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5 months after launch...
How are Balancer metrics doing?
And how do I see $BAL supply evolving?
A thread
(spoiler: 
)
How are Balancer metrics doing?
And how do I see $BAL supply evolving?
A thread
(spoiler: )
Let's start by comparing Balancer with other projects in terms of annualized revenue.
I'm sure this graph will be a head scratcher for many...
Way above Synthetix, Curve and Kyber?
Flipped Compound??
I'm sure this graph will be a head scratcher for many...
Way above Synthetix, Curve and Kyber?
Flipped Compound??
Q: WTH, how is Balancer already that big?! 
A: By consistently growing 5-10x EVERY MONTH!
( @tokenterminal ser, wen log graph?
)
A: By consistently growing 5-10x EVERY MONTH!
( @tokenterminal ser, wen log graph?
)
Of course DeFi as a whole is growing and had a strong Q2 as we apparently approach a bull market.
But the way Uniswap
and Balancer 
are growing is something entirely different.
Reminds me of Binance in H2/2017.
Their recent trajectories of annualized revenue are
But the way Uniswap
and Balancer are growing is something entirely different.Reminds me of Binance in H2/2017.
Their recent trajectories of annualized revenue are
Why focus on revenue?
TVL and plain volume (for DEXs) are interesting, but they're means to an end.
Revenue is the metric that reveals potential for *protocol value capture*.
Revenue = volume * fees
TVL and plain volume (for DEXs) are interesting, but they're means to an end.
Revenue is the metric that reveals potential for *protocol value capture*.
Revenue = volume * fees
Let's explore fees.
Balancer has the highest take rate (weighted fee average) among DEXs: 0.44%
https://twitter.com/FollowTheChain/status/1175520925976027137
Balancer has the highest take rate (weighted fee average) among DEXs: 0.44%
https://twitter.com/FollowTheChain/status/1175520925976027137
5-10x/month growth isn't sustainable forever, of course.
But the team keeps on shipping...
Multi-path order routing, for instance, was just launched and is likely to boost volume and improve results for both traders and LPs: https://twitter.com/Daryllautk/status/1298266490450239499
But the team keeps on shipping...
Multi-path order routing, for instance, was just launched and is likely to boost volume and improve results for both traders and LPs: https://twitter.com/Daryllautk/status/1298266490450239499
Every new farming game using Balancer as a building block brings a wave of new users. Latest example is @FinanceYfv.
And so does every new token launch made on Balancer. Next up is: https://twitter.com/perpprotocol/status/1298290082672066561
And so does every new token launch made on Balancer. Next up is: https://twitter.com/perpprotocol/status/1298290082672066561
Now a closer look at incentives. 
Q: Aren't degen farmers just dumping mined $BAL?
A: Not really. Liquidity Staking began recently, allowing LPs to compound their stack at a faster pace and to achieve a stronger position in protocol governance.
https://twitter.com/FollowTheChain/status/1296473151610683398
Q: Aren't degen farmers just dumping mined $BAL?
A: Not really. Liquidity Staking began recently, allowing LPs to compound their stack at a faster pace and to achieve a stronger position in protocol governance.
https://twitter.com/FollowTheChain/status/1296473151610683398
This week, $BAL distribution (yellow arrow @ BAL/ETH chart) created *no sell pressure* at all. 
The message from LPs is clear: owning a piece of Balancer governance is more valuable than dumping their mining proceeds.
LPs are now hodlers w/ compounding protocol ownership!
The message from LPs is clear: owning a piece of Balancer governance is more valuable than dumping their mining proceeds.
LPs are now hodlers w/ compounding protocol ownership!
Also, liquidity in BAL pools increased significantly, meaning Liquidity Staking is a great success so far.
This is the recent evolution of liquidity in the popular 67/33 BAL/ETH pool: 3x in 10 days.
This is the recent evolution of liquidity in the popular 67/33 BAL/ETH pool: 3x in 10 days.
Q: But staking locks tokens, which artificially restricts supply and liquidity, right?
A: NO! In Balancer's Liquidity Staking, you provide liquidity with BAL, but there's *no locking*. https://twitter.com/FollowTheChain/status/1297975278308864006
A: NO! In Balancer's Liquidity Staking, you provide liquidity with BAL, but there's *no locking*. https://twitter.com/FollowTheChain/status/1297975278308864006
Q: And how deep is BAL liquidity on Balancer then?
A: Already much deeper than CEXs, with no signs of slowing down.
A: Already much deeper than CEXs, with no signs of slowing down.
Q: Ok, metrics are amazing! But with a Fully Diluted Supply (FDS) of 100M BAL, I'm not touching this thing.
A: If you don't unpack the nuance on FDS, you're doing it wrong. Unpack it we shall... https://twitter.com/mrjasonchoi/status/1294268780219002880
A: If you don't unpack the nuance on FDS, you're doing it wrong. Unpack it we shall... https://twitter.com/mrjasonchoi/status/1294268780219002880
Current circulating supply: 7.4M BAL
Current inflation: 145k BAL/week.
When the first year of inflation is over (on 2021-06-01, with 7.5M BAL mined), the community will revisit the inflation schedule. It's possible there'll be a reduction in issuance.
Current inflation: 145k BAL/week.
When the first year of inflation is over (on 2021-06-01, with 7.5M BAL mined), the community will revisit the inflation schedule. It's possible there'll be a reduction in issuance.
100M is a *theoretical* maximum FDS (guaranteed not to be exceeded). It could only be reached after 8+ YEARS of mining.
But before this crypto-eternity goes by, governance may decide to slow down on issuance, and/or even to end liquidity mining distribution altogether.
But before this crypto-eternity goes by, governance may decide to slow down on issuance, and/or even to end liquidity mining distribution altogether.
IMO the timing for issuance reductions/elimination will be predominantly a question of decentralization & moat:
The more decentralized BAL ownership is and the stronger Balancer's moat is, the lower the need for BAL dilution.
The more decentralized BAL ownership is and the stronger Balancer's moat is, the lower the need for BAL dilution.
Given this context, we can now better speculate around FDS...
My current PERSONAL impression (a guess) is that it would end up at around 60M BAL.
And it would take years to get there. Maybe more than one bull market away from today...
My current PERSONAL impression (a guess) is that it would end up at around 60M BAL.
And it would take years to get there. Maybe more than one bull market away from today...
If I'm right, you may apply a 0.6 factor to all Balancer metrics related to supply at:
https://app.redash.io/token-terminal/public/dashboards/yk0ptGeWBpfboaxOzJmCayiGtjWK5qu83hDWYFQc
(because all metrics there consider FDS=100M)
h/t @tokenterminal
https://app.redash.io/token-terminal/public/dashboards/yk0ptGeWBpfboaxOzJmCayiGtjWK5qu83hDWYFQc
(because all metrics there consider FDS=100M)
h/t @tokenterminal
So for instance its price-to-sales ratio (P/S) would be at a competitive 30 (
is better) w/ the current $28/BAL, lower than other major DeFi protocols. 
BTW, assumption for that P/S to NOT keep falling: Balancer stops growing right now!
So yes, this is my DeFi gem.
is better) w/ the current $28/BAL, lower than other major DeFi protocols. BTW, assumption for that P/S to NOT keep falling: Balancer stops growing right now!
So yes, this is my DeFi gem.
