[BIP-XXX] Deploy Productive BAL Liquidity and Next Generation Yield Bearing Derivatives of ETH, GHO and BAL

Governance General Proposal
1

Summary

This proposal aims to incentivize deeper liquidity migration to Balancer by sustainably increasing the value accrual of BAL. This will be achieved through the deployment and incentivization of liquidity pools designed to generate compounding swap fees while capturing the capital appreciation of high-quality, blue-chip DeFi assets.

The proposed framework aligns BAL emissions with productive liquidity strategies that maximize protocol revenue, improve capital efficiency, and strengthen BAL’s long-term value proposition.

Author

Astral Protocol
A protocol focused on increasing liquidity provider returns through layered yield strategies, liquidity pools, and yield-bearing vault tokens.

Background

Balancer currently distributes approximately $13K worth of BAL per week in liquidity incentives. This relatively low emission level limits:

  • The depth of incentivized liquidity
  • Balancer’s total value locked (TVL)
  • Growth potential and partnership opportunities

Over the past three months, the veBAL liquidity pool generated $82.7K in swap fees, accounting for approximately 63% of total Balancer swap revenue during that period.

This demonstrates that BAL-centric liquidity can be highly productive.

Expanding this model through additional BAL-integrated pools can:

  1. Reduce sell pressure on BAL emissions
  • By creating new yield options for BAL that do not require selling or long-term locking BAL
  1. Expose BAL to increased capital appreciation
  • Through pairing BAL with high-quality DeFi blue-chip assets
  1. Increase BAL Trade volume
  • Driving additional swap activity and fee generation
  1. Maximize compounding swap fee revenue
  • Through optimized pool swap fee configurations

Motivation

The objective of this proposal is to:

  • Increase Balancer TVL
  • Expand protocol revenue
  • Improve BAL token value accrual
  • Attract new users and partner protocols
  • Establish Balancer as a leading venue for productive, yield-optimized liquidity

Specifications

1. stAuraBAL / AuraBAL Stable Pool

  • Type: Stable Pool
  • Features:
    • StableSurge Hook
    • Rate Provider Oracle
  • Assets:
    • AuraBAL
    • stAuraBAL

This pool enables stAuraBAL to function as a liquid, yield-bearing veBAL derivative.

Parameters:

  • Swap Fee: 0.2%
  • Creator Fee: 20%–30%
  • AMP: 1000

2. wstETH / EarnETH Stable Pool

  • Type: Stable Pool
  • Features:
    • StableSurge Hook
    • Rate Provider Oracle
  • Assets:
    • wstETH
    • EarnETH

Parameters:

  • Swap Fee: 0.1%
  • Creator Fee: 15%–30%
  • AMP: 500

3. BAL Yield Index Weighted Pool

  • Type: Weighted Pool
  • Composition:
    • 30% BAL
    • 30% sGHO (staked sGHO, ~6% APY, no slashing/penalty risk)
    • 25% stAuraBAL (~35% APY)
    • 15% EarnETH (estimated ~6% APY ETH vault derived from Lido)

This pool is designed as a yield-optimized BAL index, combining BAL exposure with diversified yield-bearing assets.

Parameters:

  • Swap Fee: 1.5%
  • Creator Fee: 15%–30%

4. Treasury Seeding Strategy

Initial liquidity to be provided via Balancer Treasury:

  • Minimum:
    • $10K per Stable Pool
    • $50K for Weighted Pool
  • Recommended:
    • $50K → stAuraBAL Stable Pool
    • $200K → EarnETH / wstETH Stable Pool
    • $500K → Weighted Pool

5. Aura Accumulation & Emissions Strategy

  • Acquire a minimum of $20K worth of AURA
    • Recommended range: $100K–$200K
  • Lock AURA to obtain voting power
  • Direct BAL emissions to the proposed pools:
    • 80% → Weighted Pool
    • 10% → stAuraBAL Pool
    • 10% → wstETH / EarnETH Pool
  • Stake BPT tokens on Aura
  • Continuously compound:
    • BAL rewards
    • AURA rewards
      → back into the pools to reinforce liquidity and yield

Performance Targets (Initial)

While exact returns will vary based on market conditions, the strategy is designed to target:

  • Swap fee APY: 6%–20%
  • Underlying asset yield: 8%–12%
  • Incentive-enhanced yield: variable (dependent on AURA emissions efficiency)

:backhand_index_pointing_right: Combined target range:

25% - 60% APY under normal conditions

Future Expansion

If this proposal is approved, Astral Protocol will propose additional BAL-integrated pool deployments based on:

  • Community preferences
  • DAO strategic priorities
  • Market opportunities

Discussion & Feedback

If the Balancer DAO supports the concept of deploying productive, revenue-generating BAL liquidity, but has preferences regarding:

  • Asset selection
  • Pool configurations
  • Fee structures
  • Emissions strategy

We welcome feedback and will collaborate with the community to refine optimal deployment strategies.

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