Balancer is an automated market maker (AMM) that was developed on the Ethereum blockchain and launched in March 2020. Balancer protocol functions as a self-balancing weighted portfolio, price sensor and liquidity provider. It allows users to earn profits through its recently introduced token ($BAL) by contributing to customizable liquidity pools.
The protocol operates a few types of pools:
- Weighted Pools: Designed for general cases, including tokens that don't necessarily have price correlation (ex. DAI/WETH).
- Stable Pools: Ideal for soft-pegged tokens with strong correlation (ex. DAI/USDC/USDT).
- MetaStable Pools: Built for non-pegged tokens that maintain correlation but may slowly diverge over time, such as derivatives (ex. stETH/WETH).
- Liquidity Bootstrapping Pools: Ideal for shifting liquidity of one token into another (ex. AKITA/ETH).
- Managed Pools: Designed to have extreme flexibility to manage a dynamic fund. Features weight shifting to rebalance, swap pausing, and management fees. (ex. WSBDapp).
