Grants Wave 13 | Q3 2024 Final Report

Wave Overview

The Balancer Grants program was established in August 2021 after a community discussion before evolving into a Service Provider beginning Wave 5 which we have continued on to now complete Wave 13. This Wave ran from July through to the end of September 2024 with k BAL available for new grantees (approved via BIP-705/snapshot).

Looking back at Wave 13 and it’s goals

  1. Continue to mentor and deliver with existing grantees

We started the wave with 5 grantees, 2 of which were completed during the quarter. The committee continues to provide assistance and connect these teams with internal resources to get the project over the line and expand the Balancer ecosystem. For our long running grantees, we maintain communication to ensure the project is on track. As things move fast in DeFi, if priorities change, we want to reallocate funding to projects aligned with Balancer.

  1. Fund projects dedicated to increasing adoption of Balancer V3

The Grants committee has focused on this goal by funding:

  • Xave Finance — long time partner building custom FX pools. This grant was awarded to cover SC development and audits to port their existing FX pools from v2 to v3.
  • QuantAMM — launch partner using v3 hook infrastructure. This grant was awarded to develop a simulator to assist projects setting up pool parameters using custom or historical data.
  • Balancer v3 Hookathon — hackathon aimed at hook development on v3. This has the hook building and a devrel/educational content stream.
  1. Funding initiatives

Run a hook bounty program — this was replaced with the hookathon as a better use of funding.

Co-funding through agreements with supported chains — we have stayed in contact with supported chain teams but with most L1/L2s moving to mission based funding, we are yet to find suitable projects for co-funding.

Grant Achievements

After receiving applications, we approved 2 grants + a hookathon for a total of 33,502 BAL (note with BAL @ $2.00 USD).

Balancer v3 Hookathon

One of the most exciting initiatives we have currently funded by Balancer Grants is a virtual Hookathon now live here on DoraHack.io. We have extended this by 2 weeks to close for submissions on Oct 20. The Hookathon aims to incentivize exploring and developing hooks on Balancer v3 to boost a community of DeFi developers and DevRel Experts to thrive in a new flexible design space. It is a unique opportunity to experiment with the Balancer v3 hook infrastructure, collaborate with Balancer’s core developer team, build new and innovative liquidity features around existing AMMs, and win a share of a $17k prize pool.

Finalized Grants

This month, the team submitted their finding for research conducted on maximizing revenue captured by Balancer pools from CEX/DEX arbitrage with dynamic fee functions. We analyzed different dynamic fee functions with volatility, volume and gas fee based inputs for 8 Balancer pools to try maximize their revenue. Our approach was to study different fee functions to find functions that increase revenue from CEX/DEX arbitrages while maintaining or decreasing the average fee level in the pools. We find that dynamic fee functions could both increase revenue and decrease average fees for 4 out of the 8 studied pools, while 2 of the pools could increase revenue at the cost of increasing average fees.

For example, adopting volume based dynamic fees could increase revenue of WBTC-WETH pool by up to 40% while decreasing the average fee.

There does not seem to be an universal solution as different pools have different optimal parameters. However, volume-based fee functions show the most promising results across all pools. In summary, our findings suggest that certain pools’ revenue could be significantly increased while decreasing average pool fees by adopting dynamic fee functions. Pools with high arbitrage volume have the most to gain from these dynamic fees.

Huge thanks to @BalancerGrants for funding this study. You can read the full report here and forum discussion here.

The mode accelerator has now closed and with no submissions for Balancer, this grant was finished and the funds made available to award to other teams building on v3.

Grantee Updates — Building

The program is proud to present our grantees and their updates in alphabetic order:

The latest news is the release of Opal airdrop checker https://app.opaldefi.xyz/airdrop enabling community, governors and users to track their airdrop allocation, although no timeline was not voted yet for the distribution, which is why an airdrop simulator is also available on the same page for newcomers to quantify their potential earnings.

To recap the changes on the grant milestones, see image attached:

  • Milestone 1 & 2 (Omnipool and Gov modules) were merged in the first audit campaign
  • Milestone 3: integration of Concentrated Liq pools (ECLP), the audit is not ongoing yet, updated ETA for December 2024
  • Milestone 4: Expanding to L2s, devs are doing R&D to solve the multichain Omnipool problem that was never solved yet in DeFi, nonetheless L2 only Omnipools can be deployed anytime

API integration revamped and financial analysis tooling added. Decay hook will be discussed with the Balancer team this week and admin questions for MS2 are also aiming to be finalized this week.

  • QuantAMM — Pool Simulator | Wave 13

Cowamm modelling, retail and dynamic fee moddeling is complete. Moving onto E-CLP modelling this week.

  • Xave Finance — Porting FX pools v3 | Wave 13

We’re excited to share our progress update for this month, highlighting significant advancements in our project:

  1. Omega Parameter Research and Planning: We’ve made substantial progress in researching and planning the implementation of the Omega parameter, a innovative enhancement to our FXPool’s fee structure. This upgrade aims to further optimize pool efficiency and liquidity within the Beta region.

This addition is expected to significantly enhance our pool’s ability to maintain balance and provide more attractive rates for users.

  1. Audit Preparations: we’re in active discussions with reputable auditors in the DeFi space. We’re carefully selecting the right partner to ensure a comprehensive and thorough audit of our codebase, including the upcoming Omega parameter implementation.

Next Steps:

  • finalize the Omega parameter implementation
  • continue refining our testing protocols
  • finalize audit partner selection and schedule

We’re thrilled about the potential improvements the Omega parameter will bring to our FXPool and, by extension, to the Balancer ecosystem. We appreciate the ongoing support from the Balancer community and look forward to sharing more concrete results in our next update.
Thank you for your continued interest and support in our project.

Yet to be announced:

In addition to these, we have 1 grantee working on adding new functionality to the V3 codebase that will be shared once complete. You’ll have to wait until this feature is live before we can share more details. Stay tuned!

Grants Program Expenses

Balancer Grants operated wtih committee members except the lead contributing pro-bono as part of their engagement with other SPs. Lead compensation was also reduced below budget due to the decrease number of suitable applications. Combined with savings from other support expenses, this resulted in $5k USDC savings to offset Q4 funding request (now approved).

The treasury took a big hit due to BAL falling from $3.00 to below $2.00 USD/BAL but recovered and was never in deficit from committed payments.