Balancer announced their V2 today. I expect them to be very successful in the positive sum game of Ethereum’s decentralized exchanges (DEXs). It continues to look like every DEX will win as each positions itself against each other to carve out a niche.
Uniswap aims to have the tightest spreads and lowest slippage for every pair. Uniswap has second to none volume and a massive war chest, but is clearly targeting the professional LPs who actively manage their positions for fees. Unfortunately, retail LPs aren’t as incentivized, and while we may be supporters and users of this phenomenal product, it’s less likely we will profit from providing liquidity.
Sushiswap is diversifying across multiple blockchains (Ethereum, Polygon, Fantom, and Solana), adding products to the stack with Bento Box (lending and leveraged trading), and continuing to reward SUSHI holders with protocol fees by staking xSUSHI. They also have a very open community that innovates quickly, entertains any new idea, and have the best branding. They even bought sushi.com!
Balancer has continued to rely on BAL incentives for LPs, flexible weights and multi asset pools, and other unique, yet intangible features. Balancer recently partnered with Gnosis to create a trading platform, CowSwap, that built in gasless transactions that protect traders from front running (miner extractable value / MEV). I’ve used CowSwap and it’s a charming experience. Low fees and sound effects included.
This same MEV protection technology will be included in Balancer’s V2, which launched today. I expect Balancer will be successful for reasons beyond their software dev strengths:
Fernando Martinelli is one of the nicest and most brilliant people in the Ethereum ecosystem. He is thoughtful, generous with him time, understands complex interactions between economics, mathematics, and CS, and has a knack for making friends. I’d recommend listening to him on this Epicenter podcast
Speaking of making friends, Balancer’s Business Development and Partnerships are impressive. They have integrated with Aave, the leading crypto bank, and several other premier DeFi protocols. I would expect DeFi insurance to be next on the list.
Balancer’s liquidity bootstrapping pools are unique and underutilized in my opinion.
Strong community with very smart Ballers (from Discord). I have been consistently impressed with the gigabrains who are part of the community. Three that stand out are Lex, rabmarut and Follow the Chain. They, and others I didn’t but should mention, have consistently built solid governance proposals, worked with the devs to incorporate new tools like Snapshot (they may have been the first), and helped manage the insane number of new projects looking to whitelist their tokens for BAL liquidity mining rewards.
Balancer originally kicked off DeFi summer stories
Early LPs were newly minted BAL millionaires. One early liquidity supplier, a Rocket Pool megawhale, created a 90% RPL 10% WETH pool with approximately $13,000,000. He was rewarded for taking a risk on a brand new DeFi primitive to the tune of 67,000 BAL tokens.
The full list of BAL token rewards for the first week is posted on their Github
Controversy ensued when Sam Bankman Fried, the infamous SBF, CEO of FTX exchange and Alameda Capital, decided to take advantage of Balancer’s generous liquidity mining incentives by depositing millions of tokens. The token white listing process began shortly after through community governance.
Keep an eye on Balancer for new liquidity mining incentives starting in June, and let me know what you think about the V2 experience!