Investors are particularly focussing on cryptocurrencies from the decentralized finance (DeFi) sector in 2021. Many projects were able to show huge price gains and cause a stir in the market. Also, Balancer is among the winners of this sector and is considered a promising project on the market.
Yield farming has proven to be particularly profitable. Since centralized exchanges are becoming less popular, decentralized exchanges (DEX) are increasingly benefiting from this change. However, these require liquidity to enable cryptocurrency trading. This creates new opportunities for investors, as they can provide their capital and thus earn interest.
What Is Balancer: Key Things to Know
Balancer is an automated market maker, which enables users to exchange cryptocurrencies. In contrast to a traditional trading platform, no order book is used, but crypto trading takes place directly at the current price. This enables a rapid exchange since cryptocurrencies don’t have to be exchanged for Bitcoin or Ethereum first. Instead, different tokens can be exchanged for one another directly.
Traders don’t need a user account or log in to trade. All you need is a suitable wallet that can be linked to the platform.
Users also have an option of increasing trading volume via various pools. By lending their own cryptocurrencies, they represent the basis for trading on Automated Market Maker (AMM). They receive a share of the trading fees as compensation. This process can be compared to staking.
Balancer offers numerous assets, including Dai, Aave, and Yearn Finance. In addition to public pools, users can also create private pools and optimize them for themselves. There is also an option of investing in pools consisting of several assets with one token. In total, pools with up to eight different assets are available.
Balancer’s Developer Team
Balancer is one of the youngest DeFi projects. Balancer Labs was able to gain investments of three million US dollars in March 2020. Nowadays, it’s one of the most promising projects with a focus on decentralized finance.
The founders include Mike McDonald and Fernando Martinelli, who started development in 2019.
How Does the Protocol Work?
It’s not a surprise that various conditions must be met in order to enable financial transactions on the blockchain. Since many smart contracts are programmed incorrectly, the number of failed projects also increases. For this reason, Balancer would like to continuously improve the security of its protocol through regular audits.
As an automated market maker, it’s also responsible for ensuring that all transactions run smoothly and function independently. Only in this way the system can achieve a high level of scalability and be accessible to many users. The focus is on the creation of pools that facilitate cryptocurrency trading. Users can also create pools themselves according to their own ideas. By providing liquidity, passive income can also be received.
Where Can You Buy Balancers (BAL)?
Despite its young age, Balancer is already one of the largest providers of decentralized finance. This also led to strong price increases. According to Coingecko, the maximum amount in circulation is 100 million BALs, which means that their supply is quite limited. On September 2, 2020, the token was able to reach its previous high of $35.
The token is already listed on numerous exchanges that provide crypto trading. Binance is one of the largest exchanges which can have a high trading volume. Token listing on several reputable exchanges is usually a good sign of the legitimacy of the project.
Since it’s an ERC20 token, it’s based on the Ethereum blockchain. This means that most wallets can be used to store BAL tokens. The Ledger Wallet has established itself as a common standard for many users. It offers the possibility of storing numerous digital currencies offline and is therefore particularly secure.