The initiative comes at a time when crypto stakeholders are being conservative with DeFi following recent arbitrage cases in these markets. However, Balancer is optimistic that its traditional finance touch will lure more participants into the network’s ecosystem on Ethereum. This platform borrows heavily from the likes of Uniswap whose Automated Market Makers (AMM) facilitate liquidity creation; the only difference is Balancer can accommodate varying Ether percentages in a given pool.

Balancer’s DeFi Model

With Balancer’s token exchange and pool manager, users can leverage a number of functions and crypto market opportunities. The very fundamental one is exchanging ERC-20 tokens which can then be moved in and out of certain pools based on Balancer’s portfolio manager interface.

Liquidity creation has been an issue in modern-day finance and was clearly not solved in the new digital asset markets. Balancer’s liquidity pool approach might, however, change this narrative given the incentives and rebalancing alternatives. The platform encourages pool creators to hold crypto tokens in which they will be rewarded fees for contributing to the DeFi’s liquidity. Notably, they can always withdraw their digital assets based on the deposit value despite the market prices.

In terms of balancing portfolios, this DeFi is designed to save trader fees when one wants to re-weight their crypto holdings. For instance, an ETH and TRX holder might want to rebalance their portfolio; normally they would have to sell part of the overweight asset. Balancer’s approach, however, eliminates this hustle through a liquidity pool. Basically, the extra ETH or TRX will be in a liquidity pool for interested buyers which automatically rebalances the seller’s portfolio as desired. These functions are complemented by the DeFi’s smart order router which enables trade optimization within Balancer’s liquidity pools.

Given its value proposition, Balancer has attracted funding from major investors eyeing the blockchain and crypto space. Barely a week ago, they announced a $3 million seed round led by Placeholder and Accomplice. Despite this progress, the project has cautioned prospective users such as 1inch, a DEX Aggregator, to begin with, small amounts.