Balancer Protocol
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Balancer Protocol

How Balancer Saves Users ETH

Through strategic integrations and sidechain expansions, Balancer’s tech helps mitigate ETH transaction fees

Partnership with Cow Protocol

In Q4 2021, we announced a partnership to form the Balancer CoW Protocol (BCP) — a new DEX that delivers the best experience possible to traders. This partnership combines Balancer Vault technology with Cow Protocol’s price-finding mechanism, enabling new features such as gasless trading, favorable swap rates, and MEV protection.

BCP delivers the best experience for traders.

Deployment on SideChains and L2s

Balancer’s technology is deployed across four networks: Mainnet, Polygon, Arbitrum, and Optimism.

Polygon

Polygon is a network and smart contract platform that utilizes a fast and scalable Proof of Stake network. It implements a “side-chain” strategy that allows its throughput to scale up to millions of tx per second during periods of high demand. The network also borrows Ethereum’s robust security, employing its staking contracts on the Eth network and running validator nodes.

Balancer’s tech deployed on Polygon.

Arbitrum

Arbitrum is a true “Layer 2” solution to the Eth network. When users interact with Arbitrum, their transaction data is added to a batch processed on the main Ethereum network. However, the transaction data that Arbitrum sends to Ethereum is sent as a “roll-up” to maximize its throughput while simultaneously minimizing transaction costs. A roll-up can be thought of as sending a .zip file. All the data is stored on the main Eth blockchain but in a condensed form that saves size and cost. This allows Arbitrum to scale up to nearly 40,000 TPS (compared to ETH’s ~14 TPS).

Balancer’s tech deployed on Arbitrum.

Optimism

Balancer’s tech is now Optimism, with the help of Friendly Fork, Beethoven X. Optimism functions similarly to Arbitrum, utilizing roll-ups to process transactions — offering the security of mainnet in a more scalable package. The main difference between Optimism and Arbitrum is how they verify transaction authenticity. Optimism uses single-round fraud proofs, and Arbitrum offers multi-round fraud proofs. In effect, single-round proofs offer faster transactions ( at a slightly higher gas cost), making Optimism faster but more expensive than Arbitrum.

Balancer’s tech reaches Optimism.

Unique Balancer Tech

Two unique in-house innovations make the Balancer tech-stack stand out from its peers. The Protocol implements an original vault mechanism that separates token accounting and management from the pool logic, lightening the gas requirements for interacting with its AMM pools. The vault itself simply keeps track of internal pool balances. This also makes multi-hop swaps (A->B->C) roughly equal in gas cost to a simple swap, allowing traders to jump from A to C. This is where the SOR comes in.

Wrapping Up

ETH fees are an annoying reality, but more solutions arise every day to help users get around them. Through a combination of SOR, unique Vault architecture, deployment on battle-tested L2s, and strategic partnerships — Balancer is leading the way in providing the best options for traders to fit their needs. As the industry continues to evolve and adapt to growing scalability requirements, Balancer will continue to innovate and lead the cutting edge of DEX tech.

About Balancer

Balancer’s mission is to accelerate innovation in DeFi by providing access to secure infrastructure for liquidity applications. As a core building block of DeFi, Balancer Protocol is community driven and is reliable, open-source, and permissionless. Projects build on Balancer to create new, innovative types of pools and financial dApps.

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Balancer Labs

Balancer Labs contributes to Balancer Protocol — the leading platform for programmable liquidity.