Came across Balancer in the last couple weeks seeing sponsorships on the Bankless podcast. With Ethereum transaction fees as high as they are now, hearing that Balancer helps cover the cost of gas stood out in my mind as a unique and thoughtful gesture that compelled me to give the platform a try. A couple weeks later, I’m providing liquidity, reviewing the V2 repo for the bug bounty, and referring a couple friends to take a closer look at Balancer.
TBH, there’s a good chance I’d have joined Balancer in any case for its strong fundamentals. However, the high up-front costs associated creating the first proxy contract and making the series of approvals necessary for contributing liquidity cost around $300. It was hard to know how many steps were involved at the outset, and approximately how much each step would cost. In the end, it was probably $200+ out of pocket to start providing liquidity (even after factoring in BAL for gas), but the BAL to help learn the ropes and subsidize initial setup costs helped grease the wheels of completing the onboarding process at its most costly point.
Thought experiment: if Balancer could conduct paid advertising but instead of paying CPC (Cost-Per-Click) or CPM (Cost-Per-Impressions), we could pay CPA (Cost-Per-Acquisition) for real results at the moment of acquisition, with those funds going to new users supporting Balancer (as opposed to big tech ad networks) – how much would we be willing to pay per acquisition?
To answer this, consider:
TVL (Total Value Locked) is an essential indicator of AMM growth
Balancer’s largest pools have under 1k LPs (706 on BAL/ETH, 684 on WBTC/WETH, etc.; source: https://pools.vision)
Only 6.94% of BAL supply are in active circulation
It’s hard to imagine more impactful & cost effective way of distributing BAL than distributing it as partial cost coverage onboarding new users (increasing network effects; Metcalfe’s Law). It would likely be strategic to pay upwards of $250-350 CPA to onboard quality LPs to the ecosystem. Actual BAL given as gas is a fraction of that. From the acquisition perspective, BAL for Gas is acquisition-insurance to ensure new LPs successfully complete the onboarding process.
Overall, completely agree with TIM_Betting’s rationale and can vouch for it having a recognizable impact in my recent onboarding experience.