The Balancer Report: Laying Out the Layers
Blockchains and casseroles may not seem similar at first glance, but they share a characteristic feature: multi-layered composition.
While not a universal trait, this layered structure enables certain blockchains to scale effectively, grow their ecosystem TVL and onboard new users.
This week we are exploring the dynamic world of Layer 2s, a concept currently at the forefront of the industry. We are also taking a look at Balancer’s role in championing L2 growth through pool incentives and new deployments.
At their core, layer 2 blockchains (also called rollups) are chains built on top of existing ones that use their base network as the settlement layer while enhancing its performance in some way. The key focus is scalability: some layer 1 chains have blockspace so valuable that transactions become costly for regular users. Ethereum is a good example of this: mainnet transactions can cost up to $100 when gas prices are soaring, which sidelines users unless they are transacting with large amounts where the fee is low relative to the overall transaction value.
Ethereum layer 2s aim to address this while preserving the security and finality of the base layer. Here’s how they work.
There are two main components: the L2 chain itself that processes transactions at a fraction of the cost of its L1, and a smart contract which ensures that L2 data is consolidated and settled on the L1. The idea here is to batch L2 transactions together and only cover gas to settle them on the mainnet once as opposed to doing that for each transaction separately. This translates into exponential gas savings with transactions often costing less than a dollar.
Rollups have gained immense popularity due to their ability to offer an affordable way to explore DeFi. The three largest ones at the moment are Arbitrum, Optimism and Base. Their combined TVL eclipses $3 billion which shows that users are willing to go an extra mile to bridge funds to their rollup of choice to enjoy accessibility. Layer 2s are also accessible to developers as they are usually EVM-compatible, which means that applications that were originally deployed on Ethereum can be deployed on most L2s without any additional work.
Protocols play a pivotal role in helping L2s grow. After all, people usually want to do something with the assets they bridge and having a variety of options for DeFi interactions is vital for any L2 aiming for long-term success.
Balancer is committed to innovation and it is no surprise that it is deployed on a wide range of leading rollups. In addition to the ones mentioned earlier, the protocol has pools on Gnosis, Polygon, Polygon zkEVM with Linea, zkSync and Scroll deployments on the way.
Balancer also fosters liquidity growth through its incentive system bootstrapped through cross-chain gauges. This allows ecosystem participants to deploy incentives on any supported chain thereby boosting its growth and making its liquidity more attractive to end users as well as LPs.
Whether you have a favorite layer 2 or are just starting to explore the space, rollups have something for you. They play an important role in making decentralized finance open to all and accessible to all kinds of users. Balancer is a leader in L2 growth and it welcomes builders and users alike.
The Balancer ecosystem keeps growing, here’s a recap of the last seven days:
Although the STIP incentives have only just started rolling out, 15 protocols are leveraging the liquidity growth program already.
The LGP is open to everyone and it aims to supercharge growth for the Arbitrum ecosystem as a whole. All a protocol needs to do to participate is create a gauge, get it approved and place a voting incentive on any veBAL voting market. The program has two types of boosts, one is fixed while the other one is based on the efficiency of the pool and can thus fluctuate. The list of protocols that have joined the program so far includes Rocket Pool, Radiant and Lido among others.
Gyroscope has updated their UI in anticipation of the GYD launch.
The UI now lets users visualize the reserve portfolio in the mint/redeem interface, see an interactive version of the DSM’s redemption curve and explore the liquidity profile of all E-CLPs in detail.
Beethoven X published a deep dive into Sonic, Fantom’s latest update that aims to make the chain faster while lowering network fees further.
The update replaces EVM with FVM (Fantom Virtual Machine) which promises performance amounting to over two thousand transactions per second. It also introduces Carmen Database Storage, which should make validator requirements lower by up to 90%. The final piece of the puzzle is the improved finality time which is now one second.
Aura’s veBAL share is closing in on 47% after Aave minted $1m worth.
It is likely that Balancer will see a rise in GHO liquidity given Aave’s recent move and its vlAURA and auraBAL positions. GHO is Aave’s native stablecoin fully backed by collateralized loans.
As always, HiddenHand incentives can be explored here, the current round ends on November 30, 2023.
Balancer: TVL and Stats — Defilytica
Balancer’s Total TVL across all networks is sitting at $754,1m.
The Total Mainnet TVL is $472,75m with a dominance of 62,7%.
Speaking of protocol volume metrics, in this last week we were able to see a cumulative volume of $175,65m.
As for protocol fee metrics, we can verify cumulative fees of $134,91k.
As for our liquid wrappers, they are under the following parity to veBAL:
This section will list the top three expected pools to receive most of the next period’s emissions. Voting is open for four more days, and the next period is scheduled to start on Thursday at 00:00 am UTC.
- Polygon — 20WETH-80BAL / tetuBAL — currently at 14.50%
- Mainnet — rETH / WETH — currently at 6.80%
- Arbitrum — GOLD / wstETH / USDC — currently at 5.82%.
You can find an overview of the current LM incentives on the Balancer Mainnet below:
This voting round is ending with 4 new Snapshot votes including the following:
- [BIP-490] Enable 80OETH-20WETH Gauge [Ethereum] with a 2% emission cap
- [BIP-491] Enable 3 GYD/stablecoin Gauges [Ethereum]
Stay tuned for this week’s Governance Recap and Gauge Update to learn about the results.
And as usual, this week Dubstard shares another set of security tips that will help you stay safe:
- Do not open any links sent to you in DMs from any one pretending to be a “mod”, “admin” “staff member” and etc.
- Do not message anybody offering help if you DMs them first, those are scammers.
- Remember, Balancer operates primarily under the following domain: https://balancer.fi/
- Never share private keys, seed phases with anyone.
- Remember, there is NO AIRDROP!
- There is no compensatory $BAL distribution and any website or user promising otherwise is trying to scam you.
- Do not click any links on X/Twitter, even from “verified” accounts. Avoid X/Twitter when it comes to Web3/DeFi/Crypto Anyone can buy a “verified” account and post scams with it.
Balancer has a flourishing ecosystem. You’re welcome to contribute to it whether you’re a dev, a community person, or a graphic designer! We strive toward onboarding every new member in a smooth and personalized way.
Join the Ballers and start your Balancer journey now: http://discord.balancer.fi/
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This article is for informational and educational purposes only. It should not be construed as investment or trading advice or a solicitation or recommendation to buy, sell, or hold any digital assets. Transactions on the blockchain are speculative. Carefully consider and accept all risks before taking action.
