The Balancer battle royale everyone can share the spoils
So, you’ve heard of #BALbattles and want your project to share the spoils?
This guide will help you go through the process of joining the battle, introduce bribes to your liquidity pool and earn incentives provided by the Balancer protocol.
Let’s get to it!
We fight for honor, we fight for glory and we fight for liquidity mining incentives drawn to our pools!
The #BALbattles are what we call a cross-project incentivization. Projects will “battle” to attract liquidity to their pools on Balancer ecosystem, by liquidity mining incentives or “bribes”, a common byproduct of gauge voting systems.
BAL emissions are directed towards liquidity pools via gauges in every epoch. The allocation of these emissions to specific pools is done through veBAL holders votes (Governance). By bribing voters to a specific gauge, protocols will incentivize Governance to allocate more emissions towards their liquidity pool and get more liquidity providers.
Let’s take a closer look.
Voting escrow BAL, or veBAL for short, is the token you get by investing in an 80/20 BAL/WETH liquidity pool and locking its BPT. The longer the lock period, the more veBAL tokens you get.
These tokens carry the governance power to vote for proposals (on Snapshot) and liquidity mining distribution (the gauges). Holders are also entitled to 75% of the protocol’s fee revenue, and up to 10% of weekly BAL emissions.
Unlike the usual 50/50 pools from other protocols, Balancer can accommodate pools of any composition and underlying math. Balancer's architecture allows for anyone to develop their own pool type, opening the door for customized pricing functions in trading pools.
Learn more about the different pools available at Balancer.
Once the pool is all set, anyone can join and provide liquidity.
The first step towards starting to distribute incentives to liquidity providers in a pool is creating a gauge for it. Gauges are contracts that determine how Liquidity Mining incentives are allocated and facilitate their distribution. Liquidity Mining emissions are distributed among different gauges according to veBAL voting.
So, in other words, veBAL holders will vote on which pools will receive incentives.
https://twitter.com/balancer/status/1526920082244481024
For that to happen, a proposal to add the gauge for your pool must be approved by governance through the Balancer Forum, with a 100K BAL quorum. Know more about how to post the proposal here.
Please take note that all votes are on mainnet, even the ones for Polygon and Arbitrum gauges.
After the gauge approval, it’s time to get the votes. Now you’re ready to battle!
An easy setup is the Hidden Hand bribing system, by Redacted Cartel. Plain and simple, this is a way to acquire votes from veBAL holders by publicly offering a bribe. The total amount put in bribes will be distributed between voters.
This increase in votes for the chosen pool therefore increases Liquidity Mining incentives directed to the bribed pool.
Learn more about gauges and bribing for votes here.
Let us illustrate it with an example.
Lido Finance recently used the bribing system on Hidden Hand to attract veBAL votes to their pool on Balancer. Lido used a 25,000 $LDO bribe (~24k USD), which attracted 16% of the total weekly BAL emissions to their wstETH / WETH pool.
16% out of the 145k weekly BAL emissions equals 23,200 BAL (~160k USD) as liquidity mining rewards to their pool.
As a result, Lido's bribe gave them an ROI of 566% meaning for every $1 they invested in voting incentives, they received $6.66 in liquidity mining rewards in their pool on Balancer.
You can find plenty of #BALbattles tales and their spoils on our Twitter!
If your project wants to join the battle, but still needs help, BalancerDAO is here for you!
Please reach out to our community through our Partnership subDAO. We will be happy to assist you to the best of our abilities, or at least point you in the right direction.
Hop on to our Discord and join the fight!