KEY TAKEAWAYS
- Balancer v3 introduces 100% Boosted Pools, enhancing liquidity providers’ returns by integrating DEXs and lending markets.
- The pools leverage Aave’s decentralized liquidity protocol, offering users peer-to-peer, permissionless loans with interest based on supply and demand.
- Boosted Pools improve capital efficiency by depositing idle liquidity into external yield markets, providing sustainable yield for DeFi users.
- Developed with Aave, these pools offer exposure to swap fees and enhanced rewards, setting a new standard for yield generation.
Balancer v3 has unveiled its 100% Boosted Pools, offering liquidity providers a streamlined approach to generating diversified, risk-adjusted returns. These pools integrate the two leading yield-generating applications in decentralized finance (DeFi): Decentralized Exchanges (DEXs) and Lending Markets. Built on Balancer v3, these passive, custom pools route all underlying liquidity to external yield markets, ensuring liquidity remains available for swaps while generating additional rewards.
The Boosted Pools leverage Aave, the largest decentralized liquidity protocol with over $38.2 billion in deposits. Aave allows users to supply, borrow, swap, and stake assets, earning interest paid by borrowers. Interest rates are determined by a mathematical formula based on supply and demand, exemplifying peer-to-peer, permissionless loans accessible globally.
How Boosted Pools Enhance Capital Efficiency
Boosted Pools aim to increase capital efficiency and simplify yield generation for DeFi users. By depositing idle swap liquidity into a trusted third-party platform, these pools provide passive liquidity provider (LP) exposure to sustainable yield. The transition from Balancer v2 to v3 introduces ERC20MultiToken and transient accounting, enabling gas-efficient 100% Boosted Pools that deposit all underlying liquidity into external yield markets.
To facilitate gas-efficient swaps, v3 introduces Buffers, which are two-token liquidity pools holding a yield-bearing token and its underlying counterpart. Buffers ensure that liquidity providers only interact with the vanilla asset, offering a passive and user-friendly experience with permissionless entry and exit.
Collaborative Development with Aave
Developed in collaboration with Aave, Balancer v3 Boosted Pools set a new standard for capital efficiency and yield generation. With Aave’s extensive liquidity and nearly five years of focus on security and risk management, these pools offer users exposure to swap fees and enhanced rewards from leading liquidity markets.
For instance, an Aave USDC | USDT Boosted Pool allows users to earn swap fees from trades between USDC and USDT while accruing supply interest rates, averaging 7.49% for USDC and 7.22% for USDT annually. Both swap and supply interest are accrued automatically, requiring no claims or management from users.
Balancer v3’s 100% Boosted Pools redefine liquidity by routing all LP capital to Aave, enabling gas-efficient, passive, and sustainable yield generation. More information about this development can be found here.
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