Payload with PR
Summary:
This proposal aims to approve the creation of two new gauges on main net with a 2% cap for new 80/20 pools, BAO/baoETH-ETH and BAO/baoUSD-LUSD.
References/Useful links:
Link to:
• Website: https://www.baofinance.io/
• Documentation: Welcome to Bao Finance | User Docs
• Github Page: Bao.Finance · GitHub
• Communities: Bao Finance, x.com
Protocol Description:
Bao Finance is a community-run project creating onchain tokenized derivatives (synths) and infrastrcture. Our current synths, baoUSD and baoETH, are backed by ETH based debt positions via our vaults.
BaoETH is minted by whitelisted contracts, which currently are “the fed” and “ammFED” (AMO). The Bao multisig has control over which contracts are whitelisted. Changes are approved via governance.
The fed mints synths into our borrow vaults, ready to be borrowed against highly liquid & decentralized ETH based collaterals such as wstETH and rETH. Controlling the available supply also affects the variable loan interest rate, helping maintain the peg.
The ammFED mints synths directly into balancer liquidity pools containing a backing asset, helping to maintain the peg and profiting from peg deviations.
Motivation:
We have made Balancer our primary source of liquidity for our synths and would like to improve liquidity for our governance token by switching to and incentivising new 80/20 pools, which we also plan to switch incentives to on our own platform pending a governance vote.
Specifications:
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**Governance:**Bao is governed by the Bao community. Actions voted on are carried out by the community “council of guardians” via its 3/7 multi-sig. This multisig/ council of guardians controls various synth parameters like the mint limit and collaterals. We plan on using governor bravo or similar in the future to improve decentralization.
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Oracles: Chainlink oracles are used to find collateral prices.
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Audits: Bao re-uses battle-tested compound, inverse and curve with some changes & has had bug bounties open on immunefi covering all of our live contracts.
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Centralization vectors: The 3/7 multisig controls various parameters such as collateral factors, IMF factor (CF factor reduces as loan size increases), liquidation incentive, ability to deposit collateral, price oracle, new collateral additions, mint limits and the ammFED.
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Market History: All Bao’s synths have remained closely pegged to their target prices since inception and have robust mechanisms to help stay pegged. The one historically exception to this was a temporary depeg of baoUSD during USDC’s depeg. Since then all synths no longer accept USDC as collateral, relying on decentralized, highly liquid ETH backed tokens like wstETH, rETH and LUSD instead. The BAO token has not seen any extreme volatility and has been relatively stable since tokenomics were changed several months ago to remove inflation.
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Value: These pools are intended to be the primary liquidity for the BAO governance token. Balancer will benefit through trading fees and increased voting incentives for BAL and AURA holders. Bao has a track record of providing vote incentives and building governance power within the Balancer ecosystem.
Pools:
- 20B-baoUSD-LUSD-BPT-80BAO: 0x9412206f58cc72b9b4e340422a95354372a3ec3d
- 20B-baoETH-ETH-BPT-80BAO: 0x19DF5BB37380186bC8EFc5Ad91516373A2C5459f
Gauge 2% cap:
- 20B-baoUSD-LUSD-BPT-80BAO-gauge: 0x6b9dE817875952Cb23d985AbF6fa9ec4b7f66ad5
- 20B-baoETH-ETH-BPT-80BAO-gauge: 0x7C02ac2BAd481dC4E566D3D54359244f381d58dC
Technical Specification
The Balancer Maxi LM Multisig
0xc38c5f97B34E175FFd35407fc91a937300E33860will interact with the GaugeAdderv4 at0x5DbAd78818D4c8958EfF2d5b95b28385A22113Cdand call the addGauge function with the following arguments:gauge(address):
0x6b9dE817875952Cb23d985AbF6fa9ec4b7f66ad5
gaugeType(string):Ethereumgauge(address):
0x7C02ac2BAd481dC4E566D3D54359244f381d58dC
gaugeType(string):Ethereum
