A major addition to the Avalanche ecosystem! Balancer V3 has been shockingly deployed: will it bring a liquidity revolution?

the development of Avalanche and the deployment of Balancer V3 is like opening a promising and innovative bubble tea shop.

Written by: 0xresearcher

Recently, China's leading KOL Wu said that Blockchain posted a post: "Ava Labs proposed to deploy Balancer V3 on Avalanche C-Chain, and the proposal was expected to be approved in Monday's voting snapshot. The deployment aims to expand Avalanche's real-world asset ecosystem and enhance DeFi liquidity, integrating with lending protocols such as Aave and BENQI to increase LP yields. It's worth noting that while the Balancer vote received 100% support, only three personal addresses participated." What are the opportunities and challenges behind this? Let's find out.

What is Balancer V3? Why is it making waves on Avalanche?

First of all, as one of the important protocols in the DeFi space, Balancer V3 is known as a revolutionary of liquidity pools. Unlike traditional automated market makers (AMMs), it allows users to create more flexible and customized liquidity pools - you can freely set the weights of the tokens in the pool, just like building Lego bricks, and build your own asset pool exactly according to your needs. In this way, users can not only enjoy higher capital efficiency, but also automatically adjust the proportion of assets in the pool through smart contracts, avoiding the risk of human operation.

However, the question arises, why choose to deploy such a powerful protocol on Avalanche? The reason is simple: Avalanche is a blockchain platform with high throughput and low latency, making it very suitable for large-scale decentralized applications (DApps) deployment. Moreover, Avalanche's 'C-Chain (Contract Chain)' is a chain specifically designed for smart contracts, featuring strong compatibility and performance. Deploying Balancer V3 on Avalanche not only leverages the high-performance advantages of the chain but also effectively enhances the protocol's liquidity, expanding more DeFi use cases.

BENQI and Aave on Avalanche: The Powerful Combination of Two Protocols

As for BENQI and Aave, these two protocols play a crucial role in the Avalanche ecosystem. Imagine you opened a milk tea shop, attracting customers through various channels to buy milk tea every day. In this context, lending protocols are like the "coupons" in your shop – they encourage more customers to enter while also incentivizing existing customers to purchase more products. By integrating with Balancer V3, BENQI and Aave on Avalanche can allow users to easily migrate funds from one protocol to another to achieve higher yields. This instant integration will significantly enhance the efficiency of liquidity pools and bring more returns.

Especially BENQI, which provides decentralized lending infrastructure on Avalanche, allowing users to lend or borrow assets. The liquidity of the lending protocol is like adding different flavors of milk tea to a milk tea shop, giving customers more options to choose from. By integrating with Balancer V3, BENQI users can not only enjoy lending profits but also earn more trading fees by providing liquidity pools.

Low Participation, Concerns about Governance Mechanisms?

However, it is worth noting that despite the governance proposal of Balancer V3 receiving 100% support, the voter participation was extremely low—only three addresses participated in the voting. This phenomenon may reveal some potential issues with the Avalanche governance mechanism: although the majority support the proposal, the actual number of participating users is very few. Could it be a problem of governance efficiency and community engagement? For DeFi projects, widespread community participation and active voting are not only a reflection of healthy governance but also the foundation for the continuous development of the protocol.

This low level of engagement is akin to a super-popular night market where everyone comes, but only a few stallholders are actively setting up their stalls. Think about it, if the night market does not have the active participation of the stall owners, customers come and go, which may eventually lead to a deserted situation. It is worth paying attention to how Avalanche optimizes its governance mechanism and mobilizes more users to participate in the future.

Future Outlook: The "Great Explosion" of the Avalanche Ecosystem?

As we reflect on the Avalanche ecosystem over the past few months, the data clearly indicates that its DeFi ecosystem is rapidly growing. In particular, over the past seven months, Avalanche's TVL (Total Value Locked) has nearly doubled. This is driven by increased liquidity in AMM and lending protocols, making the entire ecosystem more vibrant.

At the same time, the trend of tokenization of real-world assets (RWAs) on Avalanche is also steadily advancing. According to the data, the total RWA locked assets on Avalanche have exceeded $7.3 billion, a growth rate of more than 200%. This shows that traditional financial institutions such as BlackRock have realized the huge potential of Avalanche as a digital asset custody platform.

From BENQI to the Future of the "Night Market Economy"

Just like in a bustling night market where vendors cooperate and achieve mutual benefits, major protocols on Avalanche (such as BENQI and Aave) are also providing users with more efficient liquidity solutions through deep integration with Balancer V3. In the future, as Balancer V3 gradually expands, we can expect to see more interconnected liquidity pools and lending protocols within the Avalanche ecosystem, which may even lead to the emergence of some unexpected innovative applications.

Overall, the deployment of Balancer V3 on Avalanche represents both a technological advancement and an ecological breakthrough. By integrating with protocols like BENQI and Aave, it provides users with higher yield opportunities and lays the groundwork for further development of the Avalanche ecosystem. However, how to enhance governance participation while improving liquidity is a challenge that the Avalanche ecosystem needs to overcome in the future.

An Ubiquitous "Innovative Milk Tea Shop"

It can be said that the development of Avalanche and the deployment of Balancer V3 are like opening a promising innovative milk tea shop. Through collaboration with protocols like BENQI and Aave, Avalanche has become a vibrant ecosystem, attracting a large amount of investment and users. However, managing all of this well, maintaining the thriving business of the milk tea shop, and improving the governance mechanism while increasing user participation remain the "sweet burdens" within the Avalanche ecosystem.