Editorial
After a one week hiatus, we’re back with an update-filled third edition of BarnBurner. In this edition, I wanted to dive a bit deeper into how BarnBridge governance is shaping up in its early days.
A common refrain throughout startup advice is to initially “do things that don’t scale” in order to win the hearts of a foundational user base that unlocks potential for future growth. Crypto protocols are no different; in fact, one could argue that it’s an even more important tenet here, as there is no clear delineation between users and investors like there is in Web2.0 land. With this in mind, we are dedicated to making sure that community members can participate in protocol development beyond just simple token voting.
Facilitating community governance at this stage means overcoming two main barriers: onerous gas costs associated with true DAO voting, and information asymmetry while product development is ongoing. So whereas at an early stage startup you may see a founder manning the customer service lines, for a crypto protocol, “do things that don’t scale” takes the form of gathering and informing social consensus off-chain.
To that end, it appears that governance norms have emerged as we’ve experimented with Snapshot votes and engaged in community debate. The following process flow is my attempt at capturing what it seems like the BarnBridge community is settling upon as reasonable for protocol decision-making:
Have an idea? Submit it to our Integration Team’s intake form so that they can provide you with feedback and plot a way forward.
Confirmed that it is feasible? Post it in the BarnBridge forum with the intention to a) gather community feedback, and b) initiate a five day long Snapshot vote once you have addressed that feedback.
Received reasonable support? If your Snapshot vote gets significant turnout and near unanimous approval, we’ll look to bundle it into the next on-chain DAO vote. These DAO votes will occur regularly throughout these early stages of BarnBridge as the Core Team pushes new products, and can thus serve as a gathering mechanism for all sizes of Snapshot proposals for gas efficiency. In practice, “significant” and “unanimous” have meant getting > 50 voters, > 70,000 $BOND, and > 90% in favor.
Your Snapshot failed? If your Snapshot fails due to a lackluster turnout, or a significant “No” vote, then you’re able to return to the drawing board and address community concerns with a future vote.
Is this system perfect? Not at all: it assumes good faith on behalf of the Core Team and presents a moving target as the qualifications for what count as “reasonable support” change with BOND circulating supply and user base growth. But what matters is that it reflects the current state of BarnBridge, a tight community of engaged individuals that were drawn to the project for its transparency, on-chain organization, and blank slate for pioneering a new DeFi primitive. Today, anyone who has a meaningful opinion on protocol development can come to the Discord or Forum and have a reasonable expectation of good faith discussion and the attention of the core team - it would be a shame to overlook that strength. My hope is that the lessons learned in these early days will come to inform a future state for BarnBridge governance that revolves around political structures like those found in the Synthetix and yEarn communities.
- Max
Governance
We’ve had three Snapshot votes go up for vote in the month since SMART Yield launched, with two having passed and another slated to pass successfully as well on the 20th.
Establish an Integrations Team [Passed]: Now that BarnBridge products are live, we can look to establish partnerships with other crypto projects and DeFi protocols. Balancing core protocol development with integration work is a decidedly tough task, however, and emphasis on one over the other can quickly lead to periods of stagnation. With this vote, funds will be set aside for members of the community Ser Speculor and Ser Wir to join Pavlo on a specialized team responsible for coordinating implementations going forward. They’ve already been hard at work on a number of fronts, including outreach, documentation, and data analysis.
Establish a China Community Management Squad [Passed]: Leo from our Discord channel came to Tyler and myself earlier in the year asking about our plans for supporting the Chinese BarnBridge community. After discussions with him, it became clear that his background was well-suited for the role, with previous experience in both crypto and and traditional tech. A salary of 60 BOND a month will be set aside for his efforts, to be reassessed quarterly, and Ser Wir and myself look forward to hitting the ground running with him this coming week on hammering out a strategy.
Seed the BOND/BNT Pool on Bancor [Ongoing]: Last month, the Bancor Network community voted to set aside up to one million BNT tokens for a BOND pool on their single-sided AMM exchange. For users to be eligible for liquidity mining rewards in this pool, the BarnBridge community first needs to demonstrate its interest in maintaining this pool. This vote looks to take BOND from the DAO treasury and provide it to the pool in order to a) engage in good faith discussions regarding liquidity mining incentives, b) earn BNT rewards should such a program be implemented, and c) expand BOND liquidity beyond just Uniswap. Feedback from the community thus far has been in unanimous support, but various calls for bumping the proposed BOND sum from 25,000 to 50,000 will also be taken into account. Successful passage of this vote would result in the formation of a multisig dedicated to such metaprotocol participation and would be seeded with the according sum of BOND.
In addition to these three Snapshot proposals, there are also conversations ongoing regarding what the appropriate strategy for SMART Yield pool incentivization should be going forward. I also like Johnny Fiat’s thread on Treasury Management, as I think it represents the natural progression of our current efforts on the Bancor front.
And for a fun update, keep your eyes peeled for barnbridge.shop as it goes live late next week. While neither the Core Team nor the DAO can participate in a for-profit BarnBridge merchandise shop, we’re excited to see what comes of this community-member-run effort and have high hopes for how ~fire~ the goods will be.
Key Metrics
The past two weeks saw us cross $45M in SMART Yield TVL and get ever closer to the 1,000 DAO staker threshold. I’m definitely excited to see what these numbers will look like as we bring on incentivized AAVE originators later this month. Also, as I detailed in the Discord, I don’t think we’ve gone through a full cycle of Pavlo’s Loop just yet.
As you’ll recall, Pavlo’s Loop refers to the process by which SMART Yield unlocks a TVL flywheel. More juniors increase liquidity for more seniors, which then lock TVL and raise the floor for how many juniors can be supported with material yields, and so on. But this leaves out a key external factor: the underlying rate at the time of minting the senior. And so, while one could mint a senior cUSDC tranche today with a principle between $6-8M without slippage, the savvy whale will rate for a spike in market rates before locking it in. We saw this earlier in the month when cUSDC rates spiked above 15%, but liquidity was smaller at that time - now we’re essentially in a game of chicken, where watchful users expecting higher rates in the future need to weigh that against the risk of another stepping in earlier and taking the senior liquidity off of the table.
On SMART Yield:
On Liquidity and the DAO:
Disclaimer: BarnBurner is not an official BarnBridge publication and is not meant to reflect the shared views of its core team or BOND token holders. BarnBurner is an educational weekly newsletter meant to share updates on technical and governance-related happenings that occur within the BarnBridge ecosystem. The content herein is not financial advice and readers should not base any investment decisions off of it.
Thanks to Zach Owens for his branding work, and 0xBoxer for his dashboards 🤝