Balancer Smart Pool Distribution

A Balancer Liquidity Bootstrapping Pool (BLBP) is designed to help DeFi protocols acquire capital with less liquidity than typically required for seeding pools on platforms like Uniswap or Sushiswap. Balancer addresses this challenge by using variable weightings of assets. A BLBP was utilised for the initial public sale of $ILV.

In a standard pool, two assets are matched in value with a 50:50 ratio. However, in a BLBP, the weights of the assets change over time, creating downward pressure on the token price. When the pool goes live, the token price begins to decline, which is why it's initially set at a high value.

There are two competing forces influencing the token price in a BLBP:

Changing Weights: As the tokens' weights change, the token's price is naturally pushed down. The token starts with a higher weight in the pool, making it worth the majority of the pool's value, and eventually ends up at a much lower level.

Trading Activity: As people buy the token, the number of tokens in the pool decreases. However, the value of the remaining tokens must still match the weights, so the token price increases to compensate.

As a result, you'll observe a gradual decline in the token price, with periodic "bumps" where the price rises again. The token price should eventually stabilize at a value that the overall market deems accurate.

By utilising Balancer's Smart Pools, Illuvium could fairly distribute up to 1,000,000 $ILV tokens without a lockup, initially listing them at a price of $50 USD per token.

Initial Pool Weight Ratio: 96:4

Final Pool Weight Ratio: 50:50

Timespan: 72 hours

Progression: Linear