What is BAL?

Modified on Sat, 18 Feb 2023 at 03:13 PM

BAL or Balancer protocol is a decentralized exchange built on the Ethereum blockchain, hence eliminating the need for a middleman facilitating various trades and functions within the platform.

The protocol’s main feature is the supply of a liquidity pool that collects all deposited assets to provide future liquidity in various trades and transactions through the withdrawal from Automated Market Makers (AMM).

Liquidity mining is performed on the platform’s pools. It refers to the process of depositing assets and funds into the platform’s pools for rewards or returns of their efforts. Rewards are given in the form of BAL tokens.

BAL token is a governance token that provides holders the opportunity to propose certain systematic changes to the protocol, along with voting for others’ policy proposals. Such proposals could, for instance, take regard to presenting a possible increase of incentivized rewards for liquidity providers (LPs).

The Balancer protocol’s main selling point is automatic systems that help users complete trades and transactions much faster and easier through the withdrawals of funds/assets from pools.

In-depth, Balancer pools are collections of various assets and coins for the purpose of supplying liquidity in users’ trades to not only complete their ongoing transactions but also fulfill the aim of building a decentralized exchange for users to enjoy.

The aforementioned pools can be divided as follows:

1.Private pools: pools that are controlled by a single entity, whom of which has the sole authority to make changes.
2.Shared pools: open pools that users can gain free access to for the purpose of supplying liquidity as a liquidity provider (LPs). LPs receive tokens for their deposits.
3.Smart pools: maintained by smart contracts, but are open for access.

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