The Great Bao Migration + Baoswap & Co

I love these ideas! Keep up the great work!

This would be my assumption but it doesn’t seem to be clearly stated. I was hoping BaoMan could confirm what the intrinsic value of these side tokens will be to their holders

Only thing that confuses me then is why is it called $YTIS and not just $YTI. $YTIS seems to narrow the scope.

I thought YTI already existed as a ticker but I think I’m wrong. Worth renaming.

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Same as Bao, governance over that protocol.

Franchises are just like launching a new Bao on a different chain but Bao holders automatically own 15% of it right from the start.

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It would be “X by Bao” such as “yetiswap by Bao” but there is power in giving a community their own identity too. Just like the Yearn ecosystem has Sushiswap, Pickle, yVaults, CREAM, Cover, etc.

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I cannot wait for the xDai migration and am really happy to hear that everything is on track for March 1st.

  1. I do like BaoSwap as a concept and I think that TheBaoMan is completely right that xDai is missing an incentivized farm. I am worried about diluting the size of the liquidity pools on xDai even more as Honeyswap pools are already a fraction of the size of Uniswap pools. That could affect price slippage of the AMM is more people start using xDai.

  2. Bao.cx is a great idea! Simple solution to a potentially complicated issue. Also, another source of passive income for Bao liquidity providers without having to deal with IL.

  3. I do understand that we have a partnership with Sushi and that is potentially why we want to add only Sushi LP tokens on xDai but is it possible to also add an option to bring Uniswap LP tokens to xDai in the future? I’ve been providing liquidity to Uniswap for a while and would love to not have to pull my liquidity out. There is an option to continue to farm on Ethereum’s main chain and get reduced returns but I think that farming on xDai would help grow the protocol a lot more.

  4. “Franchises”. Amazing idea and I honestly don’t know why other protocols have not implemented this. Basically free income to Bao.

All in all, amazing update. I cannot be more excited to be participating in this awesome project!

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An additional clarification here.

On xDAI we will have Sushiswap LP token pools from migrated tokens over $250k from the main net.

Baoswap pools will be for the unique xDAI pairs and assets that didn’t get migrated so as to not compete with our partner at Sushiswap.

While we cannot prevent people from making new pairs on Baoswap, the farm incentives won’t exist for those pairs.

This was quite unclear in how I had initially written it.

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Just making sure I understood it correctly.

  1. Pools with >$250,000 LP on main chain will be migrated over to xDAI with only Sushi pairs
  2. BaoSwap will support xDAI specific pairs not available on Sushi (Like a Bao-xDAI for example?)
  3. BaoSwap will support non-migrated pools with LP amount below $250,000

Will those non-migrated pools with LP below 250,000 also be incentivised with block reward?
Is BaoSwap intended to be used generically for swapping on xDAI?

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Yeah that is correct.

Those smaller pools will have some incentive but not as much.

Baoswap’s main goal is to provide us with the tools we need to kickstart synth development on the xDAI side and the swapping 1:1 of Bao<->Bao.cx if people generically use it for swapping that’s great. But unlike someone like Uniswap that is not our primary focus.

Our main focus is to deliver the synths, swap tools are something we need in order to do that because synths need rebalancing. Since sushiswap isn’t on xDAI it was the choice of giving that liquidity to someone else or capturing it ourselves.

Whenever there is that kind of opportunity where we don’t compete with sushi but can capture more value or liquidity in tooling we need we will deploy it :)

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How do we keep the swap ratio 1:1 for BAO <-> BAO.cx? Will it be a static ratio instead of dynamic? I saw 2B tokens to be provided from treasury - wasn’t entirely clear if this was just to kick start the pool or intended to be the sole liquidity provider of the pool.

If community is providing liquidity to BAO/BAO.cx pair will there be some other way to redeem BAO.cx back for BAO on the mainchain in order to regulate the price?

The BAO and BAO.cx swap on BaoSwap will work like Uniswap’s Automatic Market Maker (https://uniswap.org/docs/v2/protocol-overview/how-uniswap-works/) where liquidity providers put in a 1:1 ratio of BAO and BAO.cx into the pool and take a portion of the swapping fees when they exit the pool. My understanding is that 2B BAO will cross the bridge to xDai and 2B more BAO.cx will come from the xDai Bao treasury to enter the BAO:BAO.cx pool.

Price will fluctuate a little as swaps are made but there probably won’t be huge swings with the initial liquidity of 4B.

Sorry if this is an obvious question but will both BAO on xDai and BAO.cx be able to create synths? We’ll need to have a demand for both if we’re going to keep the price 1:1.

I was expecting that by the time we come to Synths, we would fully have migrated to xDAI? Or that they would only be available on xDAI?

What happens to pair that are in Uniswap and not in Sushiswap? I am farming a top 100 token pair which only appears on Uni for unknown reasons.

Bumping this question as I too am curious about how that figure was reached. It seems logical that at some point any X by BAO chain that accumulates substantial value would take a community vote to drop paying the 15% fee. Despite no longer receiving and updates from the BAO community they would be monetarily incentivized to do this. Even if most or all of the 15% fee they saved was turned towards funding a development team of their own. Being how much of the code even from our own project is open source (GPL-3.0 License) it likely would not cost them anywhere near that % if they are successful and accumulated significant value.

Is this the proposed solution to that problem? If I understand this correctly then someone owning x amount of BAO at the time of the new chains creation, they would then own the same number of whatever the asset on the new chain is called. Thereby maintaining equal governance and voting power to the current BAO holder on the new chain? If this is not the case then how do you expect BAO holders to maintain governance without transferring assets out of BAO and into each new chain.

This bring us to the excellent point that @Hooloovoo made

The current plan seems likely to degrade over time as value is accumulated and governance shifts. @SaltyWaters makes a great point here.

Overall as I think @rfw sums it up well when he said

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Ultimately, I think that it’s ok for Bao franchises to vote themselves off of the Bao ecosystem when they have the vote and even create synths. I see franchises as a way to capture quick capital with minimal effort and not necessary a long term expansion onto different chains. I also don’t really see them as competition for Bao. Like TheBaoMan said, most crypto users have a chain that they like to use and migration to different chains is unlikely.

But even if users do decide to move to another chain, I’m ok with that too. I’m ok with allowing the free market to dictate which chains are most used. I choose to use Eth because it has the most developers and is pretty decentralized. I choose to go over to xDai for some projects because it is trying to be a side chain of Eth with much lower transaction fees. I think that Bao on xDai will be the best version of Bao because of the ecosystem that it is in so why not capture some capital from other chains with minimal investment? I think the biggest thing that we’ll need to do in the future is to come back to Eth after Eth 2.0 fully launches but that should not be too difficult from xDai.

As far as bridges go, it seems super difficult to create trustless bridges between chains. I’m not a developer and I don’t follow Cadano that closely but it seems to be taking them a really long time to create an Eth bridge and they have a ton more resources than Bao.

Not sure if this answers your question but this is what the road map says:

  • Yield Farming on xDAI [1st March]

  • BaoSwap on xDAI [1st March]

  • A franchise of BaoSwap, YetiSwap on the Avalanche chain [1st March]

  • A franchise of BaoSwap on other EVM chains [Q2 2021]

  • Soft Synthetics based on BaoBaskets on xDAI. [Alpha - Q2 2021]

  • Full Synthetics on ETH main net based on Sushi LP tokens [Alpha -Q3 2021]

  • Full Synthetics on xDAI based on BaoSwap xDAI LP tokens [Alpha - Q3 2021]

  • Full Synthetics on Avalanche and other EVM chains based on their LP tokens [Alpha - Q3 2021]

  • Soft Synthetics on ETH main net

Essentially: test synths on xDai, then launch full synths on Eth and xDai, then expand to franchises.

I’m under the impression that they won’t be coming over to xDai at least not right now.

Edit: Added quotes. Lol, didn’t know how to do it before!

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To start, Bao.cx will be earning any rewards from Baoswap volume.

Bao tokens will be earning any rewards from franchise swaps volumes.

(Both subject to the community voting on activating those measures)

It will be the “Bao on xDAI” token (transferred from the mainchain) that will be used when synths are launched.

The use of the Baoswap LP pool to keep balance is a temporary measure and we’ll have a full redemption contract out after that to make sure this redemption is stable.

It just didn’t make sense for us to try and fit in building, testing and auditing a brand new redemption contract before the migration when there were so many other things to do, and the LP pool should do a good enough job.

I also suspect professional arbitragers will likely help keep the pool balanced.

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You can create a Sushiswap pool for any token.

If one doesn’t exist, then you can move the assets over to xDAI and there would be a Baoswap pool for it.

Bumping this question as I too am curious about how that figure was reached. It seems logical that at some point any X by BAO chain that accumulates substantial value would take a community vote to drop paying the 15% fee. Despite no longer receiving and updates from the BAO community they would be monetarily incentivized to do this. Even if most or all of the 15% fee they saved was turned towards funding a development team of their own. Being how much of the code even from our own project is open source (GPL-3.0 License) it likely would not cost them anywhere near that % if they are successful and accumulated significant value.

But the Bao community will own 15% of that vote.

Bao users, who are likely to be the most common users of franchises on other chains to start will also likely have a large volume of votes. Those users who hold both tokens also have a very strong incentive to keep the new swaps as part of the franchise.

They will both gain value from the synth protocol, which will only exist under Bao. Only by staying part of the ecosystem do they get that value case.

Given how few people get involved in governance, I am fairly confident that while it is possible for them to vote to separate, it is very unlikely.

It needs to be possible for them to be truly decentralized organizations. It is just like it is possible to vote to replace thebaoman as lead developer, but its not likely to happen.

Is this the proposed solution to that problem? If I understand this correctly then someone owning x amount of BAO at the time of the new chains creation, they would then own the same number of whatever the asset on the new chain is called. Thereby maintaining equal governance and voting power to the current BAO holder on the new chain? If this is not the case then how do you expect BAO holders to maintain governance without transferring assets out of BAO and into each new chain.

The 15% of the new asset is held in the community vault on the new chain. When there are governance votes on a new protocol such as Yeti, a duplicate vote will be held in Bao’s snapshot.vote.

Whatever the Bao community chooses as the majority choice is how the 15% of assets in the community vault on Yeti would vote.

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?

They have self governance, the ability to gain from swap protocol fees (like Sushi or Uni does as long as users vote it on) and they will have a role to be used in the synth ecosystem, but at a much lesser extent.

Because each franchise is a swap + a farm, there is core value from day one.

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?

First off bridges are very complicated, that’s why xDAI is one of the only projects with a good trustless bridge and we can’t exactly afford to hire the xDAI team to spend full time making bridges.

Most bridges are either:

  • Trusted bridges
  • Fee charging bridges
  • Asset limited bridges

For example, no other bridge other than the xDAI omnibridge lets you transfer LP tokens.

The other reason to do franchises instead of bridges is motivation of the users to adopt.

If you just made the $BAO token the token on all the other chains, and 80% of the $BAO ever to be minted is already locked, why would users on a new chain be motivated to use the new Bao franchise farm instead of a local competitor?

Now, most teams take a team share of 20%-30%, on $BAO we kept these numbers very low, but in the franchise model we can continue to keep it low because with multiple chains on the same code base we don’t have duplicated developer fees.

So having the 15% community ownership of the franchise means it still drives value back to Bao’s ecosystem, but is also competitive in attracting new users and new liquidity on that other chain.

Lastly, it lowers risk.

A lot of the other EVM chains are centralized. I wouldn’t want to build Bao synths on them, or worry about bridges and keeping equal assets.

What happens for example if you put Bao on BSC and they change the rules of their private trusted bridge and no longer let you withdraw Bao from BSC to ETH?

Is that Bao still worth 1 Bao on Ethereum? Is it burned? Who pays the cost? The team or the user? Do we stop the farm there? How do we adjust?

Every time you add a new chain, you increase this risk. If you run Bao on all those chains then xDAI carries the risk that something could happen on Polygon or BSC, etc.

But if you have it isolated as a franchise, you don’t run into these issues. In the rare event that a major sidechain collapses or has issues, Bao is still protected. The main network doesn’t carry risk but neither do any of the sidechains.

It allows you to move much quicker, launch on early stage chains with more certainty and properly motivate new users.

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Exactly.

In the rare event that the franchises vote to separate, which I think the voting math will almost never support, then it is ok for them to do this.

That is part of being a decentralized organization.

It would be a bad idea for them as they would then also need to vote in a new dev who would want to get paid which puts up their cost.

The Bao community would also then keep (and have distributed) the 15% of the token they already earned.

Since the token minting rate lowers over time, this means the amount gained from separating with Bao will always be many times smaller than the fees already paid.

So it simply doesn’t make sense.

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