It is well known that more that more than 60% of all Bitcoins have not moved for more than a year. Reportedly, several BTC holders are those who are expecting higher price for Bitcoins, but they do not make use of the opportunities for making profits by simply hodling on to BTC. They need to stop HODL to make some profits when opportunities happen.
HODL refers to the intention of Bitcoin holders who continue to hold Bitcoins without any intention of using or selling those coins. The DeFi space is considered to be a good solution for those who are looking to earn more without long control over their BTC.
DeFi also known as decentralized finance refers to digital assets and financial smart contracts, protocols, and decentralized applications (DApps) which are financial software on the blockchain. Cryptocurrency entrepreneurs will be able to create synthetic financial instruments in the decentralized space outside the control of the government and companies.
On the Ethereum Network, this gets done using the Bitcoin substitutes on the Ethereum network. Liquidity mining is a fast evolving topic in the cryptocurrency space. Balancer refers to non-custodial generalized Automatic Market Maker (AMM) Protocols. Balancer Token pools earn BAL, which is a governance token of Balancer.
Bitcoin and BAL Token Holders
Balancer bring a decentralized finance protocol on Ethereum permits automatic market-making. The traditional market makers and liquidity providers buy and sell financial instruments, which provide liquidity to the market and further profit from the spread between the bid and ask price. The automatic market maker is controlled by algorithms which define the rules for the trades.
There are several other such automatic market making platforms in the market. Balancer is unique from the rest of the protocols in that the protocol will be able to support nearly eight assets per market along with the custom trading fees which is set by the pool creator.
The Balancer Liquidity Pools are used by traders in two ways. They can use it for providing liquidity and also for trading.
Centralized exchanges make use of order books to derive the prices. The price of the tokens in exchanges is based on their deviation from their set weighting.
The Balancer Labs are making use of a system of sourcing liquidity which they believe has the ability to create “Flywheel” network effect, which results in increased traders, fees, liquidity and profits for the LPs. The flexible parameters offered by Balancers make it possible for cryptocurrency providers to do a lot more than provide a place for the crypto holders to exchange their assets.
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