MetaStable Pools by Balancer Labs
Balancer announced the launch of MetaStable Pools and a partnership with Lido Finance for joint incentives.
While Stable Pools are important for tokens with a 1:1 value, MetaStable Pools are great for tokens with highly correlated, but not hard-pegged, prices. Because of this, MetaStable Pools are especially well suited to handle pegged tokens that gradually accumulate fees.
One of the most powerful use cases for MetaStable Pools is “nesting” other pools by holding their Balancer Pool Tokens (BPTs), thereby facilitating cheap swaps between their constituent tokens and those of the nested pool — as though all the component tokens were in a single pool. A MetaStable Pool with StaBAL3-USD (made of DAI, USDC, and USDT) and NewUsdStable tokens could be used to swap between NewUsdStable and any of the nested StaBAL3-USD tokens (DAI, USDC, USDT).
While Stable Pools are well suited for tokens with 1:1 exchange rates, MetaStable Pools work well for tokens that gradually diverge in value. In the above example, StaBAL3-USD is highly correlated with the price of a US dollar, but the pool token grows in value as trade fees accumulate. Similarly, a MetaStable Pool with DAI and cDAI would work well, since the cDAI slowly grows in value as the underlying DAI is lent on Compound.
MetaStable Pools also offer further benefits to traders and liquidity providers. Previously, someone looking to facilitate trades between NewUsdStable, DAI, USDC, and USDT might create a standard Stable Pool with the four tokens. As a MetaStable Pool, however, this pool can piggyback on the deep liquidity of StaBAL3-USD, offering the best prices to traders. This also reduces the fracturing of stablecoin liquidity, which improves prices and increases maximum trade amount. Simultaneously, liquidity providers for StaBAL3-USD do not need to worry about the potential volatility, security, or failure of NewUsdStable since MetaStable Pools prevent the draining of underlying pool tokens.
MetaStable Pools help users of Balancer Protocol list less liquid assets and prevent diluting existing pools.
🔹Balancer Partners with Lido
With the MetaStable Pool launch, liquid staking protocol Lido is launching a pool to facilitate trades between Ether and Staked Ether to offer liquidity for stakers securing the Ethereum Network. We’re excited to increase the number of liquidity pools for the Ethereum staking community and to support growing liquidity conditions for Lido’s stETH token. Furthermore, cooperation with Lido will go a long way in enhancing the productivity of stETH/wstETH.
The pools will be co-incentivised with LDO and BAL rewards to drive further liquidity and offer users with sufficient liquidity rewards to encourage participation.
2,500 BAL per week has been allocated to the pool with an additional 25,000 LIDO per week for the first month. These are live right now, and the first distribution will take place on August 24th via Balancer’s claim portal.
About Balancer
Balancer protocol is a yield-generating portfolio manager and decentralized trading platform.
About Lido
The Lido Ethereum Liquid Staking Protocol, built on Ethereum 2.0’s Beacon chain, allows their users to earn staking rewards on the Beacon chain without locking Ether or maintaining staking infrastructure.
Users can deposit Ether to the Lido smart contract and receive stETH tokens in return. The smart contract then stakes tokens with the DAO-picked node operators. Users’ deposited funds are pooled by the DAO, node operators never have direct access to the users’ assets.
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