Today, Balancer launched portfolio management and exchange dapps that could revolutionize indexed asset management for crypto.
Balancer, a non-custodial portfolio manager and liquidity provider, today announced the launch of its token exchange and pool management dapps.
Though Balancer can be compared to several existing products, its entry into the DeFi marketplace is nonetheless notable because it turns several traditional portfolio management concepts on their head.
At its most basic, the Balancer exchange enables swapping between ERC-20 tokens in an experience similar to Uniswap. The complementary pool management interface allows users to move tokens into and out of existing shared pools that facilitate the exchange.
More specifically, the platform allows pool creators to automatically maintain token holding values in designated amounts. As a reward for providing liquidity, pool creators earn fees on their holdings. Because the total value of assets in the pool stays the same, pool contributors can always withdraw tokens equal in value to those that were deposited, even if the number of tokens is different due to changing prices.
Balancer also switches up rebalancing. Instead of asset holders paying a fee to rebalance their portfolio, Balancer allows traders to buy assets from the pool, which brings asset holdings back to pre-determined ratios.
Take a pool holding TRN and ETH, for example. If the value of ETH rises, that would mean the Balancer pool now has a higher proportional value of ETH. Traditional rebalancing practices would sell some ETH to get asset values back to the designated level. They’d then charge users a fee for the transaction. Balancer pools instead make that ETH available for sale in a liquidity pool. Traders who buy ETH from that pool pay a transaction fee set by the pool creator.
Moreover, traders get access to liquidity independent from large-scale exchanges, creating arbitrage opportunities and token transfers at automatically updated exchange rates. The protocol also implements smart order routing across all pools to generate the best possible exchange rate when accounting for slippage and gas prices.
Already this March, Balancer has raised $3 million in seed funding, open-sourced its core smart contracts, and been audited by security firm Trail of Bits. Yet while consumers may welcome Balancer’s subsequent entry in the growing DeFi marketplace, its developers have warned that the platform is still in beta and advised users to only transact in small amounts to start.
Today’s announcement indicated several additional tools are in the works to allow pools to be customized for unique use cases.