🔥_🔥 x Balancer
An overview on the FireEyes x Balancer engagement and key outcomes
🔥_🔥(Fire Eyes DAO) is excited to announce our collaboration with Balancer Labs — the core team behind Balancer, one of the leading protocols for DeFi liquidity.
2020 was an exceptional year for Automated Market Makers (AMMs). DEX volumes soared to rival those of Coinbase, Binance, and other prominent centralized exchanges. While volumes soared, the core nature of these liquidity protocols also became more efficient, effective, and powerful than ever.
The launch of Balancer V1 in Spring 2020 showcased the flexibility that’s possible with this new technology. The industry discovered that AMMs don’t have to be bound by a single trading pair and instead can support multiple assets, allowing them to act as automated asset managers.
At 🔥_🔥, we recognize the limitless potential for AMMs, and we’re only starting to scratch the surface of what’s possible. As a result, we could not be more excited to collaborate with Balancer Labs as they push forward to build out Balancer V2.
Balancer came to us with the goal of increasing community participation. So that’s exactly what set out to do. Here’s how:
Governance Mining
Our first proposal to the Balancer community highlighted Governance Mining, a topic 🔥_🔥 has been passionate about since outlining Proposal Farming as liquidity mining started making an impact during 2020. We saw that while millions of dollars were going out to liquidity providers, there was none going to community contributors, ideators and governance stewards. We set out to change that.
Working alongside the Balancer Labs, we proposed Governance Mining, a full fledged suite of governance incentives to engage active and meaningful community participation.
Following community feedback, we recognized the scope of Governance Mining was too substantial to implement all at once. Instead, we dialed in on two key mechanisms that would achieve our broader goal. These included (1) govFactor and (2) SourceCred Engagement.
Proposal: GovFactor
One of the first issues we concluded on was that consistent voter participation among DeFi protocols has historically been too low.
Whether this results in proposals not reaching quorum, or not accurately representing voter sentiment (because no one voted), it became clear that ensuring sufficient voter participation was a key priority as Balancer Labs looks to transition full ownership over the protocol to the community.
This culminated in the govFactor, a simple incentive mechanism for Balancer LPs to become active voters on governance proposals. Similar to past factors, the govFactor was an on-chain voting incentive that affected how liquidity mining rewards were distributed.
Liquidity providers that voted on the most recent proposal receive a factor of 1.1x, mildly increasing their weekly rewards compared to those that didn’t vote. This factor did not change how many rewards were distributed per week, but only how those rewards were distributed. And the results speak for themselves!
Prior to the govFactor, proposals averaged roughly ~100K BAL in voting weight per proposal (~0.1% of the total supply). Following the implementation of the govFactor, average BAL voting increased to 700K BAL (>0.7%), and in some cases millions of BAL, driving an increase of over 7x in voter participation.
We’re extremely happy that the Balancer community chose to accept this proposal. It’s one of the first on-chain governance incentive from a permissionless protocol that we’ve seen to date.
It’s now clear to us that no matter what gets proposed on-chain, there will be BAL holders there to vote on it; a key piece to sustainability on the road to decentralization.
Proposal: SourceCred Engagement
While the govFactor addressed on-chain vote participation, we felt there was also room for an off-chain incentive to reward active community members for spurring discussions on the forum and Discord.
We’ve seen successful implementations of soft governance incentives in protocols like MakerDAO and Index Coop. In both instances, there were improvements in the quantity, quality, and diversity of contributions from the community. This is something we looked to imitate within the Balancer ecosystem.
As such, our second proposal included the implementation of SourceCred. For those unfamiliar, SourceCred is a tool to track and reward valuable participation within communities. As such, we wanted to empower the Balancer community to participate, and if they do, they can be rewarded for it too.
Working closely with the Balancer team, we’ve set up an instance to track contributions to the governance forum and the Discord channel. Using these scores, contributors can earn a pro-rata allocation of 50 BAL per week.
The expectation is to ramp up these rewards over time, starting with a foundation that is meaningful to the growing community of Ballers.
Empowering Active Community Members
When Balancer launched, the response from the DeFi community was overwhelming. People flooded the community, and participation was insanely high.
Following the initial hype, what was left was a small group of passionate individuals who were active in the community, always helping out new members — dubbed the ‘Ballers’.
Ballers are dedicated community members aligned for the long term. With the help of Balancer Labs, we wanted to empower these individuals. We wanted to see them take the next steps in engaging, building, and nurturing the community to new levels, blending the lines between team and community.
So we implemented monthly rewards (we like to call them BALaries) for this select group of passionate individuals. In return, they’ve chosen to actively engage in the community — whether it’s helping new members learn their way around or writing weekly updates for the community, these individuals are dedicating their time to Balancer, and it’s important for us to ensure they’re being recognized for doing so.
We’re extremely proud of the group that’s emerged. They are the backbone of the Balancer community. They are the key piece to an abundance of community resources and a welcoming environment for anyone else that ventures into our nascent community.
Thank you to:
- Tongnk
- Bakamoto
- Solarcurve
- Justwanttoknowathing
- Jiecut
- Jnapier
- 1saf
- Rabmarut
- FollowTheChain
- OakSprout
You guys are the heart of the Balancer community and a crucial piece to the long term success of the protocol. Thank you for your commitment from all of us at 🔥_🔥
Balancer V2 Execution
The final piece to our puzzle is acting as extra manpower for Balancer Labs as they roll out V2. We’ve been assisting with the communication strategy and content rollout, and made sure all aspects of the protocol could be well-understood by all levels of DeFi enthusiasts.
And the response from the DeFi community was outstanding. People loved V2.
While we only had a small part in Balancer V2, the technical innovation that’s included in this upgrade is massive. Balancer will become a more efficient, powerful, and effective source of DeFi liquidity.
As a generalized AMM protocol, V2 features a single vault that holds all Balancer pool assets. It separates liquidity from trading logic, allowing teams to design custom strategies like stable pools similar to Curve. Unused assets can now be put to work thanks to Asset Manager and as expected, V2 is as gas and capital efficient as ever.
There’s more in the books with this rollout, so be sure to stay tuned to hear more about the upcoming V2 upgrade!
Wrapping up
Throughout this partnership, 🔥_🔥 has been able to design a number of core principles to reward key community contributors. We expect this trend to continue throughout 2021 and look forward to pioneering and participating in these programs as active protocol politicians.
🔥_🔥 has had an exceptional time working (and continuing to work!) with Balancer Labs. We’re confident that this core team will be able to execute on the full vision of the Balancer protocol.
We’re excited for the future of Balancer and how it will continue to innovate and evolve. Moving forward, 🔥_🔥 will be playing a key role in the Balancer community as we continue to explore the frontiers of governance.
We’re only getting started. Plenty more to come in 2021.
🔥_🔥
