Balancer extended the AMM concept to support multiple assets with custom weightings. Think of it as a self-rebalancing index fund that also serves as a DEX.
Weighted Pools
Unlike Uniswap’s 50/50 pools, Balancer allows:
- Up to 8 tokens per pool
- Custom weights (e.g., 80% ETH / 20% USDC)
- Automatic rebalancing through arbitrage
- Reduced impermanent loss for certain configurations
Pool Types
- Weighted Pools — Custom allocations
- Stable Pools — Like Curve for stable assets
- Boosted Pools — Idle liquidity earns yield
- Linear Pools — Nested pool efficiency
veBAL Governance
Following Curve’s model, Balancer adopted vote-escrow with veBAL tokens.
Key Takeaways
- Weighted pools enable multi-asset portfolios
- Custom weights reduce IL for certain strategies
- Boosted pools maximize capital efficiency
- veBAL governance influences emission allocation