[SPONSORED] Balancer Wars: Aura’s path to dominance in Ethereum DeFi

The Balancer Wars are getting more and more complicated. In recent months, the focus has not only been on the accumulation of BAL tokens, but also on veBAL, Balancer’s recently announced voting-reserved token.

DAOs like Olympus, Lido, and Gnosis, which have already contributed millions of dollars to the balancer ecosystem, are now focused on passing proposals that accumulate more veBAL and are similarly exploring partnerships with protocols and tokens that are capable to deepen their veBAL yields.

And yet, while the balancer wars may only have started a few months ago, certain holders have already recognized the similarities between the curve finance and balancer wars.

Curve’s past could be Balancer’s future

In simpler times, there was Curve Finance, the dominant stablecoin AMM that not only kept stablecoins properly pegged to a dollar, but also offered low trading fees for any investor who needed to run stable swaps.

To maintain its competitive edge, Curve developed the veCRV, which rewards holders who have their CRV locked. Because veCRV is Curve’s governance token, it allowed holders to earn higher returns on their CRV, taking some of Curve’s revenue, but most importantly, having the power to vote on its governance proposals.

By allowing veCRV holders to vote on key decisions such as the level of mining rewards for different liquidity pools, whales and protocols alike wanted to gain majority influence over veCRV.

As veCRV gained traction and utility from the Curve Wars, Balancer picked up a few pages of Curve’s ve Tokenomics model shortly thereafter.

veCRV vs. veBAL: A comparison

Ultimately, Balancer leveraged a similar Ve Tokenomics model by creating veBAL in March 2022. By accumulating veBAL, holders were not only allowed to vote on Balancer’s governance proposals, but also received the additional returns generated from BAL tokens, as well as a share of 75% of the fees generated by the protocol.

While CRV holders had to lock CRV to receive veCRV, Balancer users must purchase Balancer Pool Tokens (BPT) from Balancer’s 80/20 BAL/WETH pool if they wish to receive veBAL. veBAL also had a maximum blocking period of 1 year, compared to veCRV’s maximum blocking period of 4 years.

Additionally, if users wanted to continue holding veBAL, they had to periodically increase the lock time of their BPTs, otherwise their veBAL may drop to 0 if left unattended.

The gap was clear – Balancer users were beginning to realize that they wanted to hold their veBAL for longer and also multiply their veBAL returns in a similar way that Convex did with Curve.

Enter Aura Finance.

Aura Finance: Balancing Balancers

Aura Finance was built with a clear goal: to provide maximum incentives to balancer liquidity providers and veBAL holders.

In June, it first launched its native ERC-20 token, AURA, which drives Aura-driven veBAL at a scaled-up ratio. As of August 2022, AURA has already reached a TVL of $316 million.

Security-wise, Aura has also completed a total of 3 security audits in the past few months, complete with an active bug bounty program, and uses fork tests for test deployments.

Structure of the aura ecosystem: veBAL to auraBAL

Aura Finance also launched auraBAL, which served as the liquid packaging for Balancer’s veBAL. To get auraBAL, users would deposit liquidity into the 80BAL-20WETH pool on Balancer and then convert to auraBAL before staking on Aura.

From here, auraBAL holders can decide to stake on the platform, where they would not only receive the regular balancer administration fees they would receive for holding veBAL normally (BAL and bbaUSD earnings), but also additional BAL from Aura’s Performance Fees and AURA. Users can trade their auraBAL back to BAL at any time.

Alternatively, auraBAL holders can choose to contribute to the auraBAL/ balancer pool.[80/20 BAL/ETH BPT]. Users can then stake the auraBAL BPT token on Aura Finance to earn a separate pool of AURA rewards for providing liquidity to others to enter and exit the ecosystem via the auraBAL token.

Overall, auraBAL delivered a clear benefit to the balancer ecosystem. His rewards are currently multiples of native veBAL rewards and scale as Aura accumulates more veBAL. auraBAL also eliminates the need to periodically re-ban veBAL and it can be banned for up to 16 weeks.

Add vlAURA

Building on the auraBAL utility, vlAURA was then introduced. Users would lock their AURA to gain multiple privileges: the ability to vote on Aura Protocol changes, direct the Aura Vault, vote on the outcome of balancer snapshot proposals, and directly receive additional AuraBAL.

vlAURA holders could also use their vlAURA to participate in Balancer Gauge voting, with markets such as the Hidden Hand allowing vlAURA holders to earn significant revenue for their votes.

Collecting Aura Tokens: The Next Big Games

As auraBAL and vlAURA provide direct benefit to their holders, several DAOs that have been heavily involved in the balancer ecosystem have also started to be more active in accumulating AURA, auraBAL and vlAURA.

Gnosis DAO, converted over 100,000 veBAL to auraBAL and deposited $2.2M into Aura’s stable pool of Boosted Aave. Badger DAO, which is known for collecting many BAL tokens, has also accumulated AURA in its treasury to use for voting. It also recently launched graviAURA, a semi-liquid AURA token that automatically votes for balancer pools that contain it and allows AURA holders to escrow their AURA and earn income from automatically collected bribes.

Other DAOs have also focused on passing Aura-related proposals. OlympusDAO recently passed a proposal, OIP-110, aimed at adding BAL and AURA to the strategic assets whitelist, as its finance department wants to maximize control over veBAL per dollar spent.

On the other hand, citing the participation of DFX, Rocketpool, Stader and FiatDAO in their Hidden Hand Gauge Incentive market for Aura, Redacted has proposed locking all AURAs coming into their treasury in order to direct more yield to strategic partner pools continue to re-lock the AURA when it comes out of lock to maintain access to the benefits of holding vlAURA for six months. Redacted will then use the vlAURA voting right for pools beneficial to the Redacted ecosystem.

Temple recently announced its participation in the Balancer Wars as it has deposited $5 million worth of assets on the Aura platform and has started promoting both veBAL and vlAURA voices through RedactedCartel’s Hidden Hand. Olympus will also add $3 million of its own liquidity to Aura and may incentivize Hidden Hand on that pool.

And to top it off, Aave (via DAO contributor Llama) has announced that they intend to “become an active participant in the governance of Aura and leverage the AURA Inflation Plan to drive the growth of Aura Finance’s TVL and Aave to support each other”.

In just a few months, Aura has managed to not only build clear multiplier effects for the balancer ecosystem, but also traction and utility within its own ecosystem by offering clear utility in the gauge incentive market with vlAURA. And while there hasn’t been an official winner of the balancer wars so far, there’s no denying that Aura and the ecosystem it’s built has become a very strong early contender. Interested in being a part of the AURA and Balancer ecosystem?

Check out app.aura.finance and use your Balancer Pool Tokens (BPTs) to triple the earnings rewards on Aura on average compared to using your BPTs in Boosted Balancer Pools!

Learn Crypto Trading, Yield Farms, Income strategies and more at CrytoAnswers
https://nov.link/cryptoanswers