BALUSD20211231
Balancer December 2021 Futures (FTX:BAL-20211231)
crypto

Balancer is a non-custodial automated portfolio manager, liquidity provider, and price sensor. The big idea of Balancer is, it is a new financial primitive that combines asset management and decentralized exchange. In traditional finance, this is similar to combining Fidelity asset management and NASDAQ's exchange, then distribute NASDAQ's trading profits to Fidelity's asset holders. Balancer is what's known as an automated-market-maker which is a decentralized exchange that does away with the concept of order books instead allowing users to deposit assets into pools that are then traded against. It is functionally similar to Uniswap, except Balancer allows for more customizability. Rather than two token pools split 50/50 and a fixed trading fee, Balancer enables up to 8 assets in a pool with arbitrary weights and fees. The price of an asset is determined by the ratio between the (balance/weight) of the base and quote assets. When discrepancies exist between that price and external market rates, arbitrageurs can profit off the difference which acts as an automatic rebalancing for the system. Smart Pool There are two types of pools that can be created, public and private. Public pools have fixed weightings and fees and allow anyone to deposit assets into the pool whereas private pools enable the creator to alter the parameters and cannot receive external funds. Balancer also allows pools to be smart-contract owned allowing more complex logic to dynamically adjust weightings and fees. Because of these flexible parameters, Balancer has templates of typical pools that would profit the traders and token holders. Some examples of pool types that are possible with dynamic Balancer pools include: Liquidity pools that grow both liquidity and staking participation. Community-governed pools, such as those in PieDAO whose USD++ pool regularly adjusts weights to favor stablecoins that exhibit lower volatility. Rollover pools that can turn expiring assets such as bonds into perpetual tokens. Pools that can be programmed to replicate financial derivatives. For example, users can hold LP shares with payoffs that approximate options. Liquidity bootstrapping pools that enable teams to build early liquidity with little initial capital, while gradually decreasing slippage and exposure. This can serve for primary asset issuance, as well as bolstering secondary-market liquidity if markets already exist for the asset. Surge pricing pools that increase fees during times of high demand for liquidity, such as Black Thursday. This attracts more liquidity to the surge pricing pool as it becomes more profitable than a fixed-fee pool. In turn, this allows for better trades with lower slippage, as there is now more liquidity available. Elastic Supply Pool that minimizes impermanent loss in the elastic supply token like Ampleforth. Smart order routing, Multi-path order routing An important feature of Balancer is its smart order routing (SOR) system which is an off-chain mechanism for providing best price execution across various liquidity pools. It surveys the entire landscape of pools and routes orders such the user gets the maximum amount of the received token. The SOR accounts for gas fees on Ethereum as higher fees make sourcing from more pools costlier. Off-Chain Vote Signalling Lastly, a tool built by the Balancer Labs called Snapshot, it allows for on-chain vote signalling. It is 100% gasless.