Balancer or BAL (BAL/USDT – trade it here) is an Ethereum token that aims to provide a distributed network where computers can operate an exchange and users can buy and sell any cryptocurrency. Balancer uses a collection of different cryptos to provide decentralized finance services without intermediary. In this article, I will cover everything you need to know about Balancer, plus an instruction on how to buy BAL tokens.
Imagine Balancer as an index fund will be helpful to understand how it works. Users create or add funds depending on their crypto investment portfolios. The funds are Balancer pools. By fund deposits, users and provide more liquidity in the pool. Why would users do that? This is because the liquidity providers can earn a part of the trading fees from the Balancer pool. These liquidity providers will get rewards in the form of BAL tokens.
How does Balancer work?
The composition of a Balancer pool can be up to 8 different cryptocurrencies. The pool value will vary based on the percentage of each type of token in it, which is determined at the time of pool creation.
Here are two main functions that Balancer provides:
- Balancer Pool. Balancer provides two pools for users’ risk preference.
- Public pools. Anyone can add or withdraw assets. This is beneficial for users who have smaller holdings and would like to earn fees from more liquid pools.
- Private pools. Only the creators can add or withdraw assets. They are useful for people who have a large portfolio and want to earn fees on their selected assets.
- Self-balancing Index Fund. Balancer utilizes smart contracts to make sure the proportion of different assets is correct, even with price fluctuation of individual tokens. For example, one token in the pool has increasing prices, the pool will automatically cut the amount of that specific token in order to keep the percent of value in the pool.
What is BAL token?
The native token of Balancer is BAL. BAL ensures that no one entity has complete control over the network. Users receive BAL tokens for adding assets to Balancer Pools, and the token also functions as a reward system. In order to operate, Balancer has to provide incentives for both sizes of the market. One is the crypto users who wish to trade their holdings, and one is the traders who wish to trade with the best asset prices.
Tokenomics of BAL
Balancer Labs independently obtained $3 million in investment in 2020. 25 million BAL tokens were given to shareholders and employees, while approximately 5 million BAL tokens were sold to investors. The total supply of BAL is 100 million tokens.
An additional 10 million BAL were put aside, with 50% going to a fund for Balancer ecosystem participants and the other 50% going to sales to prospective investors.
How to buy BAL tokens?
You can buy BAL on MEXC by the following the steps:
- Log in to your MEXC account and click [Trade]. Click on [Spot].
- Search “BAL” using the search bar to see the available trading pairs. Take BAL/USDT as an example.
- Scroll down and go to the [Spot] box. Enter the amount of tokens you want to buy. You can choose from opening a Limit order, a Market order or a Stop-limit order. Take Market order as an example. Click [Buy BAL] to confirm your order. You will find the purchased tokens in your Spot Wallet.
Who created Balancer?
In 2018, Fernando Martinelli and Mike McDonald formed the software consulting company BlockScience, where Balancer first started as a research project.
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