As the popularity of cryptocurrency continues to grow in the world, the need for decentralized exchanges also increases. Decentralized Exchanges are also known as DEXs, a peer-to-peer marketplace that allows traders to trade cryptocurrencies in a non-custodial manner. They can trade their funds directly without handing them over it to the management. Today we will talk about Balancer, one of the best DEX platforms available in the market.
In our further content, we will cover some topics such as an Introduction to Balancer, its pros and cons, and a comparison of it with Uniswap based on their features.
What is Balancer?
Balancer, one of the best DEX platforms available in the market that operates on Ethereum blockchain and initially began as a research project at Block Science (software consulting firm) in the year 2018. It was founded by Fernando Martinelli and Mike McDonald. It is an AMM (automated market maker) exchange protocol that allows its users to create liquidity pools with the support of 8 different assets in any ratio. And acts as a liquidity provider, price sensor, and non-custodial portfolio manager.
Balancer Pros & Cons:
- Fully permissionless and decentralized.
- Its pools are open to anyone and can create liquidity pools on any particular token.
- Customizable AMMs.
- Reduced gas fee charges.
- Not beginner-friendly, its concept is tough for beginners in the crypto market.
- Unregulated DEX.
- Limited to ERC-20 tokens.
Difference between Uniswap vs Balancer on the basis of their Features:
Balancer and Uniswap both are the best and leading decentralized exchanges (DEXes) in the crypto market. But users have to know that Uniswap protocol offers a special decentralized governance protocol to its users. On the other hand, the Balancer protocol allows its users to make decisions on custom trading fees and also provides a liquidity pool for up to 8 different assets.
The most important features of Uniswap are given as follows,
- It supports up to 2 numbers of assets by liquidity pools.
- The ratio of the assets in the liquidity pool is 1:1.
- Charges for trading fees are 0.3%.
- It supports price oracles from Uniswap V2, where developers can create their own oracles on-chain.
- Its native token is UNI, which is used to influence the development of the platform.
The most important features of it are given as follows,
- It supports a total 8 number of assets in a single liquidity pool.
- The ratio of the assets in the pool is Arbitrary.
- Trading fees are decided by the creators of the pool.
- It does not support the price oracle as compared to Uniswap.
- Its native token is BAL, the protocol is governed by the BAL token which can be earned via liquidity mining.
In our above content, we have covered some topics such as an introduction to Balancer, its pros & cons, and a comparison of it with Uniswap based on their features. It is a suitable AMM (automated market maker) protocol for crypto traders who want to exchange their digital assets at satisfactory prices. Along with that, it enables a customizable multi-asset liquidity pool that functions like a crypto index fund.