An Introduction To Bloomworks — Root’s Internal DeFi Lab That Is Building Out A Comprehensive Operating System For DeFi

This article is Part 2 of Root’s Sprout Academy, explaining every aspect of the Root ecosystem. If you missed Part 1, you can read it here.

TL;DR

• Bloomworks is Root’s DeFi lab, which incubates Stem protocols that target key high EV DeFi market inefficiencies
• Each Stem protocol creates a new revenue stream for the Root ecosystem
• Additionally, Bloomworks’ central team ensures a standardized and streamlined user experience across all Stem protocols
• Together, Stem protocols will grow into a comprehensive operating system for DeFi called Sprout, offering all DeFi products and services under one roof

From Roots To Stems: A Revolutionary New Business Model For Growing The First Comprehensive Operating System For DeFi

As discussed in Part 1 of Sprout Academy, Root kicks off its revenue generation process by harnessing its Orchard Omnichain Governance Aggregator. Orchard capitalizes on the incentives offered by next-generation DEXs to create a self-perpetuating revenue flywheel that is constantly feeding more income into the Root ecosystem. Whilst the concept of a self-perpetuating revenue flywheel is exciting in its own right, Orchard alone would not be sufficient to deliver on the vision that Root has for becoming the “Robinhood of DeFi,” totally transforming the DeFi space. This is where Bloomworks comes in.

A portion of the income generated by Orchard will be funneled into Bloomworks, which is Root’s very own DeFi Lab. The role of Bloomworks will be to incubate Stem protocols that will eventually grow into a complete one-stop shop for DeFi called Sprout. Sprout will house all DeFi products and services under one roof, with a unified and streamlined user experience. There are 3 key components to Bloomworks that form the soil from which this operating system will grow, namely:

1. Capital: The Orchard Omnichain Governance Aggregator will constantly drip-feed portions of its revenue into Bloomworks. This will provide it with a constant source of capital to fund its Stem protocol investments and incubation process. So, it will create a DeFi lab funded by DeFi activity that funds the creation of a new DeFi ecosystem!
2. Team: The Bloomworks team will be comprised entirely of core Root contributors. This will allow them to design a standardized user experience across all Stem protocols, laying the groundwork to integrate them into a single unified operating system as the ecosystem grows.
3. Investment Thesis: Bloomworks has a clearly defined investment thesis designed to foster an ecosystem that both naturally evolves into an integrated operating system and drives outsized income back into the Root ecosystem. Bloomworks operates on a core premise that as barriers to entry arise, DeFi user onboarding and adoption decreases. As barriers to entry are reduced, DeFi usage, onboarding, and adoption increases. Therefore, it focuses on incubating Stem protocols that meet 2 key criteria:

a) The Stem remedies a major market inefficiency, such as inaccessibility to DeFi. The creation and release of the particular Stem helps Root to establish itself as an all-in-one consolidated DeFi Hub

AND

b) The Stem offers a uniquely high-EV opportunity for native and existing DeFi users

Together, these principles ensure that all Stem protocols naturally form a piece in the puzzle of Root’s long-term vision for creating a unified operating system for DeFi, whilst still generating short-term income in the meantime.

So, Bloomworks has a self-perpetuating source of capital, a team of DeFi experts to deploy it, and a clearly defined investment thesis geared towards both a long-term vision and short-term revenue generation. This provides the soil from which it will grow a comprehensive operating system for DeFi that is profitable in the short and long term. So, now let’s look a bit more at how it will achieve this by examining how exactly Stem protocols work.

How Stems Bloom Into Revenue Centres For The Root Ecosystem

Each Stem protocol will provide a secure source of revenue back into the Root ecosystem. Here is a breakdown of the ways in which Stem protocols provide economic benefit to Root stakeholders:

• Direct Revenue Share: Root-developed projects distribute a portion of revenue to Root’s Treasury
• Whitelisting & Airdrops: If the incubated project features a new token, veROOT and Genesis rootNFT holders are automatically whitelisted for the initial raises and rootNFT holders will receive an airdrop of the token
• Governance Power: Root maintains sizeable governance authority over Root-developed Stems
• Increasing Root’s User Base: As barriers to entry are reduced, mass adoption is accelerated, increasing Root’s potential user base

This means that from day 1, Stem protocols are creating multiple revenue streams for the Root ecosystem. This means the Root & Stem structure offers a potentially infinite source of income. Whereas most DeFi token holders are betting on the revenue potential of one single DeFi application, Root capitalizes on the revenue potential of every conceivable market inefficiency in the DeFi space. This is the kind of upside potential that no other DeFi project can offer.

What’s more, this is not just a theoretical model. Straight from launch, Bloomworks has already announced the first two Stem protocols that it is incubating … and they are pretty exciting. So, without further ado, let’s introduce the first Stems that are growing amongst the Bloomworks soil…

A Sprouting DeFi Ecosystem: Introducing The First Stems To Be Incubated By Bloomworks

Stem protocols are already starting to sprout from inside Bloomworks DeFi lab and they both deliver on Root’s promise of targeting high-EV revenue opportunities that provide solutions to major DeFi market inefficiencies. So, let’s dive into the inner workings of Torus and Cordyceps, the very first Stem protocols to start driving value into the Root ecosystem:

1. Torus: Torus is revolutionizing liquidity distribution and yield across multiple prominent automated market makers (AMMs) including Balancer, Curve, and many more. By driving liquidity wars, mitigating centralization, and embracing the LSDfi narrative, Torus empowers users to actively shape the future of DeFi. The platform’s unique ability to offer bribes and unlock community-driven decision-making processes sets it apart from its competitors. As Torus continues to redefine liquidity wars, integrate liquid staking tokens, and optimize yield generation, it remains a pioneering force in the DeFi landscape. With liquidity distribution, yield generation, and decentralization presenting three of the most important challenges the DeFi market is facing, Torus answers to Bloomworks criteria of offering a solution to key market inefficiencies with high EV potential.
2. Cordyceps: Cordyceps is an Omnichain insurance market for pegged assets, and a speculation market for related events. At its core, Cordyceps is about risk management in the crypto space. It provides insurance for pegged assets like stablecoins and LSTs, allowing users to hedge their positions and mitigate potential losses. This platform is not just for traditional insurance products, but also opens up the market for speculative insurance. This means you can bet on events that may cause assets to depeg, adding another layer of potential profitability to your crypto portfolio. As an Omnichain platform, it’s not limited to just one blockchain. This expands its potential user base and increases the types of assets that can be insured. Cordyceps therefore again shows a great example of how Bloomworks investment thesis plays out in reality. By targeting the insurance sector with a unique model, it focuses on a high-EV revenue market that is not currently well-addressed by the DeFi sector. It also offers a high potential for outsized revenue generation.

One thing that is important to note about Torus and Cordyceps is just how diverse the two product offerings are. They target entirely different market inefficiencies in completely separate sectors in a way that only the unique Root & Stem model can deliver. Meanwhile they are both being guided by Bloomworks to develop their protocols with standardized, streamlined user experiences that can grow towards integration in a single operating system. This shows the power of the Root and Stem approach and gives a sneak peek of what can be expected from the Root ecosystem as it develops.

Picking The Flowers… How You Can Become A Stakeholder In The Root Ecosystem

The Root dApp will be going live on Wednesday 26th July at 2pm EST, which means you can soon become one of the first people to capitalize on the revenue opportunities being created by Bloomworks. All you need to do is become a veROOT token holder. To do this, follow a simple 3 stage process:

1. Buy ROOT tokens: You will be able to do this by heading over to the dApp and purchasing a Root Bond. Alternatively, you will be able to buy ROOT tokens on the open market on either the Balancer 80/20 ROOT/ETH pool on Ethereum, or the Uniswap v3 pool.
2. Stake Your ROOT Tokens To Receive veROOT: The next step will be to go to the Staking section on the Root dApp and stake your ROOT tokens, in return for which you will receive veROOT tokens.
3. Watch The Income Start Rolling In: Root protocol does everything for you from there! You can watch your passive income start accumulating in the form of esROOT, the escrowed version of Root, which is redeemable 1:1 for ROOT tokens. The following graph gives an estimate of the APR for veROOT holders:

If you act fast, you will also take part in the veHyperStake event, which takes place for the first 3 days after launch. This allows you to double your Year 1 APR. So, any user who vests their ROOT into veROOT in the first 3 days after launch will receive doubled APR for the whole year. This opportunity will run from 2pm EST on Wednesday 26th July until 2pm EST on Saturday 29th July.

Seeing The Woods From The Trees … Building Towards The Sprout Operating System

This article has shown how Bloomworks has created a completely unique incubation model to provide a credible route towards building the first all-encompassing operating system for DeFi. The operating system that will grow out of Bloomworks will be called Sprout, and in Part 3 of Sprout Academy, we’ll be offering a deep dive into Sprout to explain what it will look like and how it has potential to become the central infrastructure supporting the entire DeFi ecosystem. Until then, you can discover more by browsing our docs and joining the Root Discord community.