Balancer: A non-custodial portfolio manager, liquidity provider, and price sensor

The problem the paper names

A two-asset pool cannot express a mandate like 'keep 40% in this asset and 20% in each of three others' without a family of separate pairs and a manager who rebalances them. Balancer puts the mandate in the invariant.

What the design proposes

• Each token has a weight. The invariant is a weighted product of balances.
• A swap changes balances but the controller does not have to submit a separate rebalance trade.
• Fees compensate providers for being the passive side of other people's rebalancing.

How the mechanism is specified

• Spot price between two tokens is a function of balances and weights. Changing a weight is a different operation from a swap.
• The paper also describes controlled pools, where a manager can change weights over time. That is a mandate, and it is a new trust assumption.
• Smart pools and later vault architecture are subsequent engineering.

What this page does not treat as proven

• A passive basket is not a hedge. Providers still hold the assets.
• A manager who can move weights can move value. The paper's non-custodial claim depends on which powers the controller actually has.
• We do not describe returns.

Why a venture studio still reads it

Relevant when a venture wants an on-ledger portfolio rule rather than a manager with a spreadsheet. The follow-up question is who may change the weights, and whether that power is visible in the contract.