liquid venues. Since swimming pools usually are not restricted to 50/50 weighting, the sphere of programmability with Balancer is huge, and already we’re seeing high tier DeFi groups experiment with the protocol as a option to resolve as-of-yet unmet wants.”
If one factor is for positive, Balancer goes to point out that capital remains to be largely being directed in direction of the DeFi ecosystem.
In the approaching months, we’ll be looking out for a consumer-facing model of the product for customers right here at DeFi Rate.
In the meantime, remember to keep up with Balancer by way of their official Twitter.
Cooper is concentrated on constructing compelling blockchain merchandise. He at present works because the managing director at Fitzner Blockchain Consulting and is a contributor to DAOs like MetaCartel and Moloch. He is an energetic member of the Ethereum group and has a powerful curiosity in for-profit companies similar to The Block Crypto and Messari.