Use cases

Explore what can be built on top of Balancer AMM

The bandwidth of applications for Balancer Pools is way beyond exchanges.

1. A building block for DeFi applications Balancer Pools are widely used as a key building block in other protocols, building and maintaining decentralized indices and portfolios, such as PowerIndex, PieDAO, and indexed.finance. At the time of writing, the total TVL in these three protocols sums up to now ~$70m, mere months after their launch.

2. Initial DEX offerings and liquidity bootstrapping events Liquidity bootstrapping via Balancer pools became trendy, and more and more projects use this option for building up a community with skin in the game . These Initial DEX Offerings turned out to be particularly interesting for fair token distribution and price discovery as Perp.fi, FURUCOMBO, and Nsure have shown last year.

3. Community token distribution events YFI’s famous yield farming program offered YFI rewards to participants staking stable coins in various Balancer Pools in order to distribute YFI tokens with governance voting rights.

4. Asset-specific AMM implementations Ampleforth’s rebase cryptocurrency is a perfect example of how to make use of Balancer smart pools. Via adapting pool weights to AMPL rebases, the AMPL protocol provides elastic supply and thus, removes price volatility and avoids value being drained from the pool by arbitrageurs.

This wide array of application cases require a rigorous Token Engineering approach to explore and specify requirements and continuously optimize against an ecosystem’s objectives. Simulations, as applied in various stress test contexts and frameworks, have proven to be a valuable tool to detect sensitivities and challenges early on. With this article, we introduce Balancer Simulations, an open-source cadCAD model and documentation to support the design, optimization, and validation of Balancer Pools across their entire life cycle.