You can use Balanced to borrow new assets, like Balanced Dollars, but unless they’re widely circulated and easy to swap between, their use — and value — is limited.
That’s why Balanced includes an exchange, and incentivizes liquidity providers to make sure its assets are always available to trade. They’ll receive 45% of the Balance Tokens each day.
Balanced will start with 3 liquidity pools: sICX/bnUSD, BALN/bnUSD, and most importantly, ICX/sICX.
In addition to Balance Tokens, the pools receive half of each 0.3% trading fee.
sICX / bnUSD
The sICX/bnUSD pool receives 17.5% of the BALN, and allows people to buy bnUSD without needing to take out a loan.
It uses staked ICX (sICX), so you continue to earn staking rewards. If you need to get some, it’s free to swap your ICX for sICX on the exchange. In order to supply liquidity to this pool, you need to deposit equal values of both assets (i.e. $100 worth of sICX and 100 bnUSD).
This pool comes with a risk of impermanent loss:
If you supply liquidity and the ICX price rises, the ratio of your supplied assets will move in favor of bnUSD, reducing the value compared to if you held the assets in your wallet. If you withdraw liquidity before the price falls again, that loss will become permanent.
BALN / bnUSD
The BALN/bnUSD pool receives 17.5% of the BALN, and will be available from day 2, after the first Balance Tokens have been distributed.
All BALN supplied to the pool will earn a share of the network fees, which will be distributed within 2 months of launch.
This pool also comes with the risk of impermanent loss as described earlier, and you’ll need to provide an equal amount of both assets (i.e. $100 worth of BALN and 100 bnUSD).
ICX / sICX
The ICX/sICX pool receives 10% of the BALN, and allows people to unstake sICX instantly.
Instead of a traditional pool, the ICX/sICX pool works like a queue that follows the First In First Out (FIFO) method. You do not need both assets to supply liquidity to this pool, you only need to supply ICX.
You supply ICX, which doesn’t earn staking rewards. Your order will be filled when someone wants to unstake instantly (swap their sICX for ICX). You’ll receive sICX (which does earn staking rewards) and stop earning Balance Tokens.
This pool doesn’t include any risk of impermanent loss, so you just need to decide if the Balance Tokens you’ll earn are worth missing out on staking rewards.
How to supply liquidity
Sign in to Balanced, then go to the trade page and click ‘Supply liquidity’. Choose a liquidity pool from the dropdown — the APYs will help you find the pool with the highest return, based on the amount of Balance Tokens earned by liquidity providers .
Choose the amount to supply. To earn Balance Tokens, you’ll need to supply at least 50 ICX to the ICX/sICX pool, or $50 of liquidity to one of the other pools (i.e. $25 worth of BALN and 25 bnUSD).
Confirm the transaction, then keep an eye on your assets from the liquidity details section. You can withdraw them at any time.
For more details or to talk through some examples, join us in the Balanced Telegram group.