Editorial
Earlier this week, I speculated a bit on what the end game for DAOs could look like after listening to Balaji Srinivasan’s discussion with Tim Ferris and speaking with Ian Lee at Syndicate DAO.
Given the lack of engagement, these types of comments are probably premature at best. But we’re starting to see the Overton Window surrounding DAOs move more into mainstream discourse.
And I would hazard a guess that concepts like charter cities and cloud countries will only gain steam going forward as remote work, digital assets, and decaying nation state institutions leave groups to figure out new ways of organizing community resources and coordinating social structures.
So what does this have to do with BarnBridge? It comes back to the concept of the governance token. Introduced as a means to coordinate open source development for digital asset applications, governance tokens are most often presented in terms of the protocol to which they’re connected. What smart contracts the DAO should deploy, how the DAO should allocate fee revenues earned by its applications, and so on. But what gets missed more often than not is that the actual act of governance is solidifying a community that exists beyond the protocol. Much like a medieval guild, the community we are building today brings with it not just what its members can offer the protocol, but what its members can offer each other.
As the BarnBridge treasury grows and the governance architecture we build around the DAO matures, there’s no reason to think that BOND holders wouldn’t be able to begin expanding their coordination beyond the protocol itself. A little pie in the sky? Sure. But what’s undeniable is that we are today but one settlement in the fastest growing economic region - Ethereum - and that we cannot discount that our community will one day want to move beyond just Discord channels and online forums.
But for now, back to the present!
- Max
Updates
May is proving to be quite the eventful month for both BarnBridge the protocol and BarnBridge the community. As I’ve had a number of long form conversations with community members over recent developments, I thought it would be best to share where our various teams are at and what questions I’m focused on solving.
C.R.E.A.M. Finance and AAVE v2 Integrations: Originators for both lending markets will be going live over the coming 2.5 weeks, with C.R.E.A.M. to come first. Check out the “Governance” section below for greater detail on how the associated DAO votes will be constructed. As a side note, the Polygon deployment of our AAVE integration is slated for the first half of June.
Public Testnet: Ever wonder how our rocket scientists at DMOB battle test BarnBridge code before deploying? You’ll soon be able to interface with the testnet version of SMART Yield, which will help other teams looking to integrate with BarnBridge better understand our smart contracts.
SMART Exposure: Audits are currently underway for BarnBridge’s second application, as is the building out of its frontend. Barring any surprise results from the audit, we’re optimistic that we’ll be able to roll out the application by month’s end. It’s been a blast working with the Atpar team on it, and I strongly recommend you give them a follow if you don’t already.
China Community Management: Leo’s been hard at work since starting two weeks ago to build out official BarnBridge communication channels within the Chinese crypto media ecosystem. BarnBridge can now be found on Gyro Finance, Mars Finance, Chain News, Cloud Financial Network, Weibo, WeChat, and Zhihu. With a media matrix in place, we can now move forward with creating native content and building out a grassroots BarnBridge community in the region.
Integrations Team: Sers Wir and Speculor, along with our own Pavlo, have spent the past month working on a new set of GitBook documentation and GitHub markdowns for BarnBridge. At the same time, we are having regular conversations with teams across DeFi who are interested in learning more about what functionality BarnBridge can offer them.
In addition to these updates, there are a number of ideas that are percolating within the community and the core team that I think are worth highlighting. Note, these ideas are just that - none of these should be considered roadmap items just yet. However, if you have any feedback, please feel free to raise the conversation.
KPI Options: Community member LeMayMay shared their vision for UMA Protocol-like options tokens for BarnBridge recently in the forum. I personally love the idea; it ensures that liquidity mining rewards are only paid out if they achieve what they’re allocated for in the first place. Moreover, I’d say these options could be more gamified than UMA has done - quadratic pay out scales, ironic airdrops to our #haters, and clever snapshot timing all could facilitate positive protocol behavior. It’s something we’re actively discussing internally and I’d like to see it be the next evolution of how we all think about incentivizing protocol behavior.
Standardized Lot Sizes for Senior Tranches: One of the main pieces of feedback we receive regarding senior tranche design is that prospective users would prefer greater secondary liquidity. That’s tough with an NFT design. I’m currently researching into how we could reduce the number of variables associated with a given senior from three - principal size, fixed return, and maturity date - to just the latter two. The semi-fungibility offered by standardized lot / principal sizes would allow market makers and lending platforms to better assess the risk associated with keeping senior tranches on their balance sheets (i.e., there’s a big difference between agreeing to take a $20M senior versus a $100K senior today).
Secondary Market Incentives for Junior Tranches: Currently, incentives for juniors are being allocated to users who are simply depositing into the tranche. This has successfully attracted nearly ~$90M in deposits, but for the amount of BOND being directed at these efforts, the return on capital isn’t something to write home about - some 60,000 BOND ($2.7M at the time of writing) has been spent to secure $550k in fee revenues. This could be better optimized by rewarding junior tranche holders who provide secondary market liquidity instead, as we have received feedback from prospective depositors that they would want to be able to exit their positions without incurring an early redemption fee. We’re still thinking internally about how this could be done best: arguments can all be made in favor of Uniswap v3, Sushiswap, Bancor, Balancer, or Curve, to name a few DEX platforms through which such pools could be incentivized. Or, perhaps it’s just a matter of setting secondary liquidity as a KPI option goal and seeing where the market goes to satisfy that aggregate target.
We’re constantly brainstorming how to more efficiently bootstrap the BarnBridge protocol and have been repeatedly impressed by the community’s willingness to air their thoughts and work with us. I’ll continue to keep everyone abreast on these ideas as they mature.
Governance
While there are no new governance Snapshot votes to report back on at the moment, there are two items worth highlighting. One is that we’re close to finalizing a Snapshot vote for implementing basic liquidity mining rewards for junior tranches on AAVE and C.R.E.A.M. After two forum discussions on the topic, you can expect these to run for no more than 10 weeks and that they’ll come in under the number laid out in the most recent forum post. These will allow us to accrue TVL in a proven manner while we plot out more sophisticated incentivization programs.
Item number two is more operational, and that is how the actual DAO votes associated with the past two months’ conversations will be structured. We’ll need two due to the 10-action limit per vote. So, DAO vote #2 will be held once C.R.E.A.M. originators are deployed and will contain the necessary on-chain actions for provisioning those reward pools, as well as the BOND required for a) Bancor pool seeding, b) Integration Team pay, and c) China Community Management Team pay. DAO vote #3 will then include the necessary on-chain actions for provisioning AAVE v2 reward pools.
Key Metrics
We finally did it folks - 1,000 stakers in the DAO 🥳
Also, we’re nearing $100M in TVL. Yes, for those of you keeping track at home, you could deposit some $30-40M in the senior tranche with minimal slippage at the moment. Let’s see how that develops as cUSDC lending rates get closer to double digits in the coming weeks.
On SMART Yield
On the DAO and Uniswap Liquidity
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 their dashboards 🤝