Betoken May Update — Compound V2, Fulcrum, Incentive improvements
Hey everyone, long time no see! Our team has been hard at work on making Betoken’s Mainnet launch in June a reality, and we’d like to update you on the many things we have achieved this month.
Compound V2 Integration — Better leverage
Compound Finance is one of the biggest decentralized lending protocols in the world, with more than $33 million available for borrow. We have previously integrated Betoken with Compound to provide shorting & leveraged longing features for our managers once Betoken launches on Mainnet, but Compound has recently released a protocol upgrade, with many breaking changes. Therefore, we’ve had to incorporate those changes on our end.
Compound V2 provides some exciting new features, the most prominent of which is variable collateral ratio. What this feature provides for Betoken managers is potentially better leverage: previously, Betoken only supported 0.5x leverage for shorting & 1.5x leverage for longing, but with Compound V2, different currency markets could have different collateral ratios, meaning that the leverage available to Betoken managers may become better.
Fulcrum Integration — Holy cow, even better leverage!
While Compound provides a liquidity pool unmatched by all but MakerDAO, the amount of leverage it provides for margin trading is unsatisfactory. Therefore, it is with great pleasure that we inform you of our integration with Fulcrum by bZx.
Fulcrum is a margin trading platform powered by the bZx lending protocol, and what’s cool about it is the huge leverage it provides for Betoken managers: up to 4x for both longing and shorting!
Our team can’t wait to see the awesome performance Betoken managers will be able to generate with this powerful addition to their boxes of financial wizardry.
Inflation Funding — Better fees & developer incentives
Previously, the Betoken fund takes 0.1% of its assets and 3% of investor withdrawals every 30 days to pay the development team (that’s us) for developing upgrades & maintaining the protocol. However, we have felt that this model does not best align the interests of the development team with that of the Betoken fund. This is why we have decided to switch to a new scheme for funding protocol development — Inflation Funding.
Inflation Funding is a simple concept: every 30 days, the Betoken fund mints Betoken Shares and gives it to the development team, the amount of which is equal to 0.1% of the total supply. These shares will be used to fund protocol development & maintenance.
The reason Inflation Funding is better is threefold:
- Holding Betoken Shares can better align the development team’s interests with that of the Betoken fund, since the value of the shares is directly dependent on the performance of the fund.
- Inflation Funding can further separate the development team from the Betoken fund, ensuring a higher degree of decentralization, and preventing legal risks for the development team.
- Betoken’s investors will retain more of their investments, which we’re sure they’ll be glad about.
Burning Dead-men— Further incentivizing manager participation
As the bottom line for manager participation rate, managers who have been inactive for 6 cycles or above will lose their entire Kairo balance. Inactivity is defined as not making any investments or margin trades.
This measure is meant to solve two problems:
- If a manager joined Betoken with a relatively low initial Kairo balance, it’s likely that they will lose interest and abandon their account, since they didn’t put in much money to begin with. However, the stale Kairo owned by their account still represents control over some portion of the fund assets. This means that as the number of inactive managers rises, a nonnegligible portion of the investors’ capital will simply sit in the fund, not being invested in anything, which would negatively impact the efficiency of Betoken.
- If a prominent manager with a large amount of Kairo unfortunately passes away, and they made no arrangements to pass on their manager account to someone else, the capital under their management will never be invested in anything, which may greatly reduce the efficiency of Betoken.
In addition to Risk Threshold and the other mechanisms in Betoken’s Incentivized Meritocracy, we are excited to introduce this “Dead-men burning” mechanism to better incentivize manager participation, and build Betoken into the protocol with the highest user participation rate.
Find out more about Betoken
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