The Liquidity Provision Game Deepens with Balancer Aave v3 Boosted Pools
v3 Boosted Pools are now live for integrations
Balancer has launched new Boosted Pools bbaUSD and wstETH/bb-a-weth on Aave v3. Aave is a key partner, and we plan to make Aave v3 Boosted Pools an important building block on the network. As the transition to v3 progresses, Balancer Boosted Pools aim to increase capital efficiency for liquidity providers.
The original bbaUSD on Aave v2 has proven to be one of our most popular and successful pools, regularly seeing above 100% utilization.
“The relationship between Balancer and Aave continues to strengthen over time. We’ve seen substantial success from the previous bb-a-USD pools, and we’re excited to continue the synergy of our teams with Aave v3. This next level of Boosted Pools aims to provide deeper liquidity with pool composability and higher yields.” — Fernando Martinelli, Balancer Labs CEO & Co-Founder
ICYMI: Boosted Pools
Launched in 2021, Boosted Pools achieve high capital efficiency by storing the majority of their liquidity on external protocols as yield-bearing versions of common tokens. This gives users not only deep liquidity in all pool tokens, but also great flexibility: both in swapping between the common and yield-bearing assets and in moving funds between composable layers or even different Boosted Pools.
Alongside the advantages of high capital efficiency and superfluid, consolidated liquidity, Boosted Pools are geared towards several types of users.
- Swappers — Enable deep liquidity → good swap prices
- Liquidity Providers — Deeper liquidity and increased yield
- Pool Creators — Swap fees and liquidity mining incentives
- Aggregators — Simplifies the paths for multi-pool operations (can keep everything within Balancer)
Regarding Automated Market Makers (AMMs), only a small percentage of liquidity deposited into a liquidity pool is used to facilitate trades. Most of the time, the daily volume of trade activity is much smaller than the net sum of the pool’s available liquidity. That deep liquidity contributes to low price impact trading and efficient markets, but most of those funds are just sitting there, doing nothing. Boosted Pools monetize those idle resources on other protocols.
A full breakdown of Balancer Boosted Pools can be found here.
“Given the past success of Balancer boosted pools on Aave V2, it was a natural next step to envision this capability on Aave V3. As a result of this integration, deposits of stablecoins into Balancer Aave boosted pool will bring additional yield to balancer LPs, including boosting the pool liquidity.” — Stani Kulechov, Aave CEO & Founder
Functionally, the v3 pools act the same as all Boosted Pools, boosting efficiency and composability for LP positions via routing liquidity to other parties. Most of the assets in the pool will be deposited to Aave v3 to earn extra yield, while a small number of assets remain in the pool to facilitate trading. The pool then rebalances between wrapped Aave v3 tokens and unwrapped stables using an asset manager rebalancer.
Closing Thoughts
Balancer is still the only DEX offering Boosted Pools technology or similar mechanisms. As Aave prepares for the coming GHO launch, Balancer is gearing up for a GHO/bbaUSD pool, reinforcing the synergistic relationship between the projects as it supports GHO liquidity, builds Aave v3 TVL, and facilitates trading activity.
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.
