Crypto Spotlight: BAL

Region: Europe
Aug 26, 2021, 10:00:00 AM Published By Wirex Team

We have another new token to introduce you to! Here’s everything you need to know about Balancer (BAL).

What is BAL?

BAL is an Ethereum token that powers the Balancer Protocol, an automated market maker that allows users to earn profits by contributing to customisable trading pools. These pools provide the liquidity needed for users to buy and sell cryptocurrency on the platform.

Liquidity providers are rewarded with a portion of the trading fees, plus BAL tokens, which also act as governance tokens for the protocol.

Balancer got its name from its ability to automatically rebalance users' portfolios in response to price fluctuations. So, if a particular token in a user’s pool shot up in value, it would automatically exchange some of it into a token of lower value, to keep the pool’s original proportion of value intact.

Who created BAL?

Fernando Martinelli and Mike McDonald began Balancer Labs as a research project at software consulting company, Blockscience, in 2018. The project raised $3 million in 2020 as Balancer Labs and has continued to grow since.

What makes it unique?

Balancer wasn’t initially launched with a native token. The BAL token was added to the protocol in June 2020, following the rapid rise in popularity of Compound’s COMP. The aim of introducing BAL was to provide more decentralisation and create an incentive for liquidity providers.