BOND Token Summary Information - As of Time of Writing:
Max Total Supply: 10,000,000 BOND
Circulating Supply: 1,652,481 BOND
Current Holders: 4,866
Total Value Locked: $440M
Market Cap / TVL Ratio: 0.22 (compared to Bancor 0.85, Aave 0.96, Synthetix 1.22)
Uniswap Liquidity: $43M
BarnBridge is the first risk tokenizing protocol that allows for hedging yield sensitivity and market price volatility using debt pools on other DeFi protocols and transforming single pools into multiple assets
Impressive team with identities fully disclosed (Meet Our Team – BarnBridge)
Strong community (see Discord, GitHub, Forum, etc. links below)
Security first approach to development (see various audits noted below)
Governance handed over to DAO in early February 2021 (DAO audits - Haechi and Quantstamp)
Shipping Smart Yield (SY) products on March 15, 2021 (SY audits - OpenZeppelin and Hacken)
- Junior token - jToken (ERC 20 token with added risk)
- Senior bond - sBOND (NFT with less risk)
Smart Alpha product expected to be released in the Spring of 2021 (see discussion below)
Key advisors - Kain Warwick (Synthetix), Stani Kulechov (Aave), Aaron McDonald (Centrality)
Stated Liquidity Providers - Fourth Revolution Capital and ParaFi Capital
Currently no CEX listing; is supported by Coinbase Custody
Involvement with the Open DeFi network and the DeFi Alliance
Description of BarnBridge and Product Offerings:
BarnBridge started as an idea in Q2 of 2019 well before DeFi collectively had reached even a billion TVL. BarnBridge seeks to provide a range of products that allow investors of all skill levels to manage their individual and portfolio risk exposure through a secure, decentralized, and permissionless platform. At scale, BarnBridge allows you to trade in and out of any risk exposed position for any asset in the world. Assuming infinite liquidity, the project can build infinite numbers of products and hedged strategies. This project brings DeFi to institutional participants as its products are structured in a way that is already very familiar to them and easy to use.
Smart Yield allows users to tranche out the yield from the debt pools of other projects, such as Aave, Compound, Cream or Yearn Finance to normalize the risk curve by creating derivatives for risk mitigation. Users are able to buy junior or senior tokens which represent tranches. Junior token holders provide liquidity and buy risk from senior bond investors. The risk here is variable rate annuities going below the expected level. Investors who buy senior bonds will have a guaranteed yield/interest rate for the life of the bond. At the same time, juniors will benefit from the extra rewards generated by tokens locked by seniors in cases where the variable APY of the underlying lending protocol (including the governance token rewards) are higher than the weighted average guaranteed yields of current seniors. Junior tranches are ERC-20 fungible tokens. Senior tranches are ERC-721 (NFTs) non-fungible tokens.
Smart Alpha is market price exposure risk mitigation using tranched volatility derivatives. Smart Alpha bonds will not be structured via traditional yield tranches but instead with various levels of market price exposure, which will be call risk ramps. The idea is that every bucket or tranche of price exposure does not need to be flat across the entire risk curve, meaning the first $100 of price exposure does not need to deserve the same upside and downside volatility. This is similar to having fractional ownership, but with different risk/reward for the fractions.
Benefits for Bancor - Rationale:
BarnBridge has a strong community which would bring more users, liquidity, and fees to Bancor. As of time of writing, if 100% or 50% of BarnBridge’s liquidity on Uniswap migrated to Bancor the pool would be in the top 10 or 20 Bancor pools, respectively. Additionally, within a week from date of writing, BarnBridge will be launching its Smart Yield product which will create jTokens that could benefit Bancor by providing an opportunity for a number of additional trading pools to users who would already be familiar with using the protocol by then.
If there appears to be sufficient enthusiasm, I suggest we formally put this forward as a proposal after March 15th when the first BarnBridge product is shipped and once the expected upward price volatility has evened out. Then, within a month after Smart Yield is launched, I would suggest evaluating the BOND pool on Bancor, TVL in Smart Yield, and then considering adding jToken pools.
Example of tranched debt pool - for illustration purposes only: