Balancer on other chains: Friendly Forks (aka Franchise Model)

This is an idea that has been floating around. I’ve gathered some thoughts from others and hope posting it here kickstarts a discussion. Is this the right strategy? What would you change in it?
I hope some version of this becomes an actual governance proposal in the near future.

Context

The Balancer community has a lot on its plate with the deployment and operation of the Balancer Protocol on Ethereum mainnet and with fostering the ecosystem around it. This ever growing ecosystem touches a variety of stakeholders such as LPs, traders, developers (including Balancer Labs), projects building on top, mission-specific committees such as the Ballers, as well as the wider community of BAL token holders with their duty of governing the protocol.

Meanwhile, crypto has been expanding rapidly, opening up opportunities for the Balancer protocol to establish a presence on networks other than Ethereum mainnet, be it competing L1s or complimentary L2s/Sidechains. So far, the Balancer community has been able to plant its flag on a few L2s/Sidechains, but there’s clearly an unmet demand for a presence on other networks.

One way to tackle that demand is to outsource the opportunity to independent teams (from now on called forking teams). A Friendly Forks model could at the same time properly incentivize and keep alignment between BAL token holders and the forking teams. This model may also benefit Balancer in a crucial way: by expanding its developer mindshare. Some of the innovations (in system architecture, UI, tokenomics, etc) and partnerships (projects building on top) happening at the forks are expected to eventually make their way back to Balancer mainnet.

Here we lay out the procedures and requirements for forking Balancer on other networks in a way that hopefully satisfies all parties involved.

Incentives & Token distribution

  • Balancer will not give out grants for forking teams, and encourage teams to issue their own separate token (let’s call it f-BAL) on the host chain
  • Any eventual protocol revenue or biz model needs to accrue to f-BAL (or to a derivative of it)
  • Total supply of f-BAL should be capped
    • If uncapped, there should be a detailed explanation of how it would evolve, under what circumstances it could change, etc, so that the total supply after X (1/2/4/8) years could be estimated with some precision
  • 20% of f-BAL’s total supply is allocated to the BAL community:
    • 15% to the Balancer Treasury
      • Subject to a vesting schedule of 6 months
    • 5% airdropped pro-rata to a snapshot of BAL holders on mainnet
      • Claimable via a merkle redeem contract
      • Should account for indirect BAL ownership:
        • For BAL in V2 pools: airdrop goes to the BPT holders
          • If those BPTs are staked and/or locked inside the Balancer ecosystem: airdrop goes to the stakers/lockers
        • The forking team might (but is not required to) take into account other indirect forms of BAL ownership
      • Not subject to a lockup
      • Minimum of 0.5 BAL to qualify for airdrop, to avoid long merkle branches full of dust f-BAL
      • After 3 months, all unclaimed f-BAL is redirected to the Balancer Treasury
        • This would naturally include the airdrop to all BAL holding addresses that can’t claim f-BAL such as lending pools, bridges and most CEXs
  • 80% of f-BAL’s total supply is distributed among f-BAL’s community, which includes:
    • 65%: f-BAL Ecosystem Fund: liquidity mining, grants, partnerships and other incentive programs
    • 15%: The forking team, subject to a 1 year cliff and a 4 years vesting schedule

Vetting Process

  • A screening committee will be formed, specific for screening teams before a governance vote
    • A somewhat loose screening process should be fine, given that:
      • The community (through BAL governance) has final say over supporting a forking team or not
      • BAL holders can individually express their support (or lack thereof) by holding their f-BAL (maybe even acquiring more) or selling it.
    • To every individual interacting with a fork: you should DYOR.
      • In the event the forking team doesn’t deliver on their promises, or acts questionably, or even outright scams their f-BAL community, the Balancer community (including the screening committee and Balancer Labs) will not be held liable because there is no formal endorsement involved.
    • To be considered, a forking team should ideally deploy contracts that have identical bytecode to the core Balancer smart contracts (vault and main pool factories)
      • Any difference in the code being deployed (including non-core contracts) should be clearly described in the forking proposal
  • A snapshot vote consolidates the will of the Balancer community in giving guidance to the forking team, and considering the endeavour a friendly fork.
    • For each host chain where there’s forking interest, there should be a window of time (at least 2 weeks) in which other teams may compete on pitching to the BAL community. The snapshot vote for a specific host chain would then have the options: “Support for Team A”, “Support for Team B”, …, “No support for now”.

Brand & Exclusive Rights

  • Approval (by BAL governance) of a fork implies authorization to use the Balancer brand on the host chain (detailed brand usage guidelines TBD; the general message would be this is “Balancer by team X”), for a limited amount of time
    • At any point in time, BAL governance may decide to dissociate itself from a forking team (i.e. unapprove a fork)
    • After approval, Balancer community commits not to support a competing forking team on the same host chain for at least 3 months
  • In case there are other forking teams interested in forking Balancer on the same host chain, BAL governance may more frequently re-assess the performance of the forking team currently carrying the Balancer brand and may decide, at any point after the 3 initial months, to also support another forking team or to switch support from one forking team to another

Guidance & Support

  • Support and guidance from Balancer Labs happens towards the forking teams, not their UI or other parts of their specific ecosystem. Those would fall under the responsibility of the forking teams themselves.
    • A great example is the multisig that will control some parts of the f-BAL ecosystem. BAL community members are of course free to join as signers, but there is no implied expectation that any of them should do so.
2 Likes

I think the idea of a franchise model is interesting. My concerns are:

  1. BAL Treasury gets more than the forking team does. There’s no precedent I’m aware of for a fork to give the OG project tokens for their treasury. Airdrops to users of the OG project have happened a few times, but a 15% treasury allocation would be a novel concept. I’m not sure how appealing it is for the forkers.
  2. governance can approve a fork, we get 20% of their tokens, then we can vote to revoke approval. we keep tokens, they have to remove our branding.
  3. What exactly are we offering besides our endorsement + branding? You say support & guidance towards the forking teams - will our devs be made available to help them with technical stuff/review their code? curious to know more about this

for context, this is beethoven’s tokenomics: Tokenomics - Beethoven X

3 Likes

I think these are some good questions, and it’d be interesting to speak with Beethoven X about how they’d have seen this proposal before they launched.

An additional question I have is around the airdrop to BAL holders: I think this is a good idea, but a merkle redeem on mainnet to claim the airdrop is going to mean that for many BAL holders an airdrop like this is nearly always more expensive in gas to claim than the tokens are worth. While we could look at BAL holders on mainnet, I don’t see the issue with allowing the claims to take place on lower gas chains.

1 Like

claim would be on the fork chain I think

4 Likes

I really like this discussion and would love to see what others think about it.

The Beethoven team could give an interesting input here as they would represent the other side of the deal. I think it’s still possible to adapt this proposal to get them on board or maybe open an exception to terms (if necessary) since they have already launched and made decisions around token distribution.

1 Like

Hey everyone!

I’m Daniel, the lead dev working on Beethoven X. It is truly humbling and inspiring to be considered in these conversations. We continue to be extremely motivated to execute on our vision of making Balancer V2 the premier DEX and source of liquidity on Fantom.

First of all, I would like to preface this entire discussion with the statement that the Beethoven X team has and will continue to pursue a partnership with the Balancer community for as long as it’s an option.

Followthechain presented a very well thought out proposal around how BAL governance can engage with “Friendly Forks” now and into the future, but we would like to present an alternative path that is modeled around the experience we’ve had until now.

A bit of backstory to provide some initial context:

  • Upon announcing our soft launch, Fernando reached out to us on Twitter and started a very friendly and open conversation around what our plans were.
  • Immediately after, Fernando introduced several Ballers to the conversation so that our two communities could start to get to know each other.
  • In the initial conversations, the idea was mentioned to us that if we were successful, there might be an opportunity for a BAL governance vote that could identify us as the “official fork” on Fantom.
  • In the following weeks, the Ballers provided invaluable input around tokenomics, community, and many other topics.

We believe that this hands off approach provided us with enough guidance to ensure that our general construction would allow for a BAL governance vote, if that day ever came. Additionally, it created an opportunity for both sides to get to know each other. More specifically, the Ballers had time to evaluate if we were a team that was competent and capable of executing on our vision. From our side, it has provided us with the space to show that we are serious about the project and are capable of achieving some form of success without an official endorsement from BAL governance.

These points could form the basis of a strategy on how to engage with current and future forks that we believe would allow BAL governance to better identify and support teams with the highest chance of success.

Ideas on how to engage with “Friendly Forks”

  • Produce a general set of guidelines that every team must abide by to be eligible for a future BAL governance vote (Expansion of this in the next section).
  • Provide a mechanism for forking teams to identify themselves to the community early, ideally prior to launching a token.
  • If the team has met the general guidelines, allow Ballers to volunteer to be unofficial advisors in the early stages of the project.
  • Allow the forking team a period of time to succeed or fail on their own. Every side chain has its own independent community and ecosystem. For the long term success of the protocol, it is incredibly important that the team is either part of the community or is able to successfully integrate into it. We are of the opinion that it is much better that the community on the host chain decides which fork to support, not BAL governance.
  • Only if the forking team has achieved some sort of traction, either through predetermined KPIs or general consensus, would they be eligible to submit a proposal to be recognized as the official fork on the chain.

Although this path would require more effort from the side of the Balancer community, we strongly believe that it would produce significantly better outcomes. In this way, BAL governance is not enforcing their opinion on a chain where they might not understand the intricacies of the community, instead they allow the market and host community to decide which, if any, fork to support.

We can speak from personal experience when saying that it is not an easy task to successfully launch the Balancer V2 protocol on another chain. The sheer difficulty serves as a barrier to entry that immediately eliminates most teams that would act in bad faith. We would suggest that you allow those teams the opportunity to prove that they have the capacity to achieve traction on their host chain prior to officially supporting them.

Ideas on general guidelines that every team must abide by

  • Teams should adhere to some loose code of conduct that is in line with the core values of the Balancer community.
  • We 100% Agree that all Balancer V2 core contracts should be deployed without any changes.
  • A diff check could be performed to ensure the integrity of the deployment
  • The Balancer community or Balancer Labs could do an overview of security measures put in place to ensure the safety of the protocol.

Tokenomics

The topic of token, tokenomics, and token distribution is, of course, the most difficult. Below are just a few of our opinions and ideas around how a partnership could look like that could benefit both communities in the long run.

  • BAL governance should issue broad guidelines on tokenomics that the forking project needs to adhere to even be considered as an approved fork. The guidelines should allow for some degree of flexibility and creativity by the implementing team.
  • A token treasury exchange for aligned incentives. This makes significantly more sense for projects that have already proven that they can achieve some sort of success without an official endorsement from Balancer. The contribution from the forking team would obviously be substantially more, but some amount of BAL tokens contributed to the treasury of the fork project would help align the communities around shared success.
  • Tokens should be vested on both sides, with a clause that in the instance that the approval is revoked within a certain period of time, the tokens are returned to their respective treasuries.
  • In the proposal from followthechain, BAL treasury tokens would unlock after 6 months, but team funds have a 1 year cliff. We believe this creates an undesirable and dangerous setup for any forking team. On one hand, with no team tokens unlocked for a year, any forking team would need a minimum of 12 months runway to even attempt spinning up a project. It would be reasonably challenging for a team to continue to scale to meet the demands of building a sustainable project without access to some amount of team tokens. Additionally, having such a large amount of a project’s tokens unlocked and in the control of the BAL treasury poses a risk to any potential investor interested in participating in the project.
  • Incentivized BAL pools on the forking platform could serve as a mechanism for token distribution in addition to a standard airdrop. This would provide additional opportunities for BAL holders to earn yield with their existing assets as well as prevent the usual dumps that happen from large amounts of tokens being released into the supply.

We feel the overall numbers presented by followthechain are on the higher end, but we obviously have a very strong bias there, so we’re not entirely sure it’s our place to comment on it. For us, we would want to ensure that any program introduced represented both the Beethoven X community on Fantom as well as the Balancer community.

Once again, we’re incredibly honored to be included in these discussions and hope that we can continue to work towards some sort of collaboration between the Balancer and Beethoven X communities.

6 Likes

Super excited about this thread!

I 100% support the idea of allowing independent teams to spin up forks of Balancer that are still connected with the core Balancer Protocol through governance and tech alignment.

I would love to support understanding how we flow technical innovation and learnings back to the core Balancer Protocol. In the future, it would be wonderful if core Balancer Protocol and Friendly Forks could share, for example, maintenance and support resources!

Maybe we can have a Friendly Forks role in Discord and open a Friendly Forks Channel where the different Friendly Fork Contributors can share learnings with each other and the Balancer community.

I’m currently working with a group (Kolektivo / Curve Labs) who aim to deploy Balancer on Celo and would love to continue the conversation around Friendly Forks!

3 Likes

Agreed on all points @LuukDAO. I think we need a specific Baller to be leading this discussion on our side, could you bring this discussion to the Ballers and help define someone (if you agree with the idea of an owner, of course)?

@danielmk thanks so much for your thoughtful and detailed response. I also agree with everything you said and found this specifically very insightful and on point:

We are of the opinion that it is much better that the community on the host chain decides which fork to support, not BAL governance.

I think @danielmk and Ballers should be hopping on a call to speed up this discussion and then lay out their conclusions here on the forum. It’s clear to me that Beethoven has the highest chances of becoming the first BFF (Balancer Friendly Fork) and therefore should have a strong influence in how the process for future BFFs is shaped.

Let’s move on quickly with this conversation as I’m sure more teams will be excited with becoming a BFF once a clear and transparent process is laid out.

Thanks so much for the kind words Fernando, it means a lot to us to have your support.

The Beethoven X team had a chance to talk to the Ballers earlier this week, and we believe that we’ve co-defined the initial terms of a collaboration that could be put to a BAL governance vote.

Before we dive into the details, we’d like to briefly introduce Beethoven X and the goals we hope to achieve.

Beethoven X is the latest symphonic composition from the undead master composer Ludwig van Beethoven. The music was formed over a 200 year reflection spent with a body decomposing in the nutritious soil and a heart and soul dancing among the stars and universes. The idea is simple; Build the best experience on Fantom, contribute to the entire ecosystem with everything we have in us, build creative highly effective edgy yield opportunities. When Beethoven lived the first time from 1770 - 1827 he was a rebellious creator of magnificent experiences that few people could follow. He was a true master, and now he is back; with his spiritually symphonic decentralised investment platform: Beethoven X. You can read more in this Fantom Spotlight article.

As a team, we strive to have well defined goals that drive our day to day efforts. As of now, those goals are clear:

  • Become the #1 DEX on Fantom.
  • Maximize the risk-adjusted return of more than 100.000 liquidity providers.
  • Maximise protocol revenue through constant experimentation and optimisation in close collaboration with the community.

The team and community behind Beethoven X truly believe in our capacity to become the #1 DEX on Fantom. We believe the technology powering the Balancer V2 protocol is second to none, and our strategy is to showcase its potential in a developing ecosystem.

Additionally, we are strong believers in the Fantom network. We strongly believe that the technological innovation offered by the Lachesis consensus algorithm and the Fantom Foundation’s focus on both DeFi and advancing Solidity development through the Fantom Virtual Machine will allow Fantom to define itself as a premier destination for DeFi. Our goal is to position Beethoven X as a core liquidity source within this developing ecosystem.

Collaboration with Balancer

We believe that a portion of the Beethoven X protocol should be owned by both the BAL treasury and BAL holders, and so we’d propose that 5% of the total supply of BEETS should be allocated as follows:

  • 4% provided to the BAL treasury, with a six month cliff.
  • 1% provided as an airdrop to BAL holders as follows:
    • A backdated snapshot will be taken for all BAL holders as of Nov 11, 2021.
    • Only holders with a BAL value greater than $100 USD will be eligible
    • A 2x multiplier will be assigned to BAL and BAL/ETH 80/20 BPT holders on ETH mainnet
    • A 1x multiplier will be assigned to Arbitrum BAL and BAL/ETH 60/40 BPT holders
    • A 1x multiplier will be assigned to Polygon BAL, USDC/MATIC/WETH/BAL 25/25/25/25 BPT holders and BAL held in the Qi Vault on polygon.
    • To achieve a more equitable distribution of tokens, the tokens will be distributed based on the weights above, not based on the USD value of holdings.
    • Any qualifying address will need to have at least $100 USD value staked in a Beethoven X incentivized farm on Fantom Opera. A cutoff date will be announced if the vote is passed.
    • The distribution mechanism of the tokens will be defined collaboratively between the Beethoven X team and the Ballers.

If you review our tokenomics and emissions schedule, you will see that 5% of our maximum supply is a significant portion of our current circulating supply. It also equates to over 70% of our available partnership fund. This is how strongly we believe in creating a lasting collaborative relationship between both communities and teams. We know that you are what Mozart was to Beethoven; The greatest source of inspiration and the original creator of a foundation to create incredible music from.

As we launched our token prior to the definition of the Friendly Fork model, the Ballers have agreed to a one time exclusion for Beethoven X. The percentages above are not reflective of the requirements for future Friendly Forks.

In exchange for the BEETS, BAL governance will recognize Beethoven X as the approved Friendly Fork on Fantom, and we’d propose that we co-compose creative ways to communicate the relationship.

The Beethoven X team will continue to search for avenues of collaboration with Balancer Labs. We believe that we are uniquely positioned to create tools and enhancements that could be easily integrated into the Balancer experience.

We truly hope that this is the starting point of a long lasting collaborative relationship.

9 Likes

Love the wording, love the proposal.

I will support this and hope to see an even stronger collaboration in the future!

2 Likes

This sounds good, my main comments:

A) We should either have a greater multiplier for Arbitrum BAL/WETH poolers or reduce the multiplier on mainnet to match, I don’t really see a reason why there should be an advantage for pooling your BAL on mainnet.

I bridged some BAL over to Arbitrum for example to pool it there as fees for claiming BAL on mainnet are too high and the BAL I was receiving each week was being eaten away by gas fees.

B) We should probably include other BAL pools on Polygon if we’re including the pool listed above. I’d say any pool with BAL as a constituent that currently receives BAL rewards. I don’t really see a reason why people would be expected to know USDC/MATIC/WETH/BAL was more of a “BAL staking” pool than e.g. (USDC)/LINK/WETH/BAL/AAVE, BAL/TEL or QI/BAL.

C) We should also provide a 1x multiplier for people who just have BAL sitting in their wallets on any network. There are various reasons people wouldn’t be pooling their BAL on the snapshot date. If it’s easy enough, perhaps also BAL deposited in AAVE/QIDao?

2 Likes

A) Agree with Bakamoto that I don’t think there’s a reason why BAL on mainnet receive higher multiplier. From strategic point of view, those LPs on Polygon and Arbitrum are more willing to bridge their assets to BEETS or other chains. (Note: This is not vampire attack as Balancer and Beethoven X have different pools for different appetite users.)

B) Same argument with Bakamoto’s. While TEL/BAL and QI/BAL pools on Polygon have 50% BAL, BAL, USDC/MATIC/WETH/BAL 25/25/25/25 only consists 25% BAL. It’s weird if these two pool holders not eligible to this airdrop. Same as Bakamoto, a better approach is including any pool with BAL as a constituent that currently receives BAL rewards.

I really appreciate Beethoven X’s vision.

1 Like

I think giving MN higher multipliers make sense as those who choose to deploy BAL on MN show greater conviction doing to pool weights: its not the same to join a 60/20 or a 25% BAL exposure than an 80/20 pool.

I don’t think BAL only holders should participate. Distribution is difficult and risks to dilute the program.

To me, the proposal makes total sense as it is.

it’s a very good point. there are 38k BAL holders on mainnet alone. Assume that gets clipped down to just 20k, which could be a low estimate, you’re looking at 125 BEETS per address. Add in BPT holders, this will go to 25k addresses easily - now everyone gets 100 BEETS.

Which is maybe cool but worth pointing out.

It doesn’t necessarily demonstrate greater conviction though, if there was an 80/20 pool on Arbitrum with rewards for example I’d have deposited there. 80/20 vs 60/40 isn’t a doubling in BAL exposure either.

Also with regards to @DavisRamsey comment about # BAL holders: very few of these are going to bridge to Fantom and go through that part of the process I’d anticipate, regardless of qualification criteria.

And surely, if they did… this would be good for Beethoven (and therefore Balancer)? We should want as much participation as possible, not to try to maximise the $ value of the air drop.

2 Likes

I tend to agree with @bakamoto20 and @joeywong in regards to being more inclusive to BAL holder variations. One primary goal of this program should be to get as many new deposits for our frens at Beethoven as possible (some will go, some will stay). I feel because bridging is involved we need to cast a wide net in order to play the percentages right.

3 Likes

Love the proposal and can speak for the very high quality and professional work by the Beethoven X team so far.

It’s great to have you around and IMO it will be even better to have a tighter relationship through this proposal and have you become our first official friendly fork!

One small technical detail to raise that touches many stakeholders: many have vesting contracts where the BAL is locked and being linearly vested. Though AFAIK these contracts could receive BEETS, they would technically not be able to have 100$ staked on Beethoven X. Here I would propose to include the vesting contract by proxy if its beneficiary (the address that will eventually be able to claim the vesting BAL and BEETS) does stake on Beethoven.

3 Likes

Hey Everyone!

Just want to say thank you so much for the kind responses. Makes us even more excited about the relationship moving forward.

As for the qualification rules, we’re flexible. We’ll leave the Ballers to define what they think is most fair and do our best to implement it from our side.

4 Likes

After approval from the Gov Council, this is scheduled for a vote starting tomorrow.

https://vote.balancer.fi/#/proposal/0x95db8e797145ad590b467f8dbecb23404c25c2a7090aa8a8d65428ad9f7373fc

1 Like