Don't overlook the Boosted revolution

Crazily capital efficient. Unrivalled efficiency. Next-level sustainability.

Boosted Pools are changing the DeFi game. 

This is your ultimate guide. 

This substack is split into 4 sections:

SECTION 1 - Boosted Pool overview

SECTION 2 - Innovation for Investors

SECTION 3 - Revolution for traders

SECTION 4 - Sustainability for protocols

SECTION 1 - Boosted Pool overview

Naly, what the hell is a boosted pool?

Did you know that up to 90% of Liquidity in a pool is not utilized? The vast majority of your capital literally sits there, idle. What a wasted opportunity. But every opportunity unlocks the possibility for innovation and boosted pools are no different.

So, what’s the innovation? These pools route your idle liquidity into other yield-generating protocols, putting your capital to work to generate an additional source of sustainable yield. Let’s go a little deeper.

Steady Beets, Boosted is a tri-stable pool on Beethoven X.

You can see the tokens at the top:

bb-rf-aDAI

bb-rf-aUSDT

bb-rf-aUSDC

Okay, first thing, what do these even mean?! Where can you find those tokens?!

These tokens represent the boosted version of the underlying token. You do not need these tokens. You simply invest with $DAI $USDT or $USDC The bb-rf-aDAI stands for Beets Boosted, Reaper Farm Aave DAI. Quite the mouthful…

Within the pool, we can see that these bb-rf-a tokens are actually a pool token themselves! This token represents something balancer technology calls a linear pool. Linear pools contain a base asset ( $DAI ) paired with an appreciating version of the same asset (rf-a-DAI).

In this particular Boosted pool, that appreciating version (rf-a-DAI) is DAI that is sent to an Aave vault on Reaper Farm. Reaper hosts an auto-compounding crypt that reinvests the additional OP incentives that Aave offer back into the appreciating aDAI tokens.

You can see that within the $USDC linear pool: 

🔸 $1.57 million $USDC has been sent to Reaper Farm. 

🔸 209k is left in the pool to facilitate trades. 

Ultimate capital efficiency; a whopping $1.57 million that would usually sit idle is earning additional yield!

SECTION 2 - Innovation for Investors

Chasing volatile yields is a tiring game. Efficiency and sustainability are KEY. In Boosted Pools, you can rest assured your capital is working in the most efficient way possible to generate sustainable yield. How about some facts?

@0xsouvlaki breaks it down with an excellent deep dive.

Key points:

✨ 76% of total Liquidity being used to earn boosted yield

✨ While 24% of total Liquidity is used to facilitate trades at a 135% utilisation rate 🤯

And Boosted Yield is no joke.

The Beethoven X tri-stable pool is generating an additional 3.93% of boosted yield 🤯

✅ Stupidly efficient.

✅ Sustainable source of yield.

But, what about the traders, how do they benefit?

SECTION 3 - Revolution for traders

A DEX isn’t just about investing your assets. A pivotal function is swapping tokens. Not only is Boosted technology an avenue for sustainable yield, but it also unlocks the potential for protocols to offer the most efficient swap rates for traders. 

Boosted Pools are a construct built on balancer v2. A flexible and adaptable multi-AMM design that allows for innovative primitives such as boosted pools to be built.  The underlying technology already allows for efficient and interconnected swaps. 

I won’t go into huge details here, but there are 3 key features:

1) The Vault

2) The SOR

3) Nesting

The Vault

Balancer V2 incorporates a single Vault that holds and manages ALL of the assets across ALL of the pools. This unlocks a seamless and gas-efficient route for swaps.

The SOR

The Smart Order Router finds the optimal path for a trade to take place, whether that is a direct swap in one pool or a combination of trades hopping through multiple pools.

Nesting

Just like it sounds, this involves ‘nesting’ one pool within another. Stable Boosted pools can be nested within any pool, unlocking a fluent route for assets to swap into all stable pairs.   

The trades are already efficient. But, there is one pivotal question that constantly arises within DeFi and DEXs. You may have heard it debated many times…

“Is it a race to zero swap fees?”

Will DEXs constantly compete against one another, reducing swap fees and undercutting competitors by fractions to ensure volume continues to increase? I’m sure you already look for the best rates, either via aggregators or competing platforms. 

But, what would this mean for an investor if swap fees go to zero? A pivotal mechanism for earning yield is swap fees…  Reducing rates may make it extremely efficient for traders, but then investors would lose out on all the swap yield, wouldn’t they?!

Protocols traverse this dilemma by emitting more and more volatile tokens. Increasing the number of token emissions seems to be the only solution. Not sustainable in the slightest, but it’s hey, it’s a solution. Unless…

The protocol utilises boosted pools. 

Protocols can reduce swap fees, ensure the most efficient rates, lap up the volume and still provide lucrative and sustainable rewards for users.  On Beethoven X, with boosted yield 35x more than the swap yield, the swap fee for the tri-stable pool was reduced to 0.005%.

Okay, but surely the protocol loses out?

Protocols are reliant on swap fees, it is their sole source of revenue. The race to zero fees is a race to zero revenue.  Innovating the game. With Balancer technology, it no longer is. 

SECTION 4 

With all these tokens naturally accruing value on the DEX, it would be pretty cool if the DEX could profit from this… Imagine if DEXs no longer had to be confined by swap fees in their ability to generate revenue. 

Sustainable revenue generation. With Balancer technology, the protocol takes a fee not only on swap fee yield but on Interest-Bearing yield too. On any token that has underlying yield generation from another source, a fee is taken by the protocol. What does this mean?

The protocol can generate a sustainable source of revenue that is purely dependent on TVL. The greater the value of the DEX, the more Interest Bearing yield the protocol earns.  Fundamentally; It completely removes the reliance on swap fees.

Swap fees can continue to reduce. The protocol need not worry. They could go to zero and the protocol could continue to generate revenue! But, how effective is this revenue source?

Let’s take a look at the protocol fees for Beethoven X. This IB fee is set at 50%. The UI shows the yield after the fee has been taken.  For the steady beets pool, the actual boosted yield is around 8%.

4% flows to Beethoven X and Balancer as a protocol fee. (The DEX launched as a partnership)

The current TVL of the boosted yield pool is $4.33 million. If the boosted yield stayed constant, that $172,000 of protocol revenue a year.  How about some other figures?

TVL = $10 mill,  Revenue = $400,000

TVL = $20 mill,  Revenue = $800,000

TVL = $30 mill,  Revenue = $1.2 mil

Bear in mind, that as TVL increases in this pool, more of the underlying tokens are generating additional boosted yield. Essentially, boosted yield actually increases alongside TVL so this revenue would increase! And, that's just one pool!

Any pool that utilises tokens incorporated into other money markets can generate protocol additional revenue. Your first reaction may be “Okay, so I’m losing out on yield?” You are earning a boosted yield which compensates for this.

And, a portion of this revenue is used as incentives for the pool that generated it! This is pretty damn cool.  Let’s explain it step by step.

1) You enter a boosted pool. 

2) You earn a boosted yield. 

3) Half of that yield flows to the protocol to ensure sustainable revenue. 

4) A portion of that protocol revenue then flows back to the pool as incentives.

5) More users enter the pool with increased incentives 

6) TVL increases

7) Boosted Yield increase

8) Protocol revenue increases 

8) Incentives increase

The process begins again...

This Protocol Revenue can be used to buy back native emission tokens to incentivise pools. This hints at a truly sustainable incentives program on a DEX. Token incentives fuel initial growth > TVL grows > IB Revenue increases > Protocol Revenue Fund’s token emissions. This is a real yield narrative built into a DEX.

Boosted Pools really do unlock a full range of possibilities for investors, traders and protocols alike. They have the potential to play a huge part in the future of liquidity provision.

Let’s summarise.

✅ Crazily capital efficient 

✅ Ridiculously rewarding for investors 

✅ Everlasting efficiency for traders

✅ Stupidly sustainable for protocols

Don’t overlook the boosted revolution.