Balancer(BAL)

Balancer is a highly versatile automated portfolio manager and decentralized exchange (DEX) that allows users to trade cryptocurrency assets and create liquidity pools with up to eight different assets in any ratio. Balancer was founded in 2018 by Fernando Martinelli and Mike McDonald. The project raised $3 million in 2020 and is maintained by Balancer Labs.

Balancer's liquidity pools can be likened to a self-balancing crypto index fund where management fees, rather than being paid to fund managers, are paid to liquidity providers. Similar to other decentralized exchanges like Uniswap and Sushiswap, Balancer allows users to exchange between various cryptocurrency assets in its liquidity pools—which can contain up to eight different assets in fixed or variable weighting, allowing for automated rebalancing.

BAL cryptocurrency serves as the governance token of the decentralized platform and also as an additional reward for users who deposit tokens into Balancer's liquidity pools, besides the transaction fees they earn.

BAL price

According to our BAL/USD live price chart, BAL coin began trading in mid-2020 at around $20 and rapidly rose to reach its 2020 high of just over $38 in August. However, it lost those gains within a few weeks and fell below its listing price, eventually bottoming out at its 2020 low of around $8 on November 4. BAL price then made a strong turnaround and began ascending, closing the year at around the $14 mark. 

BAL price in USD terms took off rapidly at the start of 2021 amid widespread market optimism, maintaining the trend of strong growth over several months and later reaching an all-time high of $75 on May 4, 2021, achieving a fully diluted valuation of nearly $500 million. BAL coin's price then suffered a massive drop in the following weeks and it lost much of its early 2021 gains. 

Following the rapid drop in the BAL coin price, which lasted for about three weeks, BAL continued to slowly trend lower for the rest of 2021, eventually reaching its 2021 low of just under $13 in December 2021. The price of BAL failed to make a convincing recovery through the rest of 2021 and has slowly trended lower since the start of 2022, reaching an all-time and yearly low of around $3.6 on June 18, 2022.

How BAL works

Balancer utilizes an automated market maker (AMM) system to facilitate trades on its platform. An AMM is a smart contract that allows digital assets to be traded automatically and without the need to match a buyer and seller. Users who deposit their tokens into one of Balancer's liquidity pools earn a reward in the form of a portion of the platform's trading fees and liquidity pool (LP) tokens.

The Balancer platform serves two major sets of users: liquidity providers and traders. It allows liquidity providers to execute various strategies according to their preferences and enables traders to find the best price for trading an asset on its DEX. If a trader wishes to trade an asset via Balancer's exchange, its algorithms scan for the best price across all its liquidity pools. Once the pool offering the best price is found, it trades the desired assets via that pool, and in doing so, rebalances the pool's weighting. The pool offering the best price for the asset is, by design, the one that needs rebalancing the most. This way, Balancer is able to help traders find the best prices and automatically rebalance its liquidity pools according to their weighting simultaneously.

Balancer's liquidity pools work similarly to index funds, except that the assets in them are automatically rebalanced. In contrast to typical index funds, the liquidity providers who deposit their assets into the pool earn rather than pay fees, since there is no need for a fund manager.

Balancer news, updates & highlights

Balancer V2

In May 2021, an upgrade to the Balancer protocol dubbed "Version 2" (or "V2") was launched. It promised to reduce the gas fees required to use the platform by administering all liquidity pools from a single "vault". The vault is a smart contract that holds and manages all the assets in all Balancer pools. Several popular decentralized finance (DeFi) protocols, such as Aave, Gnosis, and Ocean Protocol, were listed as partners for the upgrade. Balancer V2 also introduced "asset managers," which are external smart contracts nominated by pools that have full power over the tokens deposited in the vault by their nominator pool. Balancer offered a $2 million bug bounty ahead of the launch of its upgrade.

BAL token

Balancer didn't originally launch with its BAL token. The token was only just distributed to users in June 2020, shortly after lending protocol Compound announced the launch of its own COMP token. The total supply of BAL tokens is 100 million. 25% of BAL's total supply was reserved for the development team, advisers, and investors. 

Five million tokens were set aside for an ecosystem fund to promote the growth of the platform, and another five million were set aside for future fundraising rounds. 65 million out of the supply are to be distributed to users.

Fundraising

Balancer Labs raised $3 million in March 2020—just before the BAL coin was launched—in a private sale of 5 million BAL tokens. The firm has gone on to raise an additional $29.3 million over two more rounds, both taking place in 2021. 

Frequently asked questions about BAL cryptocurrency

• Can you mine or stake BAL?

BAL, being a governance token, can neither be mined nor staked. However, you can earn BAL tokens by providing liquidity to one of Balancer's pools.

• Which are some of the best BAL wallets?

BAL is an ERC-20 token, so it is compatible with all wallets that support the standard. Some of the best ERC-20 wallets include Metamask and Trust Wallet. You may also store your BAL tokens in compatible hardware wallets like Ledger or Trezor.

• What can you do with BAL tokens?

BAL is a governance token, so it grants you the ability to take part in shaping the future of the protocol by voting for or against governance proposals. The more BAL tokens you hold, the greater your voting power. You earn BAL as a reward for providing liquidity to one of Balancer's pools, in addition to a portion of Balancer's transaction fees.

• How can you buy BAL?

You can buy BAL with your local currency or other cryptocurrencies you own by trading pairs like BAL/BTC, BAL/USDT, or BAL/ETH via an exchange like HitBTC, Binance, Kraken, or OKX.