The time to sunset the Bao Baskets has come
Since Bao Finance DAO’s establishment, our mission has been to democratize financial data, offering an alternative to traditional financial systems and their inherent shortcomings. Our journey has been marked by innovations such as the introduction of baoUSD and baoETH synthetics, alongside various mechanisms integral to these products.
We tried to bring users to BAO, but it is now time to bring BAO to DeFi users.
The Journey from Bao Baskets to single yield-bearing collaterals
Our inaugural offering, Bao Baskets, initially conceived as ‘soft synthetics’ within the Polly Finance ecosystem, represented our first foray into yield-bearing collateral for synthetic tokens. While promising in terms of flexibility and potential protocol revenues, they provided additional contract and counterpart risk amongst other additional barriers to entry.
Recognizing the complexities these products introduced, and in response to community feedback, we made a strategic decision to sunset Bao Baskets. This pivot aligns with our commitment to simplicity and security, transitioning towards established ETH-backed assets such as LSTs, LRTs, and ETH-backed Stablecoins like LUSD.
Core Philosophy: Integration with Premier DeFi Assets
At the heart of Bao Finance’s ethos is reliability, so who only back our synthetics with the highest caliber assets in the industry. We are dedicated to ensuring our vaults backing synthetic tokens are fortified with secure, liquid, and stable assets, making Bao Synthetics some of the most dependable on the market.
Our vision extends beyond creating synthetic tokens; we aim to transform the way we interact with and leverage information by tokenizing data, making it accessible and actionable for everyone. By providing attractive and consumable data streams through our synthetics, we shift the power of information from institutional gatekeepers to individual users.
Key Strategic Developments for 2024
Sunsetting Bao Baskets (BIP-42)
The decision to phase out Bao Baskets is an important milestone in our 2024 agenda. This move, driven by a desire to streamline our ecosystem, reflects our commitment to user-centric product design. We recognize that while Bao Baskets offered controlled flexibility, they inadvertently increased entry barriers and operational complexity. Transitioning to simpler, more direct collateral options like rETH, ETH, or LUSD, aligns with our ethos of simplicity and security. Each potential collateral will undergo a rigorous risk assessment, ensuring alignment with BAO’s core values and community consensus.
Enhancing Collateral Risk Evaluation
We are in the process of developing a comprehensive risk evaluation framework for potential collateral tokens. This template, which will be publicly available, focuses on evaluating tokens based on objective criteria, including alignment with BAO’s foundational principles. Initial evaluations will include LUSD from Liquity and stETH from Lido, setting a precedent for selecting robust collateral alternatives for our vaults.
Integrating The Best Collaterals
As we phase out Bao Baskets, we focus on identifying and integrating the most secure and effective collateral options. These alternatives, subject to community voting and rigorous evaluation, will not only replace Bao Baskets but also enhance the overall strength and appeal of our synthetic products.
Getting back to our fundamentals
The strategic redirection of bao baskets in 2024 is encapsulated in our objective to “Simplify and Strengthen Core Protocol Fundamentals.”
With these milestones in mind, Bao synthetics will find more resilience and attractiveness in the DeFi ecosystem while bringing them closer to other DeFi projects by integrating key collaterals widely adopted and secure.
