disclaimer, this proposal is debated amongst Guardians
This proposal hopes to outline a set of plans to be undertaken in hopes of building a more sustainable model for the ecosystem by:
Decreasing overall emissions
Adjusting Gauge emission shares, (Also touched on in another concept
Delaying Treasury BAO Lock
Treasury buybacks BAO & uses it to provide liquidity (Unsure, need feedback on ramifications. But it would jumpstart protocol-owned liquidity as BAOv2 is massively under the value of BAOv1)
These actions aim to lower the incentive to sell BAO and put us more in line with current market conditions by moving liquidity into the DAO’s control, reducing inflation, making veBAO revenue overall comparatively more lucrative which incentivizes BAO lock up more and increasing BAO’s exposure to other protocols.
Twoscore, and three days ago, Bao Finance had undergone a migration for the purpose of new infrastructure, making right on the locked rewards, and giving users true ownership over the protocol beyond just voting but also by giving 100% share of the earnings of the protocol as well as giving them favored emissions in gauges when they aligned towards long term participation in the ecosystem.
And now, a few things have been made clear within a month and a half of the migration being in effect.
- Our circulating supply is far lower than anticipated.
The swapper started with 166 million, which showed the DAO’s upper expectation, it is now 163 million excluding Gate.io who has not confirmed migration the current circulating supply is 5,690,854.
- From projections, BIP-21 assumed a roughly 50-200% dilution based on varied circulating supplies.
Assuming 80-166 million was claimed and converted, BAOv2 annual emissions were set to be around 230 million and are currently set for that. From here, that means from 5.7 million, we can expect inflation of 4035%.
With these figures in mind from a month and a half of operation after the migration, It is this writer’s opinion that the DAO needs to alter the model’s parameters that were heavily influenced by a model made shortly before the bull markets start and accelerate protocol-owned liquidity underlined in the Annual Roadmap. We have to built around the market we are in and 4000% inflation is just not going to make it in this economy.
Actions in order)
- Adjust the percent of weights of each Gauge
BAO/ETH - 50%
baoUSD/3crv - 40%
bSTBL/DAI - 10%
bSTBL’s heavy lower of emissions account for the inherent yield it gets from underlying assets while being extremely low risk and not needing liquidity as much to be used as collateral for baoUSD.
Use the Control Gauge to reduce overall emissions from 230 million to a range of 12-25 million BAOv2 a year. (Adjustable in the future, i.e., Influx of conversions from BAOv1 to BAOv2, need to expand emissions to cover more gauges from other protocols, etc.)
Treasury buyback BAOv2 from the market and LPs it (TBD)
The treasury of the DAO delays staking of its BAO holdings into veBAO until the annual revenue of all veBAO reaches 250,000 as currently the revenue to be made on veBAO for the treasury is small and only would damage its viability to potential users.