Bao Finance Q3 2023 Update
Rebranding for the Next Phase
With the protocol and community evolving, we felt it was time to refresh Bao Finance’s brand as well.
We collaborated with a top branding agency to develop an updated visual identity and style that better reflects Bao today.
This included modern new logos, fonts, and color schemes:
We also fully revamped our web presence:
- https://app.baofinance.io/ — Our new application UI
- https://www.baofinance.io/ — The refreshed Bao Finance website
Let us know what you think of the new brand! It was crafted to capture Bao’s maturation as a protocol reaching new levels of decentralization.
Decentralizing the Core
A key focus this past quarter has been replacing centralized dependencies in our core protocol layers with decentralized alternatives.
For example, in our Vaults and Baskets, we migrated away from assets like USDC to decentralized options like LUSD. LUSD proved resilient during periods of instability this year thanks to its decentralized nature and pristine collateral. We also pruned liquidity pools containing centralized assets, keeping only the most robust pools relying solely on decentralized counterparts. In our Ballast, DAI was replaced with LUSD.
For bSTBL’s foundations, USDC was swapped for LUSD as well to reduce reliance on centralized stablecoins.
Finally, our decentralized ETH liquid staking derivative basket bETH was approved as collateral for minting baoUSD.
These changes significantly reduce centralization risks across our core DeFi building blocks. As demonstrated this year, centralized systems can fail in periods of instability. Bao’s focus is fortifying our base layers to withstand market volatility.
Cultivating On-Chain Governance
Another key milestone was sprouting our first shoots of on-chain governance via a pilot program on Polygon.
Users will soon be able to propose and vote on protocol changes directly on the blockchain without intermediaries. Everything from submitting proposals to voting occurs transparently on-chain.
This paves the way to further decentralize Bao’s development by aligning governance with regular users rather than centralized entities.
On-chain governance also diversifies participation in the evolution of Bao Finance. With just a wallet, anyone can engage in the proposal process.
As we iteratively expand on-chain governance based on community feedback, Bao Finance aims to limit centralized points of control and align our growth with users — two crucial ingredients for a sustainable DAO.
Integrating Community-Run Liquidations
Over the past quarter, we also integrated B.Protocol to enable decentralized, community-run liquidations for the Bao ecosystem.
B.Protocol’s Backstop pools allow members to provide liquidity for liquidations across integrated platforms like Liquity, Hundred Finance, Chicken Bonds, Vesta, and now Bao. Liquidity providers earn a yield on their deposits while awaiting liquidation events.
When liquidations are triggered, the Backstop pools supply the necessary liquidity. Profits generated from liquidations are channeled back into the pools rather than accruing to bots.
For Bao Finance, this delivers three key benefits:
1. Improved stability — With liquidity provision decentralized across community members, Bao’s liquidation infrastructure is far more robust. This fortifies the stability of our synth pegs.
2. Democratized profits — MEV and bot profits from liquidations are redistributed to ordinary users providing liquidity through B.Protocol.
3. Increased automation — The overall liquidation process is also far more automated and decentralized compared to relying on external arbitragers.
Taken together, B.Protocol integration marks a major step forward in decentralizing a core DeFi protocol function while delivering better stability and efficiency.
Strengthening Community Participation
Besides improving the protocol fundamentals, we also focused on nurturing the community that strengthens Bao.
We launched a series of incentivized educational sprints on Zealy, structured as fun quests that reward learning. Topics spanned Bao Finance basics to deep dives on features like veBAO governance.
Over 150 members participated, completing quests and engaging with fellow community members along the way.
Strengthening communal bonds is just as crucial as fortifying protocol architecture. We were delighted to see such enthusiastic involvement in growing together.
The Road Ahead in Q4 2023
As we look ahead to Q4 2023, here are some of the key items on our roadmap:
- Fine tuning tokenomics and emissions models to nurture growth
- Integrating bSTBL beyond Bao Finance to spread decentralized stability
- Exploring omni-chain synthetics
- Planning our forward roadmap
Fine Tuning Tokenomics
We are exploring potential adjustments to Bao Finance’s tokenomics and emissions distributions.
Goals include reducing sell pressure from rewards, better incentivizing desired community behaviors, managing inflationary pressures, and optimizing growth.
There are no set plans yet. We are open to community proposals on enhancements to our tokenomic mechanics.
Leadership Transition
As part of our annual governance process, we have to decide as a DAO our roadmap for 2024. A transition is planned with our current maintainer moving from an executive to an advisory role. Chickn has been nominated by the Council of Guardians to take on expanded leadership duties given his immense expertise. We are excited about his vision in guiding Bao’s next phase.
Your Ideas?
Bao Finance is an ever-evolving community endeavor. We welcome your thoughts on how to enhance the protocol and ecosystem.
Please share any feedback or suggestions in the discord or the forums! Together we can grow Bao Finance into an increasingly decentralized and resilient cornerstone of DeFi.
