The team behind Balanced, ICON’s newest DeFi protocol, is hard at work to bring you a new, ‘rebalanced’ experience.
Launched in April 2021, Balanced.network is a borrowing and AMM (Automated Market Maker) trading platform with a cryptocurrency-backed stablecoin called Balanced Dollars (bnUSD). Balanced also introduced their own token, Balanced Token (BALN), as well as Staked ICX (sICX), a token which represents a share of their ICX staking pool. The Balanced DeFi protocol is comparable to Maker DAO or Synthetix, for those in the know.
One improvement in the works is that Balanced tokens will soon boost holders’ network fee and BALN mining allocations depending on how much and how long they stake. Liquidity pool rewards will be boosted as well.
“Going forward, the goal is to incentivize users of the platform to also stake BALN in order to maximize their rewards,” says Scott Smiley, Founder of Balanced. “This is based on curve token economics, which is one of the most successful and well-studied token economics platforms in the Ethereum DeFi ecosystem and the backbone of many Ethereum DeFi products. We are grateful for the work that they have done, and want to leverage that as much as we can.”
Staking changes and a lowering of borrowing rewards will also be discussed by the DAO.
“A lot of people are taking out loans for the BALN rewards and just holding bnUSD, which doesn’t really add much value to the protocol. Lowering rewards for borrowers makes a lot of sense, so we can reallocate some of these rewards elsewhere,” Smiley says.
He adds, “In most places where you can borrow money, you don’t get paid to do it. We may wind this feature down gradually in the future, depending on what the DAO decides. It’s all up to token holders, in the end.”
That’s right, Balanced (currently) pays you to borrow crypto
In fact, Balanced offers a multitude of ways to fatten your wallet:
- Deposit ICX to be used as collateral and automatically earn staking rewards.
- Stake BALN and earn a share of the network fees, distributed daily.
- Supply ICX, sICX, BALN and/or bnUSD to a liquidity pool and earn BALN. (Balanced suggests everyone read up on ‘impermanent loss’ before utilizing this feature though.)
- Take out a loan of at least 50 bnUSD and receive BALN rewards. There’s no termination date, zero interest and only a one percent origination fee.
- Retire bnUSD for profit when the sICX/bnUSD price is at least 5% higher than the actual ICX price.
- Swap assets for a profit when prices are right. Balanced includes an exchange that handles just this sort of thing with a low 0.3% fee, and also allows users to convert ICX to sICX, for free.
Seriously, what’s not to love about this platform? It’s a work of art — literally: Balanced boasts on their website that it’s “the first design-led DeFi platform”, with an intuitive UX/UI aimed at reducing the complexity and friction of DeFi for the masses.
Growing debt to grow the ecosystem
Smiley is the visionary who came up with the whole idea behind Balanced.
“I first started thinking about Balanced when I was at Devcon Osaka in 2019,” recalls Smiley. “They were really pumping DeFi as a use case for Ethereum. This was before the ‘DeFi Summer’, and there weren’t many protocols out there at the time besides Maker DAO. I started to realize that DeFi is not something that is a market for just one public blockchain, but is a necessary infrastructure for any public blockchain cryptocurrency.”
Smiley, who has a background in banking, points to debt as a key ingredient in any healthy ecosystem — cryptocurrency or otherwise. “DeFi allows people to have access to debt, and debt is what fuels growth in modern society. If no banks existed, you wouldn’t be able to buy a home. The ability to take out a loan is really what keeps society going.”
“Giving your cryptocurrency holders access to debt is extremely important for growth of the ecosystem. When I saw that Ethereum was doing great with DeFi, I realized that everybody needs this, and ICON definitely needs this. So I started drawing up the initial plans and working on this in my extra time.”
A collaborative effort
Smiley, who wrote the Balanced.network whitepaper, is a member of ICX_Station, the P-Rep team who has taken a product management role in the development of Balanced. ICX_Station is also responsible for the protocol’s token economics, as well as community and relationship building.
Other P-Reps working on the project include: iBriz/Iconosphere and Mousebelt on smart contracts, PARROT9 on product design, Geometry Labs on infrastructure and ICONDAO on frontend development.
The DAO (distributed autonomous organization) is made up of all BALN holders around the world. BALN gives DAO members the power to vote on how the platform evolves. Want to see borrowing rewards stick around permanently? Buy up more BALN and make your voice heard.
“The DAO will always be focused on doing what’s in the best interest of Balanced,” Smiley says. “But one thing I find very interesting is the possibility of using the DAO fund to farm other tokens. And then when OMM launches, we can lend on their platform using some of the money that we earned, and we can earn even more tokens that way.”