With the first DEFI release for the Icon network, I want to analyze the Balanced platform against other highly used DEFI projects. Balanced has crossed the 6 day mark and the numbers are on an amazing trajectory. The platform is easy to use and allows for the Icon community to utilize their position in a way that has never been seen. Overall, as an Icon holder, I’m very excited to have access to DEFI opportunities such as collateralizing and LPs.
In this article, I will give the high level on Balanced and compare against what I consider to be some of the top DEFI platforms — UNI, CAKE, SUSHI, 1INCH. Yes, it seems DEFI names are very creative so if Icon was going to take that approach, I would have expected a name like KIMCHI, but who’s to say there won’t be one in the future. Jokes, aside, let's get into it.
Balanced is the first DEFI product on the Icon network with a goal to become the best place to stake ICX, borrow synthetic assets, swap, and supply liquidity. By launching on the Icon network, this allows for fast/cheap transaction fees in comparison to ETH and even BSC DEFI products. Being the first DEFI product on the platform, I’m expecting a great value add to the ecosystem in-which some have seen already.
To understand the project, let's take a high level look at Balanced and what they have done in their first week of launch. Balanced doesn't have any pre-mined coin so everyone has a fair chance in maintaining a stake in the Balanced ecosystem. Breakdown of reward allocation below:
When you hold BALN (Balanced tokens), you are able to own a share in platform along with voting rights on future features. If BALN is supplied to the BALN/bnUSD LP or staked, you will also participate in a piece of the network fee. From the value of the network fees, 40% will be allocated to the DAO fund with the remaining 60% sent to the BALN holders, paid each week. As for tokenomics, I believe this is fair and provides incentives for investors to hold a token of value.
Day 6 stats:
- TVL (collateral): $101.89 million
- TVL (DEX): $66.3 million
- Borrowers: 2,126
- BALN holders: 2,480
- Total fees: $321,948
How does Balanced measure up against other DEFI products. Please note that BALN is less than a week old but I will use these metrics to attempt on forecasting the valuation of the product dependent on future additions.
To keep it simple, we will measure a couple key metrics — Total TVL, # of LPs, daily transaction value.
With Balanced approaching it’s 1 week mark, there has been amazing use-case right off the bat. Total fees is approaching $400K with a total of 2,126 borrows and 3,129 liquidity providers. With the structure of emissions, Balanced will release 100,000 tokens into the circulating supply for the first 60 days. After, the inflation will drop .50% each day until 1,250 is reached which would be less than a 2% inflation rate. As of now, the current price of $BALN is $11.50 and seems to be slowly sliding, which is expected. The following is what I’d like to see from Balanced and plan to vote on via my position.
- Listing BnUSD on an exchange. This will not only open the ability to arbitrate the price on the platform but also allow for every day users to utilize the collateral by transferring out the BnUSD and converting to a local currency like USD, EUR, CAD.
- More LPs! Looking at the comparison chart, between the 4 other projects we’re looking at an average of 369 LPs per platform. Ideally we approach the higher end of the spectrum but this will take time.
- Utilizing the interoperability protocol that will launch later this year to allow for outsiders to cross-chain DEFI on Balanced.
I strongly believe there will be big value in Balanced as they further develop and rollout more features. As for price action, looking at other DEFI projects, you will see a similar trend where the price spikes at launch, followed by a drop, and then reach to new highs (assuming use-case stays). This cycle usually occurs within a period of 1–4 months but of course dependent on other variables such as market conditions, use-case, etc.
Right now, the 100,000 day is amounting to a large inflation percentage which will slowly be less impactful moving forward. Below, I’ve outlined a quick breakdown on how this looks. After 60 days, the 100,000 distribution will also lower. I’m expecting within 60 days, BALN finds it’s true value and price starts increasing shortly after; just my thought so always DYOR.
- Day 1 — 0 circulating + 100k daily distribution
- Day 2 — 100,000 circulating + 100k daily distribution = 100% inflation
- Day 3 — 200,000 circulating + 100k daily distribution = 50% inflation
- Day 4 — 300,000 circulating + 100k daily distribution = 33.33% inflation
- Day 5 — 400,000 circulating + 100k daily distribution = 25% inflation
- Day 6 — 500,000 circulating + 100k daily distribution = 20% inflation
- Day 7 — 600,000 circulating + 100k daily distribution = 16.66% inflation
As you can see, the impact of the daily distributions will slowly have less impact on the circulating supply.
I’d like to see development around the 3 bullets I outlined in the previous section, but again, we’re 7 days in and the numbers have been nothing less than amazing. Overall, amazing work launching a DEFI product that is easy to use and understand.
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NO INVESTMENT ADVICE — The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.
We hold a position in $ICX / $BALN