Balancer Labs has officially released the second iteration of its automated market maker (AMM) after more than a year of development, the DeFi project said in a blog post on 11 May.
According to the announcement, Balancer V2 will offer users lower gas costs and better pricing once a “substantial amount of liquidity” has been moved to it. The platform has estimated that V2 will be able to reduce the gas prices for simple swaps by up to 53%. The upgrade also comes with an improved interface, which developers say would provide a cleaner experience and more accurate information to traders. Balancer Labs said in the blog post:
“Our expectation is that V1 will continue to provide the best price until a substantial amount of liquidity migrates to V2, at which point we expect trades will be routed through V2’s Protocol Vault resulting in lower gas costs and better pricing.”
While the project had opted to separate each pool for security reasons in its V1, the second iteration will put all assets within one big vault, meaning users will have to pay gas only for going into and out of Balancer. The upgrade will also enable users to invest in pools with “any combination of tokens and any amounts”, allowing for single-sided liquidity provision.
Balancer V2 was released in partnership with some of the biggest names in DeFi, such as Aave, Gyroscope, Enzym Finance, Ocean Protocol, PowerPool and Techemy Capital. The launch partners will help the protocol provide better pricing, higher yields, streamlined liquidity and support for the V2 AMM logic. The most notable partnership, however, was with Gnosis. Balancer said:
“Balancer-Gnosis-Protocol (BGP) combines the new and improved vault system of Balancer V2 with Gnosis Protocol’s unrivaled price finding mechanism.”
Balancer also stated it will be launching a new liquidity mining campaign for its BAL governance token in order to incentivize its users to migrate to the new version. Each V2 pool will be assigned one of three different tiers of BAL rewards, which will be governed in a “transparent and accountable way”.
Balancer first released its V2 smart contracts on the Ethereum mainnet on 20 April, but delayed the launch of the UI to give its partners and developers time to build and integrate before consumers start using V2 actively. At the time, the project also launched one of the biggest bug bounties — with the top prize being 1,000 ETH or $2 million (whichever was higher) — for those that are able to spot critical bugs that allow attackers to drain the V2 vaults.