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The multi-token protocol enabling automatic market-making Balancer has partnered with the blockchain-based simulation platform for building financial models, Gauntlet. The collaboration aims to enhance returns for Balancer V2 Liquidity Providers while still keeping the funds fully non-custodial.
Balancer Partners with Gauntlet to Maximize Returns
In a press release shared with CryptoPotato, Balancer announced its latest partnership with Gauntlet, aiming to maximize returns for Liquidity Providers (LPs) on the recently announced Balancer V2 platform.
After completing the integration, LPs will have the “long-awaited dynamic-fee AMM pools” available for their disposal. The statement promised that this upgrade will come at no extra cost and “no strings attached.”
Furthermore, Gauntlet will not be able to access or move the funds at any time, meaning that they will remain fully non-custodial.
As a simulation platform for on-chain risk management, Gauntlet uses “battle-tested” techniques from the algorithmic trading industry to help protocols manage risk, capital efficiency, and rewards.
The partnership with Balancer will enable Gauntlet to make protocol parameter optimizations, starting with trading fees. The project vowed to continue improving the simulation model on its quest to become a “core component” of Balancer V2, which will launch with a “few dozen ‘Gauntlet-powered’ pools.”
“Balancer’s vision for their V2 pools is perfectly suited for our simulation platform. Dynamic fees allow Balancer to leverage our off-chain automation to improve on-chain LP returns. We are looking forward to launch, but we are even more excited for what comes after – our optimization platform gets smarter as we incorporate more live data.” – noted Gauntlet COO, John Morrow.
Dynamic-Fee Pools Are the Future?
The PR touched upon the difficultness of attracting pool liquidity as the entire DeFi space has become “hyper-competitive.” However, Fernando Martinelli – the CEO of Balancer – said that the partnership with Gauntlet will place his team a few steps ahead in this race.
He believes that fixed-fee pools “won’t be able to compete with dynamic-fee pools just like taxis can’t compete with ride-sharing apps. It is better for all stakeholders for fees to constantly adapt to the market conditions.”
The statement also informed that the addition of new types of AMM on top of Balancer V2 will provide “a big opportunity” for other teams and protocols to employ the protocol by exploring “real-time optimization of pool parameters.”