This is a joint proposal by @mubaris and @monet-supply to add BAL as a new asset in the Aave market.
Some details about BAL & Balancer
Balancer is a decentralized exchange that uses a constant function market maker formula to allow liquidity pools with multiple tokens, custom allocations and fees. Smart pools in Balancer can be used for programmable liquidity. Traders can swap between any of the tokens listed on Balancer in exchange for a swap fee (paid to liquidity providers) and slippage based upon the relative trade size. BAL is the governance token of the Balancer exchange, entitling holders (including those providing BAL liquidity on Balancer) to vote on proposals. BAL also receives preferential treatment in the Balancer exchange liquidity mining program.
At the time of writing, BAL has a market cap of $146M.
Most of the BAL liquidity is on Balancer itself. Balancer has a little over $80M liquidity distributed over multiple pools.
Apart from the BAL liquidity on Balancer, BAL is also listed on FTX, Coinbase, Binance, Gemini and other centralized exchanges.
Benefits for Aave
Balancer has a very active community which would bring more users and liquidity to Aave.
BAL earns native yield through liquidity mining on Balancer exchange, currently it’s possible to earn 80%+ APY with limited impermanent loss. This has generated strong borrowing demand for BAL on CREAM, with deposit rates often above 10%
With deposit rates so high, it becomes super cost effective for people to borrow funds with BAL as collateral. often their effective borrowing rate is negative!
Thanks for putting this together @mubaris and @monet-supply - Listing BAL makes a lot of sense here, especially with Balancer V2 on the near horizon.
The closest comparison to already supported assets would be UNI or KNC, both of which feature 60% LTV’s.
Plus, Aave and Balancer have a strong ongoing relationship with Aave using Balancer for the Safety Module, so seems like a great two way street to have BAL listed for lending and borrowing markets here as well.
BAL is the governance token of the Balancer decentralized exchange thats allows liquidity pools with multiple tokens, custom allocations and fees. Smart pools in Balancer can be used for programmable liquidity, this solution is currently being implemented for Aave’s Safety Module. Balancer’s Dex currently holds $800m of TVL.
Since its launch in June BAL has reached half a million transactions driven by liquidity mining distribution program which may lead to inflation. The smart contract has been well battle tested, audited twice and has a good test coverage.
BAL Counterparty Risk: B
Balancer is a permissionless Dex with a large community of BAL holders that vote on proposals. Furthermore anyone can create a custom Balancer Pool.
The BAL token has experience less volatility than the rest of the DeFi market since its inception but remains quite volatile. The token is traded on the top centralised exchanges with good volume.
