The Great Bao Migration + Baoswap & Co

As you know, Bao is planning to migrate to xDAI in order to reduce the fees on our farming.

So far I’m pleased to announce that all tests of the core contracts used for Bao have worked flawlessly in an xDAI environment and require no additional changes. So we are very confident in our March 1st release date.

What is the migration?

Migration may not be the best word choice. It is more like Bao is opening up a franchise on xDAI.

There will be a version of the Bao Farm contract on both xDAI and the Ethereum main net.

The rewards on the mainnet contract will be reduced (to 1/4th their current levels which is 250 base Bao per block) and the xDAI farm will be set at 750 base Bao per block.

As users begin to plan for this migration it is now time for us to outline some specifics:

#1 - General Timelines Details:

The official migration date is March 1st.

This is essentially “moving day” its the day you should expect to migrate your assets optionally across the chains.

Since there was some ambiguity to this, I will clarify that March 1st is the LAST day to harvest on the mainnet contract without penalty.

The actual transaction to lower the reward rate on the Ethereum mainnet will take place sometime after 11:59 PM PST, meaning that the transaction will actually execute on March 2nd to change the rewards. The exact time will depend on network gas that day.

Bao Farms on xDAI will have their pools open for deposit as of March 1st, but the farming will not begin until a few minutes after the Ethereum mainnet pools have been reduced. This will prevent their being an overlap of extra Bao printed during that time.

Currently the mainnet pools are set to have their rewards reduced from 250 → 0 in June. But I will be introducing another governance vote for consideration to suggest we do not make that change. You’ll see why in a later section.

#2 - How the Migration Works:

In order to migrate users will unstake their LP tokens from the Bao Farm.

xDAI is a sidechain of Ethereum. This means if you have an Ethereum address, then that same address is owned by you on xDAI (using your same private key) and you can connect to the network the same way you would connect to a test network.

If your LP tokens are Sushiswap LP tokens that are supported by the new xDAI Bao Farms, you’ll be able to immediately take your LP tokens to the xDAI “Omnibridge” (https://omni.xdaichain.com/) and add the address of your LP token and transfer it to your xDAI wallet. (Don’t worry our community team will be making detailed picture tutorials to guide you before the big day!)

If your LP tokens are Uniswap LP tokens, you can either keep them on the mainnet, or withdraw the underlying assets and move them across the bridge using either Sushiswap or one of the other supported LP pools on xDAI that are outlined later in this announcement.

We are currently testing the remaining LP tokens, but so far it seems that nearly all LP tokens have no minimum transfer requirement when transferring them over the Omnibridge. If any of them do fail because the LP tokens have such small units, then you will be able to unstake the original assets and move them over to LP tools on the xDAI side.

#3 - Changes on xDAI

Since xDAI has a faster blocktime than Ethereum, it is not possible for us to keep the two contracts in sync as the blocktimes will change.

We will aim to keep the time for each halving phase the same at roughly one week (measured in blocktime) but the specific blocks will differ. This will be based from the target time of the contract start and so we will post an updated chart of halving times for xDAI once the contract is deployed.

#4 - Timelock Adjustments

We will not be deploying the timelock on the xDAI sidechain until after the first halving of the xDAI contract. Given the complications we had early on with the timelock contract on the main network we want to make sure we can quickly respond to any issues that may happen on the xDAI side.

If you are in any way not comfortable with that then do not deposit your assets in the xDAI Bao Farm until after the timelock is implemented.

#5 - BaoSwap

Before we announce the pools that will be on the xDAI chain, it is time for one of our two surprise announcements.

As you know our community has a partnership with Sushi to use their mainnet LP tokens for our final synth products, and for this we decided we would not deploy our own swapping protocol on the mainnet.

However we feel comfortable doing this deploy on other networks where it is not competitive with Sushiswap, and given the lack of incentivized farms on xDAI and our need to create swapping tools we felt it was worthwhile to deploy our own.

So Bao will create a Uniswap fork on xDAI called “BaoSwap”.

BaoSwap will use the same smart contract source code as Uniswap and the core contract and router are already deployed on xDAI. We are currently going through final testing of the UI and will be releasing it prior to the migration.

BaoSwap fee collection will feed into a future Bao staking program (much like xSushi) which will require a governance vote to deploy once ready sometime later in the Spring.

#6 - Bao.cx

When users migrate the $BAO token to xDAI over the bridge they receive a “$BAO on xDAI” token an ERC677 that is trustlessly controlled by the bridge contract.

This means that the Bao Farm on xDAI cannot issue its on “$BAO on xDAI” and will instead issue $BAO.cx (Bao coupon xDAI)

Rather than create a brand new contract just for swapping and worrying about security issues and audits, we will set up an incentivized $BAO.cx/$BAO on xDAI pool on BaoSwap that will allow users to swap between the two assets on the xDAI side. If they want to bring their Bao back onto mainnet they will simply bring “$BAO on xDAI” back to the Omnibridge and switch back.

To provide the initial liquidity for this pool, the Bao treasury will allocate 2B Bao from the liquidity pool of the treasury (currently unused) to be migrated across and staked, and will do the same with the xDAI treasury when $BAO.cx farming starts.

#7 - Bao Baskets

As a brief update on the schedule of Bao Baskets. We are still on track to be able to do a spring release of these for our soft synths. As users know this is a fork of Balancer pools.

However Balancer has just announced that their V2 contract will be launching in March.

In order to set the right expectations I’m recommending that we wait to fork our own deploy of the V2 contract rather than deploying the V1.

This change will (at most) add 1-2 weeks to the deploy, but will allow for general pool AMM, built in oracles, community governed protocol fees and most importantly asset lending.

The community can of course choose to vote on and move forward with the deploy of V1 but I do not recommend it.

#8 - Pools

All pools that have at least $250k worth of LP deposits (based on BaoBoard.com) by the end of this week will be available on xDAI in both SushiSwap LPs with Baoswap LP farms incentivizing native pairs.

We will also be adding additional same asset pools (like USDT/USDC, wBTC/tBTC, etc) in order to let users farm with low IL.

#9 - YetiSwap

In our deploy of BaoSwap I realized three things:

  1. There are a great many chains that have liquidity but are not incentivized farms.
  2. Sushiswap does not operate on those chains.
  3. It is very easy for us to modify our infrastructure to run on multiple EVM chains.

With all this in mind, a new idea emerged to replicate Bao’s infrastructure on every EVM chain that is not the Ethereum mainnet.

The only challenge became that you cannot sync tokens between multiple chains that don’t have trustless omnibridges. To solve that we would have to deploy new tokens on each chain.

I wanted to prototype this idea, in looking at Bao Farms, BaoSwap and Bao Synths as essentially a franchise model to be deployed to multiple chains. It turns out it takes no more than a few days to adapt the system to get the ecosystem running on other chains, other chains that have hundreds of millions of dollars in liquidity waiting to be soaked up.

The idea here is that Bao will fork and deploy its infrastructure to other EVM chains where there is new liquidity to be had.

In each of these deploys it would be its own standalone brand and own token.

However, the Bao community would proportionally own the vaults from that token, and in turn have proportional governance over it.

Since these other chains share infrastructure with Bao, they can have a smaller dev fund and do not need an LP fund, meaning most of the fund of any new issuance can be part of the community fund.

To pilot this project I’ve set up “YetiSwap by Bao” on the Avalanche chain, the contracts are already live and working but the UI will be ready to deploy at the same time as BaoSwap. The swap will be ready first, with the farms to come later.

The farms will issue a $YTIS token to reward farmers, similar to $BAO.

But, 15% of $YTIS created will go into a vault owned by the $BAO community meaning that users will vote with $BAO to control that 15% of $YTIS and that 15% of $YTIS fees will come back into the future Bao staking programs.

This will allow $BAO to franchise its infrastructure across other chains and expand its liquidity footprint, only requiring a few days of dev time each time we deploy.

We will begin with YetiSwap as a pilot, but have prototypes ready to deploy for up to 6 other chains if Yetiswap goes smoothly and if other tests are successful.

Bao’s xDAI ecosystem will still be our primary and top priority. But, any time we can capture new liquidity and value for the Bao ecosystem without adding extra overhead and without competing with our partners then we will do what we can to capture that value.

#10 - Hiring

As many of you know we’ve hired one new full time dev, made an agreement with an experienced consultant and hired a full time community manager (Chickn)

Our full time dev will be starting on the Feb 27th. But we are still looking for at least one more senior dev.

The current set up and testing for xDAI and the migration, as well as BaoSwap and YetiSwap has been done by Baoman while we wait for the new dev to onboard. (Amazing what you can achieve once you have a community manager dealing with Discord :P)

Given this hiring we expect to be able to keep all of our current timeline goals for soft synths (spring) and full synths (summer)

Got Questions?

If you have questions about the outlined info (which I am sure you do) post them here and I will try to get to them early this week.

A lot of this information is brand new, even to the community managers, so they may not have the full details to answer your questions yet.

I will also be taking most of Sunday off in order to rest after the busy week. So if you have questions about the migration or the new product please be patient and we will get to them as soon as possible.

Remember that everything in this project is run by you, the community, and as a community your thoughts will shape our path forward and bind it by votes.

For example if you as a community do not want to do franchised versions of Bao (which I think would be a bad idea to not do) then you could vote on it. If we want to push back dates, we can vote on that too. So a lot of open questions may be things that are up to you as the community.

I’m sure this isn’t ALL the possible info I could put in this announcement but I think its enough for now to show our progress, exciting new plans and outline some of the biggest questions of our migration.

It is exciting to see where we will go as a community together!

Summary:

  • Launching Uniswap clone all xDAI called BaoSwap.
  • Also deploying clones of this to Avalanche to pilot ‘franchising’ Bao on other chains with the ownership and liquidity driving back to Bao.
  • xDAI tests for farming and swapping have been successful.
  • On track for all other timelines previously mentioned.
  • New dev starts later this month. Community manager already started.
32 Likes

Hey Baoman I got a few questions about the franchise idea. Could you go into a bit more detail about why a franchise model with each ecosystem having their own asset is superior to what is planned for the xDai deployment? What is it about the xDai chain that makes it more suitable for a 1:1 deployment of Bao, but makes the Avalanche chain more suitable for a franchise approach?

And lastly, could you explain just a bit more what you mean by “value capture” through franchising? Through what mechanism would value be added to Bao through the liquidity capture performed on other chains?

Thanks!

2 Likes

Could you go into a bit more detail about why a franchise model with each ecosystem having their own asset is superior to what is planned for the xDai deployment? What is it about the xDai chain that makes it more suitable for a 1:1 deployment of Bao, but makes the Avalanche chain more suitable for a franchise approach?

xDAI is the only chain with an existing trustless omnibridge that lets you move any asset in two directions without centralized parties.

Other EVMs have limited bridges or centralized bridges and so you can’t do 1:1 transfers easily. If you cannot do 1:1 transfers easily across the chain then the prices get split up and it gets messy.

I think the franchise model is probably cleaner. If I was doing all of this again from the very start, I would either launch $BAO only on xDAI to start and not the main chain. So the xDAI 1:1 is a response to dealing with the gas fees and being forced to move elsewhere, because of the trustless bridge we can do that securely 1:1.

If we try and expand out the one Bao asset to too many chains then you start to have problems in the tokenomics in incentivizing participation and broad price arbitrage.

And lastly, could you explain just a bit more what you mean by “value capture” through franchising? Through what mechanism would value be added to Bao through the liquidity capture performed on other chains?

100% of Bao tokens own 15% of YTIS tokens including the fee capture (if the community votes to turn it on and implement it in the protocol) while we can’t transfer any token 1:1 we can transfer stablecoins. So a portion of the fees gathered from swap protocols on other chains would go over bridges and be used either in a buy and make model, or a staking model returning to Bao holders.

The specific implementations and economics still need to be voted on and implemented in a trustless manner, but that is the goal here.

14 Likes

BaoMan - You are great.

Is BSC one of the 7 other chains to franchise too? It seems BSC is the best set up for DEFI at the moment and has incredible TVL already. Can you name each place you want to expand too?

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As I said we will get through the pilot test with Yetiswap first and then worry about the chains but all other EVM chains are possible this would include BSC eventually.

8 Likes

this confuses me…
https://docs.bao.finance/fees-penalties-and-funds
if people stay more then 5 days there should not be a penalty at all ?

BIG update!

Only concern I have is… what will the tokenomics be for the other chains… Will there be same/similar amount of initial BAO tokens on the other EVMs that are NOT omni bridge compliant?

Also Is there a way to ensure the token price will be indexed so that regardless of all the different chains… the BAO token price is the same on each chain. This would make not only the BAO infrastructure transferable BUT also the BAO token value proposition to be cross chain without actually being cross chain if that makes sense. We could do this through our FIRST Synth no :) ?

Are you able to clarify if each different BAO chain will have their own governance, separate to the current voting system we have? or will the governance voting and management system still remain the same through 1 portal to manage them all?

thank you

2 Likes

My understanding of the franchise model is in essence clone Bao into sub brands across other EVM chains. These sub brands would have their own independent tokens on each chain. The APY, price etc… are independent of Bao, however they would inherit the new features of Bao. So as BaoSwap launches, YetiSwap launches on Avalanche.

When Baskets launches, this will also be deployed on Avalanche as Backpacks (fake example) and a part of YetiSwap.

A small portion of the treasury of each of these sub brands will pay out to Bao treasury (franchise fee) and Bao members can stake Bao tokens to receive proportionate stake.

If I misread feel free to correct.

TLDR:

  • Reuse the products developed on xDAI for other EVM chains
  • Increase total liquidity of bao ecosystem
  • Increase fees
2 Likes

On the subject of a franchise and franchises in general, I’m having trouble seeing how it benefits me as someone farming BAO. So I guess the issue is that I’m not seeing how the vault has any value to me, and how having a larger vault is going to help. How does the vault help me?

Additionally, if the issue is a trustless omnibridge, wouldn’t the higher value solution be to get really good at making the bridge, or at least hire someone really good at it, rather than fracturing the brand across multiple iterations? Because if BAO become BAO +$YTIS +$WTVR +$ECT, it’s not a franchise. Each iteration will be it’s own brand, unable to contribute to the total ‘brand value’ of BAO. A Wells-Fargo branch doesn’t get to change the name and the brand just because it’s in a different location.

If it’s going to be done, it’s worth doing right, I think. If trustless Omnibridges are what’s standing in the way of doing it right, that’s where the focus should be.

That being said, the idea of rapidly expanding into every market avaliable, if implemented properly, is basically free money. Honest to god, it’s a brilliant move.

3 Likes

Will this partially cannibalize Bao? Why wouldn’t I just jump over to Avax, farm YTIS for a while for the high APY? It’s still the bao ecosystem, but might make basic metrics like TVL appear suspect, and harm the brand’s reputation. The premise of supporting multiple chains makes sense, but I’m not sold on the method. The update though overall is impressive!

So I guess the issue is that I’m not seeing how the vault has any value to me, and how having a larger vault is going to help. How does the vault help me?

I prefer to think of it as how does it help us, the Bao community.

  1. Fattens up the treasury of Bao. Having a bigger treasury allows us to hire more, payout more bounties and generally secure the future development and delivery of the ecosystem.

  2. Allows us, if we voted, to payout a percentage of the ecosystem earnings to users who stake Bao. This would provide a long term aligned incentive for not only farming and using Bao for synths, but also holding Bao to earn a dividend from the ecosystem.

As I understood it the brand would be like a sub brand of Bao. So it would be “YetiSwap brought to you by Bao”, with the design and look and feel sharing close similarity to Bao. A bit like how Yam is bringing Degenerative and Umbrella or how Yearn has different products inside their portfolio. I wouldn’t see it as splitting up the brand, rather funnelling in users across different chains into the Bao ecosystem. A user who discovers and likes YetiSwap on Avalanche is likely an Eth user as well and might decide, seeing that YetiSwap pays to the Bao treasury, to join Bao Dao.

Good questions, not having a collective TVL is unfortunate (on Coingecko or CMC) though I guess we could calculate it ourselves. I’m anticipating APY to go down quite a bit on xDAI purely because of the huge reduction in fees opening up the opportunity to lots of new farmers. Offsetting some of this a bit onto other Chains might help to maintain a bit of a higher APY on xDAI, all theoretical and guess work at this point.

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Bao members can stake Bao tokens to receive proportionate stake.

Correct users have proportional control and value capture over each iteration.

Including fee value capture driving back to Bao.

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Why wouldn’t I just jump over to Avax, farm YTIS for a while for the high APY?

Sure go for it.

But most users won’t migrate chains (especially ones that don’t have trustless bridges) just to farm.

Right now there are billions of dollars of volume and liquidity sitting on other chains. The fact that Bao exist hasn’t changed that and brought them here. It makes sense to get a cut of that action.

5 Likes

So while I see the value to the primary Bao community of having these franchises, I am struggling to understand the value of farming from the perspective of one of these alternative chains users.

$BAO has future value as both a governance token but also by virtue of the fact it will be burned/used in minting synths thus sustaining itself and having deflationary measures against the emission of vested tokens etc.

Were I an AVAX user, what is the functional use of possessing $YTIS tokens and having a $YTIS farm? They will presumably have some self governance ability, but what else? Will it also be used for synths ultimately? Or otherwise, how would the franchised farming protocol be different to projects like Kimchi which are straight yield farming systems with no end use?

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“penalty” was the wrong word chosen to describe what happens. If you don’t “harvest” your “pending” BAO and make it “locked” BAO, then your pending balance will change to 25% of what it was after that date. It is because of how ethereum works that that will happen. So harvest on that last day, and you ensure that your pending balance goes to locked.

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I love the idea, and especially love the cold bao icon.
I feel concerned about spreading BAO resources too thin, as each of these different ‘franchises’ that are deployed would require oversight, administration and management.

While not against it, I do want to make sure that BAO stays focused on providing a kick ass product(synthetic assets), in every vertical it does(seeming like mainnet, xdai and maybe avax).

Would we bring people on to cover those efforts or do you not thing the work effort would be that large?

3 Likes

ahh cool thanks a lot for the clarification

How did you derive 15% as the preferred Bao stake? Am I correct in my understanding that the balance to be struck is between:

  1. Making sure the Bao ecosystem retains an appropriately large share of control over these forks
    and
  2. Making sure that the $YTIS sub-ecosystem is given breathing room to grow and compete on these side-chains

My assumption is that each franchise has the same mission as Bao but on that chain, xDAI is like the beacon project and the other franchises inherit the code from the beacon and pay back a franchising fee. Only thing that confuses me then is why is it called $YTIS and not just $YTI. $YTIS seems to narrow the scope.

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With these new franchise tokens being created with their own tokenomics doesn’t it essentially dilute existing BAO with many tokens leading to essentially one ecosystem? I see the value of being in other chains but BAO should be burned to create these new tokens.