It’s that time of the week again. You guessed it – we’ve got another cryptocurrency to introduce to you!
This week, it’s all about BAL – an Ethereum-based token and the driving force behind the Balancer protocol. Here’s what you need to know about it.
The BAL token is an essential component of the Balancer network, an automated market maker (AMM) that allows users to earn profits by creating or adding to customisable trading pools.
Users create these pools based on the cryptocurrencies in their portfolios. They can also provide liquidity by depositing their assets, which in turn earns them a portion of the trading fee paid to the network, as well as newly-minted BAL tokens.
There are two types of pools available on Balancer – private and public. A public pool allows anyone to provide liquidity, and is particularly beneficial for those with small holdings, who are looking to earn from them.
On the other hand, a private pool only allows the creator to add or withdraw assets. These types of pools are useful for those with larger portfolios, who want to earn fees on certain assets.
As well as an incentive for users to provide liquidity, BAL also acts as the governance token for the Balancer protocol. It can be used to vote on its weekly distribution rate, network fees and even the possibility of launching Balancer on other blockchains.
BAL is also available to buy and exchange in the Wirex app. Do so today at exclusive OTC rates, or spend it in real-life with your multicurrency Wirex card.
Balancer was developed in 2018 by Fernando Martinelli and Mike McDonald.
In 2020, the project (then called “Balancer Labs”) managed to raise $3 million in funding, with 5 million BAL tokens sold to investors. A further 25 million tokens were distributed to shareholders and employees.
Balancer is often compared to other exchanges, most notably the Uniswap platform. While both networks share similarities in what they offer, there are two primary differences that make Balancer stand out from its competitors.
The first is that it supports up to eight different assets in one liquidity pool, which in turn creates more liquidity and greater profit for users.
The other key difference is that is allows creators to set their own trading fees, giving them ultimate control of their liquidity pools.