Balancer – an automated asset management and liquidity protocol – has amended its liquidity mining distribution to further favor BAL-based pools.
Tomorrow, Saturday 22nd of August, at 16h UTC, a voting will be active on the proposal to introduce BAL liquidity staking.
The voting will end 24 hours later, on Sunday 23rd of August, at 16h UTC.
— Balancer Labs (@BalancerLabs) August 22, 2020
For those unfamiliar, users who provide liquidity to Balancer earn weekly rewards in the form of BAL governance tokens. The project has undergone a suite of changes to better balance this distribution through a variety of factors like fees, wrap, cap, pegs and ratios. In short, the protocol has looked to issue the 145k BAL rewards to the most “useful” liquidity, all of which have resulted in stronger community engagement for Balancer liquidity.
More recently, Balancer added a balFactor which gave BAL liquidity a 1.5x higher return on BAL rewards. Now, that buffer has been boosted even more through the passing of Liquidity Staking.
With the new vote, 45k BAL out of the 145k total weekly distribution will be allocated directly to BAL-based pools which are paired with uncapped ‘useful’ tokens like WETH, USDC and DAI.
“The main goals are to significantly increase liquidity on key BAL pairs and to allow non-shareholders to compound their BAL holdings at a much faster pace, accelerating protocol decentralization.”
The vote over the weekend passed with flying colors, with 98% Yes votes backed by 189k BAL participating in the poll.
Why Should I Care?
With this new change, BAL-based pools are netting upwards of 300% APY, by far the highest Return on Liquidity (ROL) of any Balancer pool today.
A community member put together a great site – pools.vision – allowing users to keep tabs on Balancer pool returns at any given time.
The shift in sentiment towards BAL-favored rewards goes to show that the Balancer community is rallying around protocol decentralization, albeit at the benefit of those who already hold BAL.
Looking at this from the perspective of someone who does not hold BAL, this move could very much be seen as empowering those with the deepest BAL holdings already. Thankfully, this proposal made sure to exclude shareholder addresses from rewards, making this distribution as community-oriented as possible.
The passing of Liquidity Staking comes in tandem with 3 other proposals, all of which passed with the following changes:
- Increase the MKR capFactor from $10M to $30M
- Decrease the RPL capFator from $10M to $3M
- Remove DZAR from the whitelist
This is a great signal that Balancer governance is quickly heating up, due in large part to the snapshot-based voting in which users can vote without having to pay a ~$10 transaction fee as with virtually all other governance systems on mainnet today.
To stay up with Balancer, follow them on Twitter or join the conversation on Discord.
Cooper is the Editor of DeFi Rate and an active contributor to leading DeFi media outlets like The Defiant, DeFi Pulse, and Bankless. He works with early-stage teams through Fire Eyes DAO to incubate governance models and grassroots community development. He is an ambassador to Set Protocol and an author of a weekly publication called Token Tuesdays. To stay up with Cooper, follow him on Twitter.