What is Balancer?
Balancer is a DeFi protocol that provides permissionless technology to streamline AMM development for developers and empower liquidity providers with an ever-expanding DEX product suite.
This is made possible by unique ‘Vault’ architecture that formally defines the requirements of a custom pool and shifts core design patterns out of the pool into a separate ‘singleton contract’. With both internally developed pool types such as Weighted Pools, Boosted Pools, and LVR mitigating stableswaps, and also externally developed pools such as Elliptical Concentrated Liquidity, CoW AMMs, and FxPools, Balancer has arisen to be a focal source of fungible, yield-bearing, and MEV-mitigated liquidity. This flexibility empowers teams like Gyroscope, CoW, and Xave to deploy AMMs that are integrated within the DeFi landscape.
How does Balancer work?
The Balancer protocol architecture comprises three primary components (Router, Vault and Pool), each designed to enhance flexibility and minimize the intricacies involved in constructing custom pools. Pools can be extended with standalone hooks contracts that can be leveraged at different stages of the pool's lifecycle. By utilizing hooks, developers can customize and enhance the functionality of pools, enabling the integration of features like oracles or time-weighted average market maker capabilities.
What is BAL and veBAL?
Balancer Governance Token (BAL) is the core token behind the Balancer protocol.
veBAL is an extension of BAL and is used for voting in decentralized governance, directing BAL emissions to pools, and represents a single position that benefits from the protocol's fee mechanisms, as well as external voting incentives via the bribe market. By locking the BAL/WETH 80/20 BPT, holders are given veBAL, entitling them to governance rights and protocol fee collection.