Balancer V2

Definition ∞ Balancer V2 is an upgraded decentralized exchange protocol on the Ethereum blockchain. It functions as an automated market maker that allows users to create and trade custom liquidity pools with varying asset weights and trading fees. This version introduced significant architectural improvements, including a single vault to hold all assets, reducing gas costs and improving capital efficiency. It offers advanced features for liquidity providers, such as dynamic fees and asset managers.
Context ∞ Balancer V2 remains a significant player in the decentralized finance space, competing with other AMMs for liquidity and trading volume. Discussions often revolve around its security audits, tokenomics, and its role in enabling complex portfolio management strategies. Future developments could include expansion to additional blockchain networks and further enhancements to its smart pool functionalities. News often covers its integration with other DeFi protocols or updates to its governance model.