Original author: Jake Pahor

Original compilation: Frank, Foresight News

What is less known is that Aave, Gyrscope, and Beethoven

This article is the latest report on Balancer by encryption researcher Jake Pahor. It conducts a detailed study of Balancer and conducts in-depth exploration of Balancer from multiple perspectives such as use cases, large-scale adoption, project revenue, and token economics. Foresight News The full text was compiled.

1 Overview

The core of Balancer is a decentralized AMM protocol, however when delving deeper into the protocol, we find that the Balancer team is building a powerful technology stack to become a liquidity center:

• New AMM/DEX is being developed;

• income generating assets;

• DAO governance;

2.Use cases

Balancer is not only a forward-looking DEX, but also the basic technology that cultivates future DeFi innovation. Its unique architecture simplifies the process of providing unique financial services to the market.

Among them, Aave, Beethoven X, Radiant and Fjord are currently using its technology stack.

What I’m most excited about about Balancer is the V3 version expected to be released this year (Q2 2024), which promises to build on the innovations of V2 and promote Balancer to become:

• DeFi’s revenue-carrying hub;

• Launchpad for innovative AMM deployment;

3. Mass adoption

Balancer TVL is currently $915 million, ranking 23rd among all DeFi protocols and 4th among other DEX protocols.

Although it is still 72% lower than ATH ($3.31 billion in November 2021), its TVL has been trending slowly higher since July 2022, and the overall lock-in scale has a solid foundation.

4. Project income

In the past 30 days, the Balancer system has produced:

• $1.5 million in fees;

• $649,000 in revenue;

According to DefiLlama, it ranks 35th among overall DeFi applications and 6th among DEXs. As of August 2023, the protocol charges 50% Swap fees and 50% encapsulated token revenue fees for non-exempt pools.

5. Token Economics

There are two main tokens in the ecosystem:

• BAL, the ecological governance token;

• veBAL, which means locking BAL for a certain period (locking BAL/WETH at a ratio of 80:20);

The 80:20 ratio ve model proposed by Balancer is an innovation designed to solve some of the problems that unilateral staking brings to DAO governance token economies (such as Curve).

Lets take a look at some key differences:

• Users earn veBAL by locking an 80/20 ratio of BAL/WETH Balancer pool tokens instead of pure BAL, ensuring deep liquidity even if most BAL tokens are locked;

• The maximum lock-in period is 1 year, which is shorter than veCRV’s maximum 4-year period;

Current supply statistics:

• Circulating supply: 54.78 million pieces;

• Maximum supply: 96.15 million pieces;

• Market cap: $195 million;

• FDV: $342 million;

• Market cap/FDV: 57%;

6. Treasury

The Balancer vault is currently worth $23.77 million and consists of the following components:

• BAL worth $19.59 million;

• Other tokens worth approximately $2.36 million (ARB, AETHBAL);

• $1.43 million in stablecoins;

• $390,000 worth of mainstream tokens (BTC and ETH);

These funds are currently held by the DAO multi-signature wallet.

7.Governance

Balancer has implemented a strong decentralized governance process and has been operating for quite some time.

In addition, they launched the ve (80/20) plan, a token economics design designed to significantly enhance traditional DAO governance.

8. Team and investors

Balancer was founded in 2018 by Fernando Martinelli and Mike McDonald. Since its inception, Balancer has successfully raised $39.25 million in funding.

Notable investors include Pantera Capital, Blockchain Capital, CoinFund, Fenbushi Capital and the Arbitrum Foundation.

9. Competitors

Balancer is a well-known DEX that competes with several other platforms, including Uniswap, Curve, PancakeSwap, Sushi, and Thorchain.

However, Balancer positions itself as the best AMM and technology stack for new projects to scale and build quickly.

10.Risk and Audit

In 2023, Balancer experienced two major breaches, one of which affected the V2 pool, while the other involved a front-end attack.

It is worth noting that Balancer has undergone multiple audits and has launched a large bug bounty program (up to $1 million).

11. Summary

Balancer is growing quietly, and the team continues to develop innovative and useful products. Upcoming catalysts include:

• Balancer V3 upgrade;

• Growth in LST and stablecoin earnings;

• Governance Token Economics –ve 80/20 Liquidity Pool;

Total weighted score = 8.55