2021-12-16 19:09 |
Balancer Labs announced the official launch of Boosted Pools, which aim to resolve low capital efficiency with token yields deposited into AMM pools, Invezz learned from a press release. Balancer’s close collaborator, lending protocol Aave (AAVE/USD), will be the first iteration of this groundbreaking product.
Traders use just 10% of liquidity in AMM poolsTypically, traders use just 10% of the liquidity deposited into an AMM pool because the trade sizes are much smaller than the liquidity available. Boosted Pools make it possible to deposit the remaining portion of liquidity into lending protocols, where it earns additional yield.
Solving effort to wrap and unwrap tokens during swapAMM pools hold wrapped tokens of yield-bearing assets (aDAI) instead of DAI to augment the overall pool yield, but token wrapping and unwrapping during a swap is too expensive and has to be done with a relayer. Aave’s Boosted Pools save this effort, leaving it to arbitrageurs, who have the incentive to make it.
Fernando Martinelli, Balancer Labs CEO and Co-Founder, said:
The collaboration with Aave as the first iteration of the Boosted Pools launch is a natural fit and solidifies their place in the Balancer ecosystem. There are various levels of Boosted Pool innovations that lead to concrete results, deeper liquidity, more efficient integrations for liquidity, and higher yields.
Stani Kulechov, Aave Founder and CEO, added:
The collaboration with Balancer for the launch of Aave Boosted Pools is a prime example of incredible innovation happening in DeFi. I have been following Balancer’s V2 launch closely and Boosted Pools offer users deeper liquidity and more access to Aave. With the help of Balancer, we look forward to providing users a seamless earning experience.
Boosted Pools: a gamechanger for liquidity providers and tradersBoosted Pools can be a gamechanger for liquidity providers and traders because lending protocols can be very expensive to join or leave. They allow users to keep a smaller percentage inside the pool to be used as liquidity and deploy a portion in a pool to Aave or other money markets. The latter portion will accrue interest from the Aave platform and any distribution from its pools.
The post Balancer Labs and AAVE launch Boosted Pools to resolve low capital efficiency appeared first on Invezz.
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