Hexagon Friendly Fork Proposal

Dear Balancer Community,
greetings from a sunny and humid Bangkok, Thailand!

Background

The Friendly Fork model (aka Franchise model) was first introduced by @followthechain in this post.

The general reasoning behind the proposal was to make the Balancer technology available on chains where Balancer.fi was not present and to avoid an increase in workload by the Balancer Labs core team.

The FF model, at the moment, has only been applied on one occasion with the approval of Beethovenx through this snapshot vote.

The extraordinary success that “Beets” has achieved to date, has created an appetite for the recreation of a similar model that could use the same superior technology (the Balancer technology), but with a different, own identity adapted to the market intended to enter.

Motivation

Current market conditions show a consistent increase in trading activity on Avalanche, which has demonstrated to be one of the most active and vibrant communities in the DeFi landscape. The strategic decision of the Balancer team not to deploy on this chain has pushed the Partnership subDAO towards the exploration of possible valid alternatives with the intention of recreating, at least partially, the success of BeethovenX.

Launching a Friendly Fork by the DAO however, proved to be a complex exercise with mainly three factors that strongly influenced the decision making process:

  1. Team: finding a team that is able to develop, maintain and dedicate resources to the project;

  2. Chain: current market conditions present two options:
    → develop a product on a highly competitive and possibly saturated chain or
    → be a first mover on “nascent” chains with the associated risk of not being relevant and wasting resources;

  3. Liquidity: how to bootstrap decent liquidity from day one (critical factor).

To minimise these risks, the Partnership subDAO believed in the creation of a “hub”, by deeply concentrating synergies with experienced players in the DeFi ecosystem and building a joint project.

Introducing Hexagon Finance

Hexagon will be a multi-functional platform, with the intention of intercepting the different needs of the Avalanche crypto Community by bringing a new decentralized exchange, a launch-pad and a lending platform.

Ava Labs blessing: A critical role has been played by Ava Labs which has operated as an important bridge between the later to be named Hexagon team and BalancerDAO.

Moreover, Avalabs has committed some initial funds specifically dedicated to the Liquidity Mining program. This will help for the bootstrapping of liquidity and attracting fresh capital from competing chains.

Terra Labs Partnership: Hexagon Finance will be mainly focused on UST, the algo stable coin of Terra, with the ultimate goal of making it the most used and widely distributed stable-coin on Avalanche.

TerraLabs will join the project by being a major stakeholder together with BalancerDAO and the founding team. Terralabs has committed for an initial capital deployment (UST) to help the project building the initial phase of liquidity bootstrapping.

The launchpad functionality will be developed by Copperlaunch, a long term partner of Balancer.

Specification

The agreement between Hexagon Finance and BalancerDAO has been built around a Memorandum of Understanding (MoU) which will be signed by a BalancerDAO representative if this proposal is accepted.

General conditions are the following:
BalancerDAO is requesting the following

1. Governance

  • The community on the host chain fully supports the fork development;
  • Teams should adhere to a level of code of conduct that is in line with the core values of the Balancer community.

2. Technical

    1. Balancer V2 core contracts should be deployed without any changes, (Contracts deployed 1:1)
    1. No migration functionality in the MasterChef;
    1. All controllable protocol parameters need to be managed by reputable multisig.

3. Financial

Hexagon Finance undertakes to provide Balancer with as many tokens as the Hexagon team. Tokens will be received under the same conditions in terms of vesting and release. This means 6% of the total supply, or 6 million tokens out of 100,000,000, whose release will be locked for 6 months upon launch and linearly vested for 12 to 24 months. The exact length of time will be finalized upon the completion of the private sale round, if any.

The tokens will be claimable using an address chosen by Balancer.

In exchange for the above conditions, Hexagon requires Balancer to engage mainly in Marketing activities and awareness campaigns as detailed below:

  • Tweeting original content about Hexagon Finance for the four weeks prior to our launch and for the two months following it. The tweet will come from the BalancerDAO handle.

  • Creating and publishing announcements regarding the activities of Hexagon Finance. This will cover every major activity such as, but not limited to, airdrops, launches, new pools being created and products being launched.

  • Organizing Ask Me Anything (AMA) sessions with the Balancer community to promote the launch of Hexagon and eventual upgrades/news afterward. At a minimum, this will include an AMA shortly before or after the launch of the Hexagon Dex.

  • Hexagon Finance is authorized to use the name and logo of Balancer in its official documents in statements with pre-approval on logo usage from BalancerDAO such as “the officially approved fork of Balancer on Avalanche” and similar;

  • Providing statements from official representatives of BalancerDAO in support of Hexagon to influencers, media outlets, and similar. This will include both written and audio statements as required by the channel used (articles, video, podcasts etc.). At least one statement should be shared before the launch of the platform.

  • In general, making it clear to the Balancer community that Hexagon is an officially approved fork of the Balancer Protocol on Avalanche.

Tokenomics

Token allocation will be distributed as follow:

18% Team - BalancerDAO - Terra Labs
5% Strategy investors
2% Liquidity bootstrapping
10% Marketing
10% Partners and Advisors
55% Liquidity Mining incentives

SWOT Analysis

Strengths

The Partnership subDAO believes that the blessing of Avalabs, the partnership with Terralabs and the reliability of the funding team are the main points of strength. The Avalanche ecosystem is already highly competitive so risk mitigations strategies have been considered necessary for the development of Hexagon Finance;

Weaknesses

  • Making UST as the main focal point can be a double edged sword for two reasons:
  1. focussing on one stable coin creates an overexposure that some would consider unnecessary in terms of point of failure;
  2. the general missing of potential trading volume on alternative pairs.
  • While the BeethovenX Friendly Fork agreement has been reached after launch, in this case, the agreement should be reached before. Consequently bringing a certain level of uncertainty. However, the Partnership subDAO believes that risks have been reduced considerably given the deep due diligence done on the team and the partners involved in this collaboration.

The DeFi landscape is still in its early stages and layers of uncertainty are very much present, especially in today’s market conditions. A constantly evolving market generates certain known unknowns and a level of unpredictability that needs to be taken into account when operating in cutting edge environments.

Opportunities

The BalancerDAO will finally have the opportunity to have a stake in a project with strong backing, good fundamentals and exposure to a strategic chain. This is, today, the best opportunity we see for a successful Balancer powered Dex on Avalanche.

Threats

Competition is high! Even if Hexagon would focus mainly on UST trading pairs, more established and long term native players still control the vast majority of the market.

Conclusion

We present this as a great opportunity to the Balancer Community. Hexagon will ultimately increase the number of independent teams working and using the Balancer technology. This project will also increase the number of developers working on the protocol, give precious feedback to the Balancer core team and ultimately, inspire us all to do better. Similar to what Beethoven has been doing during the past few months.

I hope this presentation gives you enough context to where we have been, where we are, and where we want to go: up only.

For full disclosure:
The Hexagon team has offered Andrea a token allocation equal to the 0,0012% of the total token supply as a thank you gesture.

14 Likes

All looks good! Thank you for leading this and getting it to the finish line. Very cool that you also got to wet your beak in the deal as well :slight_smile:

6 Likes

Thank you for spearheading this Andrea. It’d be great to have another successful fork of Balancer, especially so on Avalanche given the great potentials there.

Wanted to bring up a few points that were a bit unclear on the proposal and hopefully the Hexagon team or Andrea could expand.

The number 1 factor that had made BeethovenX a successful project is the team. Given the crucial importance of the role the team plays in any project, it’d be great to know more about the Hexagon team, their backgrounds, their credentials and their future plans for Hexagon.

The other item that could use some elaboration is the token allocation. A few questions that pop-up after an initial read:

  • Who are partners and advisors? 10% of the token supply for advisors and partners is rather a very large allocation (note that it’s twice the size of the investors allocation).
  • Who are the strategic investors?
  • What portion of the 18% is allocated to Balancer DAO Treasury? Are there any terms associated with this allocation?
  • What would the 10% marketing allocation be spent on, through which vehicle? Where would operating capital other than marketing needed for the project come from?

Furthermore, it’d be great if you could expand on the nature of the relationship with the Terra ecosystem. Does the Hexagon team plan to purely focus on Terra use cases? Is there plan to use the tech for other products if such products do not tie directly to Terra?

8 Likes

Thanks for the very well written proposal @Andrea81!

@LongJuanSilverado thanks also for the valid points which I’m sure we can clarify before bringing this to a snapshot vote.

3 Likes

Thank you for your efforts in putting this proposal together Andrea :pray:

5 Likes

I really like the proposal you are presenting us! Good job Andrea and great challenge ahead :rocket:

3 Likes

Well-presented and intriguing opportunity. +1 on learning more about the team’s background and experience. Establishing team credibility is a key component of BFF proposals.

2 Likes

Thank you for the very thoughtful proposal Andrea. We’ve had a number of projects inquire about creating LBPs on Avalanche, so we’re very excited to work with the Hexagon team to make this vision a reality. We’ve had a great chat around the strategy and are very excited to push the Balancer Protocol’s mission on Avalanche in collaboration with Hexagon.

4 Likes

Luigi (Head of DeFi) at Ava Labs. I am very much in support of this proposal and have been working closely with the Hexagon team and can vouch for their abilities on the ability to deliver a project. I am also a huge Balancer fan <3

7 Likes

@Andrea81 cheers for putting together this proposal. I know you have been working on fleshing out the particulars of the friendly model for some time, so this is a great accomplishment. I look forward to seeing this project scoped out more over time. The collaboration here is super, UST is growing, Avalanche is a great chain, and having Copperlaunch bring LBPs to the chain is the cherry on top.

5 Likes

Seems all good.
What interests me most is that it has got the Terra’s support.
Even potentially bigger than Beets on Fantom I believe.

3 Likes

I am really excited to see Balancer v2 tech on AVAX via another Friendly Fork.

I can’t help but compare this proposal to the Beet’s proposal. Though I know that every team has a different chemistry, I think there is some great content on ‘how to friendly fork Balancer’ called out by Daniel in his wonderful post below the Beet’s proposal (it’s actually longer than the initial Beet’s proposal).

  • 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.

  • 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.

Beet’s airdrop required that the position be on both chains (Balancer and Beets) within a certain time frame, which mainly attracted the long time BAL holders. That connection and engagement between BAL 80/20 holders, Ballers, and the Beet’s team really paid off, and helped build a strong community early.

4 Likes

Sounds like just what AVAX needs.

Excited to see this develop and get involved.

Congrats

2 Likes

This is a very important proposal. After the big success of BeethovenX, I really like the idea of pursuing a similar strategy on Avalanche. And this seems a strong team, that with @luigidemeo has the support of Avax!

I agree with @LongJuanSilverado that there are some issues that perhaps need a better clarification.

Nevertheless, what really seems quite offensive too me is the “0,0012%” allocation to our @Andrea81. I know how much effort he puts in his work and in the selection of beneficial partnerships. Considering that 18% goes to the team and 10% goes to partners and advisors, in my opinion the Hexagon team should really commit more, at least a 0,1%, for the person that made this partnership possible. 0,0012% seems a joke and I don’t like that our contributors don’t get what they deserve.

4 Likes

Hi Everyone,

This is the Hexagon team :slight_smile: Super excited about being here, both because of the upcoming launch and because we are long-time fans of the Balancer protocol and its very interesting capabilities.

A big thank you goes to @Andrea81 for his help in making this happen as well as to all the other people who have contributed to getting Hexagon where it is now. (Meaning about to launch a cool,multi-functional platform on one of the hottest chains out there!) Obviously, we mean @luigidemeo and his team, as well as our Terra partners.

2 Likes

Ye all good, expect that UsT claims… its risky there are a lot of rumors and negative things going around about Luna/ust and all that shabang. Not sure if an association with this would be in our best interest and positive for the long run. We might regret it later

1 Like

Hi LongJuanSilverado,

All very good questions. Please allow us to take on them one by one:

  • 10% is a lot, that’s why we are considering reducing it and merging this part with the marketing budget under a common treasury fund (see below.) In any case, future changes will only see the tokens used to increase liquidity.

  • The team is semi-anon, so part of it is known to Balancer, Ava Labs and Terra because of geographical issues if you like. In other words, we do not all live in crypto-friendly lands sadly :-/

  • There are no strategic investors yet. The 5% will be devoted to a private sale before launch. We have of course spoken to a series of VCs but it is obviously not fair to mention their names before anyone agrees to participate. However, we’d like to stress that anyone investing in the sale as a bigger investor will be public, not least because this is good for marketing.

  • 6 percent f the total is allocated to the DAO. The tokens will be released after a lock period of 6 months and vested for either 12 or 24. This is true for the team as well, as for all other participants, so that conditions are fair to everyone.

  • Whether we call it treasury fund or marketing budget, this allocation will be spent on a series of vehicles - we literally started marketing today! - and will cover the whole life of the project. Hexagon is built to last so we need to plan ahead for any eventuality.

Finally, regarding our relationship with Terra, we can say that they, too, have a stake in the success of this project. Terra aims to establish a presence on Avalanche to expand the use of UST - and we are that presence.

3 Likes

Hi Asnogordo,

Great to know you’re excited about the friendly fork and thank you for the suggestions :slight_smile:

I reckon the more technical ones should be discussed among the community here. What I can say for having people from Balancer as advisors or otherwise involved is that this was our plan all along.

We want to create a synergy that will help both platforms - and Avalanche as well. So coordination is a must.

2 Likes

Thanks for hopping on the forum and participating in the discussions. Also, thank you for addressing my questions.

A few of the points still remain outstanding regarding roadmap and Terra.

  • How does the team plan on expanding the roadmap?
  • We do understand that Terra is a stakeholder but the question still remains whether the Hexagon team would be working on use cases outside of the Terra ecosystem or if Hexagon will be purely in the service of the Terra ecosystem.
  • It is also understandable that the team would like to remain anonymous but perhaps more can be shared without naming them and while preserving their identities.
2 Likes

Our pleasure!

In the beginning, with three forks to deploy and operate (think of marketing, BD, and community) we think we’ll be fairly busy for a while. In the long term, we have given a thought to the mirror protocol, as well as integrating new products - leveraged ones included. As we launch, a proper roadmap will be made available to the public.

The dex/lending will be focused on UST but act independently. The main goal here is to make it successful so that UST plays a key role within a wider ecosystem. Or, to put it simply, the most important pools will be using UST, but the protocol being permissionless, anyone could create any pool they’ll like. It will be inclusive.

Thank you for your understanding regarding the team. The curiosity is fine though :slight_smile: We have one main director, one financial expert, one product manager, and one technical advisor who are all drawn from the Avax ecosystem. Besides, we have currently enrolled a marketing manager who will be dedicated to socials and influencers, a BD lead, two community managers, two full-time engineers, and another three part-time engineers, plus some extra help. All are experienced in blockchain and all non-technical roles have been working in the Avalanche ecosystem before.

4 Likes