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Balancer Liquidity Provision Guide

Balancer is a multi-asset AMM that supports up to 8 tokens per pool, custom weightings, Stable Pools, and dynamic fees-empowering LPs to earn yield through diverse strategies.

🧭 Why Use Balancer?​

  • Multi‑token pools: Combine assets like ETH, DAI, and USDC in one bucket-no need to pair off individually
  • Custom fees: Pools can set fees from 0.0001% to 10%, and some use automated optimization tools like Gauntlet
  • Stable Pools: Ideal for assets like wstETH/WETH with low slippage and deep liquidity

🧱 How to Add Liquidity​

  1. Choose a pool type

    • Weighted, Stable, Managed Pools
    • Explore pools via Balancer App or tools like Enkrypt

  2. Connect your wallet

    • Compatible with MetaMask, WalletConnect, Coinbase, etc., across Ethereum, Polygon, Optimism, Arbitrum

  3. Add liquidity

    • Deposit proportionally or via single-token input-Balancer adjusts automatically

  4. Approve & confirm

    • Pay gas fees. You'll receive Balancer Pool Tokens (BPTs) representing your share

💸 How You Earn Fees​

  • LP Fees: Trading fees accumulate directly in the pool-your BPT holdings grow over time
  • BAL Incentives: Stake BPT in gauges to earn BAL tokens, especially for stable or reward pools

⚠️ Risks & Mistakes to Watch​

  1. Impermanent Loss

    • Can be severe on volatile pairs-Stable Pools minimize this risk

  2. Gas costs

    • Mainnet transactions and reward claims (e.g., BAL) can be expensive-consider L2s or batch claims

  3. Selecting wrong fee tiers

    • Dynamic pools may automatically adjust-understand pool strategy before joining

📊 Example: ETH/wstETH Stable Pool​

Balancer/s composable Stable Pools (e.g. ETH/wstETH) are optimized for low slippage on correlated assets. Here's how to get started:

  • Approve ETH and wstETH in your wallet
  • Deposit using the Balancer App or SDK
  • Optionally stake BPT in gauge for extra BAL rewards

📚 Further Learning​

✅ Next Steps​

  1. Pick a pool that fits your strategy (weighted vs stable, gas-optimized, reward-focused).
  2. Deposit tokens and monitor performance via Balancer App or portfolio trackers.
  3. Stake BPT if rewards are available, and claim periodically.
  4. Compare your results with strategies on Uniswap or Solana guides.
  5. Stake your BPT in AAVE's Safety Module for governance rewards - AAVE allows staking of specific BPT tokens (like 80/20 AAVE/ETH pool tokens) in their Safety Module to earn Safety Incentives while participating in protocol governance.
  6. Explore Balancer/s GitHub repository for advanced integration and automation.

👉 Looking for narrower-range LPing? See Uniswap V3 strategies →
👉 Want a quick Solana LP overview? Go to Solana guide →