The partnership between DeFi protocols Balancer and Gnosis will give rise to Balancer-Gnosis-Protocol, a new, highly interoperable and transparent next-generation DEX focused on DeFi development.
Protocols DeFi Balancer, a decentralized exchange built on Ethereum, and Gnosis, a plataform blockchain for decentralized finance, they announced a strategic alliance that will allow them to unite all their potential to build new, powerful and innovative tools within the DeFi ecosystem.
According to release Shared by Balancer, its partnership with Gnosis will allow it to offer a new decentralized exchange (DEX), called Balancer-Gnosis-Protocol, to provide the best user experience to traders, investors and merchants using the protocol.
Balancer notes that this alliance will build a next-generation, more transparent and interoperable DEX, which will provide more flexible and reliable liquidity pools thanks to the Balancer V2 architecture, combined with the innovative price search mechanisms of Gnosis Protocol v2; in addition to MEV protection, which will mitigate the risks of “miner extractable value”.
For its part, Gnosis announced that the integration with Balancer will allow making Balancer-Gnosis-Protocol “especially gas efficient when trading against Balancer pools”The company claims that the new version of its protocol, Gnosis Protocol v2, which will be integrated with Balancer V2 in Balancer-Gnosis-Protocol, improves batch auction mechanisms, reduces spreads, and offers a greater degree of flexibility for traders and investors.
The launch of this new DEX is planned to take place in several phases, while full integration is estimated to be completed by mid-June this year.
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An alliance to embrace the competition
Balancer recognizes that the potential that decentralized finance has demonstrated in the last year has turned this sector, which was born as a small ecosystem on Ethereum, into a giant within the crypto industry.
DeFi brings together a liquidity of more than 122.000 million Currently, over 65% of this liquidity moves on the Ethereum blockchain. To date, there are a wide variety of decentralized protocols, which offer different services to users, but are not completely optimal. For example, fragmented liquidity across different protocols means that users get different prices, which increases spreads. Likewise, MEV risks generating higher gas fees, or lower prices, due to manipulation.
Because of this, both Balancer and Gnosis consider it essential to “embrace the competition” to complement their protocols and services and create a new generation of innovative products that guarantee an optimal experience for investors and users.
“We believe we can outperform our competitors, traditional finance, by providing unparalleled decentralization, transparency and value in our tools.”
Gnosis Protocol V2, solution to MEV
In addition to Balancer-Gnosis-Protocol, the Gnosis team also announced the release of its second version, which as mentioned, will allow the protocol to minimize the problems of maximum extractable value for miners; one that has affected Ethereum-based DEXs since January of last year.
Gnosis explains that the MEV (Maximum Extractable Value) problem is a phenomenon that currently captures a value of up to 0,1% of all orders placed on Ethereum decentralized exchanges. It is estimated that, since January 2020, around $402,6 million has been extracted from Ethereum users; a figure that represents around 13% of all transaction fees generated on this blockchain during this time.
In the new version of Gnosis, the developers introduce significant improvements to the protocol that substantially reduce MEV risks, allowing users to operate within a more reliable and secure decentralized exchange, which will guarantee the lowest gas fees.
Gnosis Protocol V2 optimizes Gnosis' batch auction mechanism, and combines it with off-chain ordering and access to any liquidity within the Ethereum network, to offer the best prices to its traders and investors.
Development of DeFi ecosystems
DeFi has been a sector with a great impact on society, allowing millions of people to access innovative financial products without any complications or obstacles. Although it is a sector of the crypto industry that is still developing, these ecosystems have gained a large number of followers, who increasingly prefer decentralized protocols over traditional finance.
To improve their environment, DeFi protocols are especially focused on launching new versions that improve and optimize their products and services; and also, on entering into alliances that allow them to create innovative products. In addition to Balancer and Gnosis, Badger dao y RenVM They also announced a collaboration to build a bridge between Ethereum and Bitcoin, allowing users to earn returns on their tokenized BTC.
Other DeFi protocols that have integrated to collaborate with each other have been Year Finance y Sushi Swap. And more recently, the governance of Inverse Finance approved a proposal to buy and merge the protocol Tonic Finance with its ecosystem.
Continue reading: Insurance, an increasingly emerging and promising sector for the future DeFi, says ShapeShift
