How To Short Balancer (BAL)

    • James Page

James HeadshotAuthor: James Page - Last Updated on June 28, 2022

Summary: Shorting Balancer is pretty straightforward, all you need is a crypto broker that allows for short selling. While there are a few exchanges out there that have added the ability to short crypto, our recommendation is to use eToro. They’re well-known, have a global presence, and are trusted by millions of users from 100+ countries.

We’ll be using eToro in our guide, you can sign up with one of the sign-up buttons below.

Global: Sign up with eToro

USA: Sign up with eToro US

Balancer

Before we get started, let’s quickly explain what shorting is (for those that are new to it). Shorting is the practice of selling a cryptocurrency hoping it will drop in price so you can buy it back later for cheaper… which, if successful, will give you a net profit.

It might sound a bit complex but don’t worry, it’s a lot easier than you might think.

How to Short Balancer

Shorting Balancer can be done in 4 steps:

  1. Find a cryptocurrency exchange
  2. Sign up with the exchange
  3. Fund your account with fiat or crypto
  4. Short Balancer

1. Find a cryptocurrency trading platform

As mentioned before, for this guide we’ll be using eToro as they offer the ability to short the most common cryptocurrencies.

You can, of course, use any other crypto exchange that allows for short selling.

etoro crypto

2. Sign up with the cryptocurrency exchange

Let’s start with creating an account on eToro.

Global: Sign up with eToro

USA: Sign up with eToro US

 

eToro sign up form

The sign-up process is very quick, as is the verification that needs to be completed afterwards so you can get started.

3. Funding your account

Next is funding your account. You have several deposit methods to choose from when depositing funds into your eToro Account. These include a bank transfer, credit card, debit card, PayPal, and more.

4. Short Balancer

These are the steps to follow to execute a short sell:

  1. Go to the search bar at the top, find Balancer by entering the name.
  2. On the crypto page/section, on the right side, hit the TRADE button to enter the trading interface.
  3. At the top of the trading interface: Click on sell to short the crypto.
  4. Enter the amount for which you want to sell Balancer and click on “Open Trade”.

Once you’re ready to close the trade, hopefully when the value of Balancer has dropped, go to your Portfolio, find the Balancer trade, and click on the red cross to close the trade.

If your assumption/prediction was right, then the profit will be added to your account after closing the trade. If you were wrong on the other hand, you’ll incur a loss which will be debited from your eToro account.

Congratulations, now you know how to short Balancer!

Global: Sign up with eToro

USA: Sign up with eToro US

 

Disclaimer: Trading, investing, and dealing with digital and cryptocurrencies might involve a lot of risks. Their prices are volatile and performance is unpredictable. Their past performance is no guarantee of future performance.

Affiliate Disclosure: This site is supported by its users. We may receive commissions for purchases made through the links on our site. This does not impact our reviews, guides or comparisons.

 

Where to Short Balancer (BAL)

Aside from eToro, the other major exchange you can use is Binance.

While Binance tends to be a bit more advanced when compared with eToro, they do have a lot more digital assets to trade with.

 

Frequently Asked Questions

Can I short Balancer on Binance?

Yes, you can short Balancer on Binance. They have over 300 cryptocurrencies on offer, have a decent phone app and a lot of advanced trading features.

About Balancer

BAL stands for Balancer Protocol governance token. It can be used in order to vote on proposed changes and to help steer the protocol's future.

BAL's total supply has been capped at 100,000,000 tokens. 25 Million of those tokens will be allocated to founder members, core development team, advisors, investors and others. The remainder are distributed to members of the community by liquidity mining.

Balancer (a multi-token automated markets maker (AMM), that acts as a self-balancing weighted protocol for portfolio management) is Balancer is built using the Ethereum network. It allows anyone with Ethereum to create or increase liquidity in customizable pools and earn trading fee. Balancer has a generalization algorithm that can be applied to any number of tokens and any weightage, as opposed to the AMM model for constant products.

This mimics an index fund in which assets are frequently reallocated according to the return and price of the assets. Index fund is a common financial tool that helps investors diversify risk and maintain a manageable risk exposure to a portfolio. Balancer uses smart contracts to solve the same problem.

There are two types that can benefit most from using Balancer. These are liquidity providers and traders. The liquidity providers are those who participate in the Balancer pool or own balancer pools. ERC-20 tokens will be traded on the open markets by traders.

Without costly and complex rebalancing, liquidity providers have the ability to manage their exposure to crypto assets. The ERC-20 tokens can be used to generate passive income for liquidity providers.

Traders can trade tokens, have access and profit from a wide range of pools, as well as arbitrage price differentials on Balancer.

The Balancer protocol's fundamental building block is its Balancer Pool. The Balancer Protocol can be seen as an automated, market-making portfolio. Each token asset has a unique weight that can be traded against any other tokens in the pool. One example: A pool might have three tokens with the following proportions: 50% DIAI, 25% SUSHI and 25% WETH.

The idea of a balancer pool is to preserve the pool's value function, weights and balanceds. To ensure each token's share of the total pool value, the pool is continually rebalanced if the relative prices of tokens fluctuate.

Each trade that is made in a Balancer pool generates a fee. The fee is a percentage from the trading volume. It can be adjusted by the pool owner at the time the pool is formed.

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