Automated market makers, or AMMs, have become a staple of the rapidly growing DeFi industry.
Balancer, a leading automated market maker, has launched version 2 of its protocol, promising faster speed, lower costs and improved liquidity.
In addition to revamping the user interface, Balancer’s backend will provide more efficient routing for trades through “Protocol Vault.” The platform claims that this upgrade will reduce gas costs and produce better pricing mechanisms.
Expected gas costs are said to be 40% lower in version 2 – a figure that jumps to 53% with internal balances.
Balancer Labs, the development arm behind the AMM, also announced a partnership with DeFi protocol Gnosis to deliver an enhanced user experience to traders across price, user experience and transparency.
Automated market makers are essentially smart contracts that generate a liquidity pool of tokens, which are traded automatically through a programmable algorithm as opposed to an order book. This allows assets to be swapped automatically.
AMMs are part of the rapidly growing DeFi industry which, according to industry estimates, has grown eightfold since the start of 2021. The DeFi space has locked in more than $160 billion in assets as of Tuesday.
Balancer’s native BAL token has set multiple record highs this year on the back of positive protocol integrations, gas fee reimbursements and a surge in DeFi trading activity. Buzz surrounding a possible Coinbase listing has also contributed to BAL’s tremendous growth.
The price of BAL was little changed at $67 on Tuesday for a total market capitalization of $722 million. BAL is the 31st largest DeFi protocol by market cap, according to Coingecko.