Unlocking Tokens, BAOv2 and veBAO Launch: What You Need to Know

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Baommunity

5 min readNov 25, 2022

The time has come to unlock Bao tokens rewards from the distribution phase of the project and migrate to Baov2! This article will take you through the two options for unlocking and anything else you need to know to prepare for our project’s new era, focusing on liquidity and revenue.

The move to Baov2 will reduce the token supply by a ratio of 1000:1, so expect to receive 1000x fewer tokens when you migrate!

Locked Tokens

Locked token balances on main-net and Gnosis (xDai) have combined, and you will choose what to do with them on main-net. Please consider the two options carefully because once you have selected one, you cannot alter your decision.

Option 1: Stake in veBAO

If you choose to stake your locked tokens, you receive veBAO in proportion to the length of time you decide to stake, up to 4 years. Locked Bao holders can stake for 3+ years. In contrast, liquid Bao can stake from 0–4 years.

veBAO is an account-based point system used for governance power and rewards distribution. The benefit of choosing this option is that you can use your entire locked Bao balance stake for veBAO from day 1. This puts a lot of power and early revenue in the hands of locked Bao holders that choose the staking option. veBAO gives users a share of:

Revenue: Every time someone mints baoUSD, they open a loan on which they must pay interest. 100% of this interest is distributed to veBAO holders as baoUSD. Additionally, the annual roadmap outlines plans for baoETH, which will accrue revenue similarly to veBAO holders as baoETH.
Voting power: veBAO holders vote on the future direction of the project as well as where to direct liquidity incentives. Power over liquidity opens the door for bribing from other entities that want veBAO holders to direct liquidity to their pools. Projects may choose to pay veBAO holders to vote for baoUSD and baoETH liquidity as a cost-effective way to deepen liquidity for their tokens.
Liquidity mining boosts: Liquidity incentives have a habit of attracting mercenary liquidity — depositing for a short time, selling rewards, and moving on when a newer, shinier option appears. veBAO holders will get a boost to their liquidity incentives, up to 2.5x, depending on their liquidity deposited in gauges and veBAO balance. Boosts ensure that long-term participants in the project get rewarded more over time. They significantly increase the incentive to stake rewards instead of selling them by expanding the governance power, revenue, and boosts of those who stake them.

As time passes and staked tokens get closer to their unlock time, users’ veBAO balance decreases. Once it gets to 0 at the unlock date, stakers will have access to 100% of their staked tokens to do anything they wish. Alternatively, to top up your veBAO balance, you can re-stake your BAO at any time, increasing the lock time and your veBAO balance simultaneously.

Option 2: Gain access to liquid Bao tokens over three years

Those who do not want to participate in veBAO will have the option to gain access to their locked balance over three years. After choosing this option, you can unlock early for a reduced portion of your locked balance. The community was conscientious of many tokens potentially flooding the market. Hence, the penalty for early unlocking is quite severe to prevent this while still providing the option to end participation early if desired.

unlock curve (purple) and slash penalty (orange)

Above is a chart showing the curve for unlocking tokens over time, starting slowly and increasing in speed as the time approaches three years from the time you manually start the distribution.

Also shown as the orange line above the distribution curve is the early unlock slashing fee. The slash fee only applies to tokens you want to unlock early, not already unlocked tokens.

For example, if you choose to end early, two years into the distribution, you would have already unlocked around 45% of the locked tokens. 5% of the remaining 55% would be available earlier than scheduled. Overall, you would receive approximately 48% of the starting locked balance.

If you choose to start a liquid distribution and then end it early in the first few weeks, you will receive very few BAOv2 tokens

Once you have decided which path you would like to take, you can follow our guides to help you through the process.

Migrating Liquid Bao tokens

If you have locked Bao tokens, starting their staking or starting your liquid distribution before dealing with liquid tokens is highly recommended to avoid problems.

tBAO, Baocx, and Bao tokens on Gnosis (xDai)

All Bao tokens (tBAO, BAOcx, and BAO) on Gnosis must be bridged back to Ethereum and migrated to v2. tBAO should be unstaked to get BAOcx. BAOcx needs to be converted to BAO using the 1:1 swapper contract. Then BAO tokens can be bridged to Ethereum, ready to be converted to v2 tokens.

Please do not try to bridge BAOcx or tBAO tokens to Ethereum directly. You will not be able to swap them for BAOv2 tokens.

You can follow the guide here

Bao tokens on Ethereum

The process for migrating tokens on Ethereum is simple — navigate to the distribution page on our website and swap your v1 tokens for v2 tokens on the liquid BAO tab.

You can follow the guide here

BAOv2 Token

Token contract address: 0xce391315b414d4c7555956120461d21808a69f3a

Warnings and Risks
Before liquidity mining rewards start, the token price is expected to be volatile as liquidity will be minimal. Please be aware of your actions’ implications if you add liquidity and buy or sell v2 tokens. It is straightforward to manipulate the price while liquidity is thin.