DeFi TVL Surges, Balancer joins the Billion Gang

Balancer is now ranked 4th according to TVL on DeFi Pulse with over $1.06 billion locked in its smart contracts

By · Aug 29, 2020 . 7min read

The move continues as more people are enthusiastic about the DeFi movement. As of writing, the Total Value Locked – TVL across the major DeFi protocols has crossed $8 billion and looks set to hit the next target. Among the new name to join the league of DeFi protocols to reach the billion mark in TVL is Balancer.

Data from DeFi Pulse shows Balancer protocol has over $1.06 billion locked in its smart contracts. That sums to about 310,000 ETH in it. Balancer is now ranked 4th according to TVL on DeFi Pulse. It has surpassed other DeFi OGs like Compound, Synthetix, Uniswap and even the hot aggregator – yearn finance.

DeFi TVL Balancer
Source: DeFi Pulse

Surprisingly, DeFi protocols’ TVL touched $7 billion barely a few weeks back and was moving towards $8 billion. After Maker reached the billion-dollar mark, Compound, Aave and Curve were next. Balancer which launched in March this year attains this highly coveted mark by DeFi protocols.

Balancer is an Ethereum protocol and an n-dimensional automated market-maker. The protocol allows anyone to create or add liquidity to customizable pools to earn trading fees. Innovations like Balancer, Uniswap and other DEX has made it easy for founders seeking to bootstrap liquidity for their startup. Usually, before the DEX revolution, we see this year, most projects depend on the strength of centralized exchanges. Consequently, most centralized exchanges subject crypto projects and founders to their whims and caprices, which, in a way, stifled growth and innovation. However, with DeFi solutions popping up here and there and with composability feature built into them, many protocols can leverage on the success of one to launch their own offerings.

Away from TVL, let’s see how Balancer stacks up among other DeFi protocols when other metrics are considered.

If you decide to look away from TVL which many consider a vanity metric, some more facts emerge.

A quick look at DeFi protocols and annualized revenue shows Balancer generates close to $58 million compared to Curve $6.9 million. To be clear, the Curve sits above Balancer at $1.27 billion.

How about Price to Sales ratio (P/S) which compares a protocol’s token price to its revenues? Here is how Balancer fairs among others.

Looking away from DeFI Pulse and Balancer's TVL to P/S
Source: Token Terminal

Accordingly, P/S for Balancer is at 50, while Loopring, which has just $17 million TVL on DeFi Pulse reflects 1,385. To be clear, P/S is an indicator of the value placed on each dollar of a protocol’s sales or revenues. The higher the value, the more investors want to risk their money on the protocol. This explains why protocols like Maker can attract VC funding for expansion easily.

However, as it seems, the race isn’t stopping for DeFi, it’s a battle of TVL among open-source protocols and Balancer will be remembered to have attracted this much liquidity no matter what happens later.

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