Balancer is one of the pioneers of the DeFi space and an essential part of its infrastructure. The protocol enables efficient trading by pooling liquidity from the crowdsourcing of investor portfolios while identifying the best available price.
Token Terminal data reveals the growth of the platform in terms of total locked-in value over the past year.
Before the last market-wide recession, which took place in May, Balancer had peaked at over $ 360 billion in TVL, a 450% increase in just 5 months, since January 2021.
This is also due to massively increased user participation in the larger DeFi market, where many protocols have seen an increase in their user base and other metrics.
During Bitcoin 2021 in Miami, CryptoPotato had the chance to speak with Jeremy Musighi – the head of growth at Balancer. We discussed the past, present and future of DeFi and Balancer, as well as other interesting and important topics for the industry.
Bull Run 2021: Bitcoin Has Always Dominated Crypto Markets
DeFi saw massive growth in 2021. At one point, the total value locked in in various industry protocols peaked at over $ 80 billion, 4 times more than in January.
We asked Musighi if he thinks the overall bull market was the main reason for this or if it was some sort of organic transition.
“I think the markets recognize how much of an impact DeFi is going to have and that it’s here to stay and I think this has helped to raise awareness and educate more on how DeFi is key to replacing many services and traditional financial products that we have. “
Musighi believes the above is part of the reason behind the bull, rather than the other way around. However, Musighi also recognizes it as a cycle.
“Investors recognize the opportunity here (in DeFi) and invest a lot of capital in it because they know how much it’s going to grow. This is one of the things that propels the bull market.
At the same time, the bull market and prices rise, attracting more attention from other foreigners and other people who have not been involved and are also getting involved. “
Still, he believes that Bitcoin has always dominated the crypto markets and that it “still behaves in a way where investors tend to pivot their investments from one vertical to another.”
Balancer’s chief growth officer also said that “Bitcoin is still used as the main reserve asset in crypto.”
Balancer: “The most customizable AMM”
Another thing that interested us is why Balancer lags behind other protocols like Uniswap in terms of TVL.
Musighi told us that there are several factors that go into the suitability and traction of the product market for a DeFi protocol.
“One thing is clear about Balancer is that it has some of the best technology on the market and is also the most flexible and customizable Automated Market Maker (AMM) around. Balancer is DeFi-primitive in that it’s so flexible that it can be used in so many ways that it almost looks like general-purpose technology.
However, there is also a flip side to this – marketing. During its short history, the protocol has been run almost exclusively by “brilliant technical talent”, but Balancer didn’t have a lot of marketers – “in fact, for a long time we didn’t have any.”
This is where the project has a lot of room to grow and the team is now focusing a lot. According to Musighi, this is one of the factors that will help Balancer grow.
But there’s even more: Musighi claimed that Balancer Labs and the community learned a lot from using Balancer V1 “in the wild and growing as much as it did.”
According to him, this has led to the successful release of V2, which brings major improvements in areas such as gas efficiency, UX and features that meet important market needs and stand out as a solution. ideal for many reasons. you would use an AMM both as a liquidity provider, as a trader and as a developer.
At the same time, he also pointed out that for security reasons, the liquidity of Balancer V1 to V2 is gradually transferred and will take 6-8 weeks.
Binance Smart Chain (BSC) or Ethereum
Many decentralized AMMs like Balancer and the bigger competitors Uniswap and Sushiswap depend somewhat on the blockchain they are built on.
Ethereum, being the most commonly used one, suffered from network congestion that caused fees to skyrocket and slow transactions. One proposed solution that we are currently working on is Ethereum 2.0, where we will potentially see the transition from a PoW-based consensus algorithm to a PoS.
“I’m very optimistic about it – it’s really important. We are confident that Ethereum 2.0 will be up to the task. In the meantime, we always want to serve the best interests of our users now, not just in the future. “
In other words, Musighi said there are other options for scaling – like layer two solutions, Ethereum side chains and even other layers and even adopting a strategy. more compatible between channels. It’s also worth noting that Balancer has also launched on Polygon (a layer two solution) in an effort to cut high gas costs.
“These are the things that we are thinking deeply about right now and very carefully because we want to understand where we think the future might go and how we can meet the needs of the market in the best possible way.”
Elsewhere, we also discussed one of the hottest trends of 2021 – Binance Smart Chain (BSC). Musighi does not see it as a competitor to Ethereum – on the contrary, “it actually helped reduce congestion on Ethereum by offloading a certain volume of transactions from the main chain.”
He said the future and the long term would favor “the most open and decentralized solutions,” hence why other more centralized blockchains cannot compete with the big picture.
“If they did, they would see a massive migration of users, projects, cash and volumes out of Ethereum that has not happened. And that should tell you that even with its flaws and even with the areas it needs to grow in, it still offers so much value.
A crack for talent in DeFi
Jeremy believes DeFi is absolutely the future of finance.
“I think there is less and less doubt about this idea in mainstream society today, which of course is one of the reasons we are seeing these great bull races.”
Asked about his biggest challenge, however, he said that one of them “brings a different diversification of talent to the industry, making DeFi products more accessible and more holistic.”
“I think one of the challenges DeFi faces today is that there is a lack of talent because there aren’t enough people who know crypto deeply, but also have soft skills. or even technical skills, all skills, from engineering to design, marketing and branding, etc.
He also spoke about the competition between DeFi and CeFi (centralized finance), admitting that CeFi “the players have a lot of customers – they have those customer relationships”. Another is the front point of contact with users who use digital financial services.
However, this presents a huge opportunity for DeFi protocols, which can be seamlessly integrated into the back-end as they clearly have the technical advantage, but “the downside of user experience design, user acquisition and mass market adoption “.
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