Balancer (BAL)
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Token:
Sector: Exchange
Governance: Offchain
Balancer is a decentralized finance (DeFi) protocol that functions as an automated market maker (AMM) and allows users to create liquidity pools with multiple tokens. Unlike traditional AMMs, which usually require a 50/50 split of two tokens, Balancer allows the creation of pools with up to eight different tokens, with any distribution of weights. This flexibility enables more complex and efficient trading strategies. Users can earn trading fees by providing liquidity to these pools, and traders can swap between tokens directly on the Balancer platform.
Additionally, Balancer also has a feature that automatically rebalances the weights of the tokens in the pool to maintain the original ratios, even as the prices of the tokens change. This automatic rebalancing helps reduce the need for manual management of the pool and provides an additional way for liquidity providers to earn returns, as they receive a portion of the trading fees generated by the rebalancing trades.