Balancer Partners With Gauntlet to Optimize Returns for V2 Liquidity Providers
- Gauntlet’s technology will become a core component of Balancer V2, which will now have dynamic-fee AMM pools.
- Balancer V2 liquidity providers will be able to maximize their returns through the new dynamic-fee model.
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Automated market maker Balancer is partnering with on-chain risk management simulation platform Gauntlet to bring dynamic-fee AMM pools to its V2 liquidity providers (LP), the firm said in a press release shared with The Chain Bulletin on 23 March.
According to the announcement, the new partnership will help Balancer move away from fixed-fee pools through Gauntlet’s “battle-tested” techniques to help protocols manage risk, capital efficiency, and rewards. By optimizing the Balancer V2 protocol parameters, Gauntlet will help the DEX provide its LP’s with dynamic-fee AMM pools, which will help them maximize their pool returns. The CEO of Balancer, Fernando Martinelli, said in a statement:
“I believe fixed-fee pools won’t be able to compete with dynamic-fee pools just like taxis can’t compete with ride-sharing apps. It is better for all stakeholders for fees to constantly adapt to the market conditions.”
The move will help Balancer attract more liquidity providers to its platform, as “appropriate” trading fees can allow LP’s to profit from the price volatility of assets in a pool. The dynamic fees model will enable Balancer to leverage Gauntlet’s off-chain automation to improve LP’s on-chain returns.
The on-chain risk management simulation platform has used its technology to build an optimization model for “real-time fee choice” of Balancer V2 pools, and integrated live data feeds to ensure recommendations are made in line with the changing market conditions. Gauntlet’s technology will now be a core component of Balancer V2, and will continuously improve its simulation model to provide LP’s with optimal trading fees for each pool “in real-time”. The COO of Gauntlet, John Morrow, said in a statement:
“Dynamic fees allow Balancer to leverage our off-chain automation to improve on-chain LP returns. We’re looking forward to launch, but we’re even more excited for what comes after – our optimization platform gets smarter as we incorporate more live data.”
- DeFi protocol Balancer confirmed it was exploited almost a week after disclosing a critical vulnerability affecting several of its boosted pools.
- The platform did its best to mitigate some of the risks but was unable to pause the affected pools, and an estimated $980,000 in DAI were stolen in an attack.
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- The incredible growth of Polygon played a huge roll in Balancer’s choice to launch support for the network.
- A joint incentives program will also be launched on the network, with Balancer providing 25,000 BAL tokens, and Polygon distributing 375,000 MATIC.
- Gauntlet’s risk management solution will consist of two components.
- The dashboard will show risk scores for all Vesper pools, while the lending risk model will determine collateral bechmarks.