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balancer decentralized finance defi market maker

DeFi Deep Dive - What is Balancer?

Written By Ivan on Tech

Aug 09, 2020

Balancer is an automated market maker (AMM) for multiple tokens. It enables portfolio owners to create Balancer Pools where traders can then trade against these pools. Balancer is still a relatively new liquidity provider (LP) in the decentralized finance (DeFi) space. It only launched in March 2020. 

Exchanges, whether they be centralized (CEX) or decentralized (DEX), exist to fulfill buy and sell orders. Their role is to find matches for a wide variety of orders from buyers and sellers so their orders can be executed. Traders rarely find the perfect match on the other side of a trade, so compromises have to be made. Hence, the need for market makers.

Market Makers

A traditional market maker is an individual or member firm of an exchange that buys and sells securities with the primary goal of profiting on the spread. Investopedia describes it this way: “Many market makers are brokerage houses that provide trading services for investors to keep financial markets...

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