BAL is the native token of Balancer.
Balancer is a permissionless, non-custodial automated market maker program. It aims to let people make deposits into liquidity pools, earn a cut of the fees from transactions that utilize that liquidity, and maintain the balance of their portfolio without additional costs.
|Circulating supply (approximately, as of August 2020)||~7,200,000 BAL|
|Maximum supply||100,000,000 BAL|
How does Balancer work?
At its heart, Balancer is a series of liquidity pools. Anyone can create a new pool and add funds to an existing pool and then receive a cut of the trading fees.
There are two kinds of people who use Balancer:
- Liquidity providers. They create or add funds to liquidity pools to earn a cut of the associated trading fees.
- Traders. They take advantage of the concentrated liquidity offered by Balancer to perform faster, cheaper trades than they might otherwise. Other smart contracts in the DeFi ecosystem can also tap into Balancer’s liquidity pools.
While there are many liquidity aggregators in DeFi, Balancer sets itself apart by letting liquidity providers enjoy automatic rebalancing of their portfolios, of up to eight assets.
It also aims to attract more depositors faster through “liquidity mining,” which is essentially an incentive scheme to reward people with the BAL token when they provide liquidity.
The idea is that liquidity begets liquidity, and as these pools grow, they become more useful and start attracting more trading fees, which in turn drive even more growth and more usability.
What does the BAL token do?
BAL is a governance token. Its holders are allowed to practice governance rights on Balancer.
While not an inherently valuable function, this opens the door for the community to make decisions further down the line. For example, there may be a decision to reduce the maximum supply of BAL tokens, to curtail BAL token rewards or to start paying a cut of the liquidity pool profits to token holders.
It can also be bought and sold.
How to buy BAL
Here’s a step-by-step guide for one way of buying BAL. Note that there might be other options available, so you may want to compare cryptocurrency exchanges to find the one that’s right for you.
Ask an Expert