Bao Q2 Update
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Now that July has come to a close, it’s time to look back at the progress made in Q2 of 2022 and what we expect to see in the coming quarter.
Bao Baskets / bSTBL launch
Bao Baskets are a flexible synthetic building block that “wrap” tokens, allowing the underlying assets to be used in various ways while the “wrapper” or basket token stays where it is.
In June, Bao released the first version of Bao Baskets on Ethereum main net, with bSTBL as the first basket — The Bao Stable Basket provides a way to earn yield and diversify counterparty risk on stable assets.
Shortly afterward, a governance vote passed to reduce the fees for bSTBL to 0 and add it as collateral to Bao Markets so that it could fulfill its primary use case as collateral for baoUSD.
The community has designed bSTBL so that it could be effective collateral regardless of the depth of liquidity available for the token. Instead, the underlying assets have deep liquidity and chainlink price feeds so that liquidators can easily calculate the value of bSTBL and liquidate at-risk positions.
bSTBL as collateral and fee removal
The most recent product change has seen bSTBL added as collateral to baoUSD and all fees associated with bSTBL reduced to ZERO!
Bao wants bSTBL to act as low-risk yield-bearing collateral for baoUSD, but fees add friction to its use as collateral. The community decided it was best to eliminate them and allow baoUSD to grow unimpeded.
We see it as a win-win because users will enjoy collecting all the yield earned on their positions, while baoUSD generates revenue for Bao holders.
Governance Galaxy
The Maintainer Galaxies 2022 Agenda saw the community mandated to create a new galaxy to help manage the governance process. That process is now complete with Chickn, Baowolf, and Fabiaz as its guardians and Jester and Nox as contributors.
You can view the full proposal to see other responsibilities the new galaxy will take on.
Mission vision and values
As the DAO continues to decentralize, Varyints initiated a concept to establish our mission, vision, and values. By making them set and clear, we will have a united community pushing towards the same goal, and the project will become easier to understand and explain.
Polly finance updates
Polly Finance continues to prove its worth in the Bao ecosystem by providing valuable feedback on deploying soft synthetics for Bao and in the future. We also strengthened our relationship with Chainlink, whose price feed integrations are integral to making them safe to integrate with our products of other Defi projects.
The community proposed several changes to nests on Polly Finance in line with their learnings, which the Galaxies promptly implemented. nDEFI now takes a new streamlined form. New nINFRA and nPoly nests focus on Polygon infrastructure and ecosystem tokens, respectively. All nests now exclusively include tokens with chainlink price feeds and good liquidity available on the polygon network to improve their composability with the rest of Defi.
Treasury Analytics
Varyints, an occasional contributor for the DAO, has kindly created a Dune Analytics dashboard for the Bao treasury. During the latest downturn, the community thought it was essential to be more transparent with our treasury, to reassure holders that it has been managed adequately.
You can view Varyints work here: https://dune.com/varyints/bao-finance-treasury
Team Changes
The Bao Guardians have been continuing to evolve over the last quarter. Nox and Jester have continued to increase their responsibilities at Bao after being added as contributors in Q1. Both recently were voted in by the community as guardians for the Smart Contract and Community galaxies.
FreshPizza, who has led the development of Bao Baskets and Bao Markets, will also be decreasing his involvement with Bao to concentrate on his new project Adeptus Digitales — a liquidity and exchange aggregation protocol on StarkNet. Pizza started his solidity development journey with Bao in the QA Galaxy, having had no prior professional experience. His talents evolved quickly, and it wasn’t long before there was a live governance vote to promote him to a guardian of the smart contract galaxy, where he led several development activities.
While we will be sad to be spending less time with Pizza, we are also excited about the possibilities of working together with Adeptus Digitales and FreshPizza in the future, should Bao decide to deploy on the same network. It’s also rewarding to see a trail has already been blazed for others to follow with Bao, going from a community member to contributor, then guardian, and eventually having the skillset to start your own project.
Next Steps for baoUSD
Working on both baoUSD and bSTBL has meant many hours of research into other stablecoins on the market. We found a wide range of offerings that all made compromises in one way or another, balancing between the 3 points of the stablecoin trilemma: decentralization, capital efficiency, and peg stability. Optimizing one aspect usually leads to the degradation of another and has long been a thorn in the side of stablecoin designers.
Guardians have been thinking about exactly how baoUSD could optimize each aspect and turn it into a product with a real market fit. This process throws up all sorts of interesting questions that will need to be agreed upon via governance before forging our path forwards. Making baoUSD immutable and trying to improve on capital efficiency and peg stability compared to other immutable stables has been the focus of conversation so far, but we would love to have some more discussions with the community about what could work before creating a proposal with a route forward for the communities approval.
If you are interested in participating in discussions, we would love to hear your thoughts on our discord server.
veBAO, token migration, and unlocking.
The passing of BIP-14 with a 99.9% majority was a positive result for the BAO community, which had spent many months evaluating models for unlocking tokens. The community chose to keep their tokens locked until a sustainable plan for unlocking and staking could be found in BIP-6. Smart Contract, Governance, and Community Galaxies all worked together to plan a veBAO staking model, similar to curve finance, and how it should be optimally applied to Bao’s products.
Bao is hiring
With FreshPizza reducing his time spent with Bao, we will be on the lookout for an additional smart contract developer. If you are interested in applying, you can use the #apply-to-bao channel on our discord server.
We also hope to expand the Front End Galaxy, so welcome applications with web3 expertise.
Our community prides itself in supporting each other’s development. If you have no professional experience, you should be able to get the skills you need by asking questions on our discord server. Guardians are always happy to advise, share learning resources, and set tasks suited to your ability level.
