My name is Kia and I’m a product manager at Balancer. I wanted to introduce Balancer’s Boosted Pools to the 1inch community and make myself available to answer any questions the community has. Boosted Pools are a new innovative DeFi primitive and we believe their integration with the 1inch aggregator would be extremely beneficial to 1inch, Balancer, Aave, FeiRari, Ampleforth and the greater DeFi ecosystem.
In short, Boosted Pools are an Aquaponics primitive that allow the unused capital in AMM pools to be deployed in money markets like Aave and Fuse, and unblocking additional capital efficiency.
In most scenarios, only a small portion of the liquidity in an AMM pool is being actively used for the vast majority of swaps in the average size. Boosted Pools allow the unused capital to be deposited into an external contract for additional capital efficiency and yield. This concept has been tried before, for example, by creating pools that only contain yield bearing assets like aTokens and cTokens. The problem with previous implementations has been the high gas costs of looping through the external contracts for each trade which render trade routing through such pools to be very inefficient. Boosted Pools solve for this gas efficiency problem by containing both the yield bearing assets and underlying tokens in appropriate proportions.
Currently, there is a Boosted Pool live on Balancer with USDC/DAI/USDT that funnels unused capital into Aave money market. This pool contains $180mm of liquidity at the time of writing. Once incentives are fully migrated, this number could exceed $250mm of stablecoin liquidity. The full migration of the incentives is pending the 1inch integration.
We are working closely with the Fei and Rari teams to adapt Boosted Pools to Fuse money markets via ERC4626. The FeiDAO holds a significant amount of DAI and LUSD which they are considering to deploy into Balancer and Fuse via this Boosted Pool. Pending FeiDAO, this pool could house up to $100mm of FEI/LUSD/DAI liquidity.
Adaptation of Boosted Pools to ERC4626 opens the door for adapting Boosted Pools to many other contracts and ERC4626 gains adoption.
The PowerPool team is working on a new innovative bbaUSD/LUSD pool that will deploy capital to LUSD’s stability pool. In this pool, LUSD will be paired with bbaUSD (the BPT/LP token of the Aave Boosted Pool).
The Ampleforth team is working on a Aave Boosted Pool of waAMPL/wAMPL. The BPT of this pool (bbaAMPL) will likely be paired with other tokens like bbaUSD or WETH in meta pools.
Boosted Pools rely on a series of technologies in the Balancer tech stack:
Boosted/Linear Pools: Boosted Pools maintain a balance of Tokens and their yield bearing equivalents, like aDAI/DAI for example. In the Balancer Boosted Aave Pool therea re three linear pools:
These pools currently maintain about $2mm-$3mm of USDC/DAI/USDT which can facilitate the vast majority of trade sizes. The remaining capital in the pools are deposited into Aave and the aTokens are housed within each Boosted Pool (~$170mm). Larger trades for which the higher gas cost is not as limiting get relayed through Aave thus, the entire TVL of the pools is available to traders at all times.
Boosted Pools have a built in incentive mechanism that incentivizes arbitrageurs to maintain the the ratio between the Token and its yield bearing version (aDAI/DAI). This incentive model also would apply to 1inch users — because of this mechanism, there will be instances where the pool would pay a fee to the traders for simple stablecoin swaps.
Batch Swaps: Balancer v2 separates the tokens from a pool’s logic such that all tokens across all pools are sitting in a single contract called the Vault and the pools only carry the logic and invariant. This allows trades that would need to go through multiple pools to only have one transfer event since all of the tokens are in the same physical place to begin with. As such, using Batch Swaps reduces the cost of trades that go through multiple pools. Boosted Pools are reliant on multiple pools (nested and meta pools) and as such, they require integration of Batch Swaps.
Nested and Meta Pools: the Aave Boosted Pool is a meta pool that consisting of the Balancer Pool Token (BPT==LP Token) of the USDC, DAI and USDT Boosted Pools.
Phantom BPT: The Balancer Pool Token (BPT==LP Token) of the Boosted Pools are preminted and resides within each pool as a swappable asset. This allows joins and exits into pools to be replaced by swaps.
To bring everything together, swapping DAI for USDC in the Aave Boosted Pool works in the following fashion:
- Swapping DAI for bbDAI (BPT of the aDAI/DAI Pool)
- Swapping bbDAI for bbUSDC
- Swapping bbUSDC for USDC
In conclusion, Boosted Pools are a brand new innovative building block that links AMMs and Money Markets together and creates better capital efficiency and yield. Boosted Pools have been picking up a lot of traction from DeFi projects who are working closely with us in adapting Boosted Pools to various use cases within their protocols including but not limited to: Fei and Rari, Ampleforth and PowerPool. In addition to unlocking the TVL that is in the Aave Boosted Pool today ($180mm), supporting the Boosted Pools will unlock the TVL that is soon to be deployed via these integrations in the work and bring volume to 1inch.