[BIP-XXX] Allocate funds for production testing of new Balancer products

Governance
1

Summary

This proposal seeks to transfer $250k worth of ARB (910k ARB @ 0.2747) to a multisig controlled by Balancer contributors to allow more concrete production tests of new pool models in place of the current status quo which is individual contributors providing personal capital.

As of recently, the Balancer teams have been pushing out new AMM products on a large scale. Throughout this process, we have realized the value of production testing pool types prior to opening them up to the public. As of now, these pools are being tested with individual contributors’ personal funds and it has provided immense value in analyzing viability and setting up periphery infrastructure for these new pool models. A couple examples would be:

Oracle stablesurge pool - This stableswap based pool utilizes a chainlink oracle feed to provide dynamic price concentration around current eth price in a ETH/USDC pair. A pool of this type can be seen here Liquidity Pool (v3): Balancer Surge USDC WETH
This testing period has allowed us to explore a new model of AMM liquidity provision for short tail assets and synergizes with the stablesurge hook to minimize losses to arbitrages. As of today, this pool has outcompeted both hodl and univ2 eth/usdc.

MEV Priority Tax Hook - This ECLP based pool has been live in production for around 2 weeks and has given us the opportunity to test parameterization and also integrate an internally run MEV bot created by Zekraken. This testing phase is crucial for new technologies like this and we would benefit from testing it at a greater scale.

ReCLAMM Pool - This new pool model is a fungible dynamic concentrated liquidity position that dynamically shifts ranges to provide deep liquidity around spot while maintaining the passive management structure. This pool is not fully developed yet but we would benefit from using these funds to test the model in production, get aggregators familiar with the new maths involved with this pool, and also test parameterization and set up surrounding infrastructure to allow us to be fully ready upon a full public launch.

Dynamic Fee Control Pools - We have been working with the EZKL team to create a solution for volatility based dynamic pool fees that use ZK to prove the methodology on chain. You can see a demonstration video here https://www.youtube.com/watch?v=sycKW0ecO3I

+ Many more cool things to come

Put simply, this discretionary fund will allow us to gain valuable insight into novel AMM mechanisms and it is orders of magnitude more efficient than throwing incentives into the wind and relying on external LP’s to provide liquidity, which in the early stages might not be particularly efficient due to the risk premia involved in new products.

It’s important to note that we expect these funds to be reused across many future pool types and the losses would be minimized to the various risks inherent to AMMs.

50k out of the 250k will be allocated towards an ARB/ETH ReCLAMM pool to pay homage to Arbitrum for being the source of funding.

Setup

We don’t plan to utilize all of these funds from day 1, but rather they will be applied over time as we continue to develop new products. While we don’t have any strict timelines on the testing phases (as they are typically product specific), we expect an allocation from this fund to subsist for around 4-8 weeks to allow us to collect data, test parameters, setup surrounding infra, etc…

This fund will be managed by a multisig consisting of members of the Maxi’s, the foundation and Balancer Labs with the following signer set:

danko 0x122AFb4667C5f80e45721a42C7c81e9140C62FA4
mike 0xc4591c41e01a7a654B5427f39Bbd1dEe5bD45D1D
Gosuto 0x11761c7b08287d9489CD84C04DF6852F5C07107b
xeonus 0x7019be4e4eb74ca5f61224feaf687d2b43998516
zen 0x7c2eA10D3e5922ba3bBBafa39Dc0677353D2AF17
zekraken 0xafFC70b81D54F229A5F50ec07e2c76D2AAAD07Ae
juani 0xB5485e0F543eE6e01e221A57e58ED95268215Ac9

These funds are NOT intended to be used for any BD purposes unless it involves new pool tech. The pools involved will not have any incentives from gauges during the testing period and these funds will not be used to “farm” anything.

If for whatever reason the contributors involved no longer see value in having a fund for testing, all funds will be withdrawn from pools and returned to the DAO multisig. We will provide a report outlining the usage of these funds on a quarterly basis.

Specification:

The DAO multisig on Arbitrum (0xaF23DC5983230E9eEAf93280e312e57539D098D0) will transfer 910k ARB to the newly created 4/7 multisig at 0x284a37B375e69c8cB30a5633Ee55f3584dd26808 which consists of the following signers:

5 Likes
2

Fully support this proposal. It is an important step for Balancer’s continued innovation.

Having a dedicated fund for production testing will be critical not only for launching new products with confidence but also for experimenting with different parameters across existing ones. The ability to iterate quickly and in a controlled environment will unlock deeper insights and stronger infrastructure readiness ahead of public launches.

Excited to see what this unlocks as we continue exploring new models like ReCLAMM, MEV hooks, and dynamic fee logic. Let’s make it happen.

1 Like
3

In full support of this proposal for several reasons

  • Utilization of otherwise idle assets
  • Showcasing of product performance
  • Bootstrapping new products to gain critical mass for integrations to work (e.g. enough TVL to get volume)
  • providing the ability to iterate fast and redeploy liquidity as needed

In terms of token allocation, I personally think liquidating parts of our ARB stack that was provided to us as an airdrop a long time ago is the best option given our current treasury. This also allows kpk to continue to manage our other assets / will not affect the managed treasury. Let’s do it!

3 Likes
4

kpk is fully aligned with the vision behind this proposal and agrees that funding internal production testing of new pool models is a worthwhile initiative for Balancer. It’s clear that recent product development efforts have benefited significantly from having capital available for real-world validation, and the outlined roadmap promises further innovation.

That said, we’d like to propose a slight adjustment to the funding mechanism: rather than sourcing $250,000 through the sale of ARB, we suggest providing USDC directly from the kpk-managed treasury.

This alternative may offer several benefits:

  • Keeping the ARB allocation intact provides Balancer with more flexibility for future Arbitrum-related initiatives, including co-incentives, grants, or new integrations that may benefit from a native token holding.
  • Selling ARB in this size would carry more market impact compared to ETH. Current liquidity data (As of 17.04.25) suggests an estimated price impact of -1.74% for a $250k ARB trade, versus just -0.19% if the same amount were sold in ETH. Using USDC avoids unnecessary execution costs and protects value for the DAO.
  • Market conditions for ARB are currently unfavourable due to broader L2 sector underperformance and ongoing token unlocks. Selling now could crystallise an artificially low valuation, which may not reflect the token’s long-term trajectory.
  • Using USDC removes the execution burden from the Balancer team, streamlining operations and avoiding the need to manage a large ARB trade in potentially illiquid market conditions.

We believe this minor adjustment still fully supports the objective of the “Innovation Fund”, while improving the efficiency and flexibility of treasury operations.

We’re happy to coordinate with the team to help implement this approach if it aligns with broader priorities.