Thread by @TrustlessState

On @bankless: ULTIMATE Guide to Balancer Smart Pools

Typical @BalancerLabs Pools have FIXED parameters, but Smart Pools have their variables UNLOCKED, are much more flexible!

- Tokens
- Weights
- Swap Fees

...are now adjustable parameters!

bankless.substack.com/p/the-ultimate…

👇thread

PUBLIC Bal Pools have SIX key parameters:

- Tokens
- Change Weights
- Change Swap Fee
- Whitelist LPs
- Max Deposited Value
- Pause Trading (can u guys pls stop trading)

In order to be TRUSTLESS, all public Balancer Pools LOCK these parameters, as a rug-pull prevention tactic.

On the other side of things, PRIVATE Pools have all six parameters completely unlocked.

This gives the deployer maximum control to suit their needs!

BUT, @BalancerLabs restricts providing liquidity to these pools to ONLY the deployer, as they are the opposite of trustless!

So what about the middle ground between PUBLIC and PRIVATE pools?

That's where SMART POOLS come in! Smart Pools are for accessing the middle-ground between fully trustless and fully trusted ends of the spectrum!

We now have the tools to be able to have more expressive pools!

A use-case is ‘Surge-Pricing’

Demand can be volatile!

We've all experienced this on pre-covid Friday nights, where calling an Uber costs 2.5x more than a Tuesday afternoon!

Uber responds by charging riders more in order to incent more drivers to start driving more riders!

A Balancer Smart Pool can recreate this environment by leveraging a variable fee, that responds to local market conditions.

Imagine a Pool that increases/decreases its fee the more/less volume flowing through it.

A Smart Pool can match the environment around it!

Another use case is 'Liquidity Bootstrapping Pools', which I get REALLY excited about. I think they're going to become the DE FACTO way to fairly issue a new token into the world.

They have significant advantages with price discovery, distribution, and fairness in access.

LBPs use the 'Change Weights' variable to slowly issue a token over time to the market.

Start Weight
-DAI: 20%
-Token: 80%

End Weight
-DAI: 80%
-Token: 20%

Time: x# of blocks

This produces a Dutch Auction, AMM hybrid where prices goes DOWN over time, but UP when people buy

Check out the price-graph of @perpprotocol's sale of PERP, who issued their token this way over a 3-day sale:

Start:
- 1.33M USDC
- 7.5M PERP

End
- 10.1M USDC
- 2.08M PERP

At the end of the sale, PERP became INSANELY well distributed.

Also, PERP seeded their own pool with $1.33M worth of USDC...

BUT they were able to achieve $14M in liquidity for their PERP token, due to the asymmetric weighting of the token 🤯

If you want to learn how to create your own 'Liquidity Bootstrapping Pool', everything you need to know is in @BanklessHQ's tactic!

bankless.substack.com/p/the-ultimate…

How do I know everything is there?

Because Bankless has its own Liquidity Bootstrapping Pool!

Remember @BanklessHQ's BAPs?

We launched 50 tokens on Uniswap, redeemable for these awesome tee shirts

bankless.substack.com/p/bankless-app…

https://twitter.com/TrustlessState/status/1290728897403695104?s=20

Only problem is we got stuck after selling 16 tokens, because then the shirts were priced at $1,200!

If only we had an AMM that could adjust the weights of tokens so that we could fully distribute ALL tokens, without the tokens being exorbitantly priced!

With Balancer's Smart Pools, WE DO!

We migrated the remaining 34 BAP0 tokens to a Balancer Pool:

beta.pools.balancer.exchange/#/pool/0x5c0f1…

You can see price and supply above!

If you just want to get your hands on a shirt (or trade against those who do), you can buy a BAP0 here:

balancer.exchange/#/swap/0x6B175…

I'm really optimistic about Balancer Smart Pools, and specifically Liquidity Bootstrapping Pools.

I think it's BY FAR the best token distribution method we've come up with so far.

Much thanks to the @BalancerLabs team (JEFF!!) for helping us along the way!