[READY] [GF: Phase 1 Proposal] BarnBridge

ARCHIVED & OLD Missions Governance Fund: Phase 1
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Project Name: BarnBridge

Author Name: Tyler Ward

Number of OP tokens requested: 600,000 $OP

Timeline for distribution: 8 months

L2 Recipient Address:

Relevant Usage Metrics: (TVL, transactions, volume, unique addresses, etc.)

  • ~10k BOND holders
  • 1,000 DAO members
  • $15M in TVL across the BarnBridge protocol

Optimism alignment (up to 200 word explanation):

  • BarnBridge is moving its DAO to Optimism & will deploy its new Smart Yield v2 product on both Optimism & Ethereum mainnet. We’re also planning to migrate our BOND token to Optimism. We believe Optimism will drastically reduce friction associated with using Smart Yield v2 & enable a far wider range of our users to participate in governance (i.e., vote on proposals at far cheaper gas prices). Further, we’ve had our Smart Alpha product deployed on Optimism since Oct 202. Smart Alpha has had about $30m in exit transactions across all networks & Optimism was among the first L2 networks we launched it on. Finally, we maintain a close relationship with the Synthetix ecosystem & have had early discussions around closer collaboration and opportunities for integrations on Optimism.

Proposal for token distribution (under 1000 words):

  • We hope to leverage an allocation from the $OP Governance Fund to 1) incentivize Smart Yield v2 users, 2) bring sustainable liquidity to our platform on Optimism, 3) reward dedicated builders working to enhance the Barnbridge platform & 4) incentivize BOND holders to vote to migrate our DAO & governance fully to Optimism.

How will the OP tokens be distributed?

Total Ask: 600,000 OP Tokens
SMART Yield Users: 33.33%
Optimism LP: 25%
Builders: 25%
Move BOND’s governance: 16.67%

How will this distribution incentivize usage and liquidity on Optimism?

Even before the collapse of Luna we have spent almost 7 months completely rebuilding how fixed income and incentives for fixed income work in crypto. It was obvious that just printing more tokens for higher APYs/APRs was not going to end well so we wanted to reassess. This is also why our TVL dropped from its height of $600m to $16m (currently). We wanted to rebuild the entire system without focusing on ponzinomics.

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It’s obvious when we decided to pivot and focus on a new rewards mechanism that was more long term focused.

However, utilizing tokens (or let’s call this unsustainable reward mechanisms) to attract original entrants is an age-old use case in both finance and the broader markets. So we still will be utilizing token rewards in our system, they will just result in more market driven fixed income rates.

It would be amazing if we could use the OP token as well to jumpstart liquidity to a place where we won’t need ongoing liquidity longer term (which is the hope of variable income protocols and capital markets like AAVE and Compound).

Upon launch, we believe BarnBridge on Optimism will be the MOST sustainable and MOST long term focused fixed income mechanism. This should make sense given that we were the first mainstream or major launch of fixed income in defi and we have been extremely focused on that vertical since launching SMART Alpha on Optimism last September.

Why will the incentivized users and liquidity remain after incentives dry up?

  • Incentivizing more capital allows the pool to earn more yield which gets distributed in the next epoch, therefore increasing demand for that epoch. This creates a positive liquidity loop where more capital = more earnings = more capital = …

Over what period of time will the tokens be distributed?

  • We would look to incentivize our pools for 6 months with the OP tokens allocations.

How much will your project match in co-incentives?

  • SMART Yield: This is difficult to estimate because we are bonding our token to liquidity providers on the LP positions of SMART Yield. In other words, our DAO will be accepting risk as the sole liquidity provider. Due to this, we will have a unique way of providing liquidity to this system. However, we expect our liquidity to far exceed the dollar value of this grant.
  • LP (BOND/USDC [or LUSD]): We want the most liquid stablecoin on Optimism or WETH to pair with our longer term liquidity incentives. I think it’s our responsibility, within reason, to match or exceed the incentives. However, we will begin porting liquidity to Optimism when our main net pool (that we cannot turn off) ends. At that time, we have no idea what the value of the token allocated for this will be and it could potentially exceed our treasury. For that reason I think we need to use discretion but recognize that we should not solely rely on Optimism tokens. So there are scenarios that our incentives will be higher and vice versa but I think the people reading this will be very happy if ours are less at that time due to a run up in the OP token price.

Edit: after reading this feedback we have changed the ask from 3m tokens to 600k tokens and changed the distribution to this:

Total Ask: 600,000 OP Tokens
SMART Yield Users: 33.33%
Optimism LP: 25%
Builders: 25%
Move BOND’s governance: 16.67%

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Easy no in current shape. Extremely high Ask (1/10 maybe okay to ask) for short-term incentive distribution, small project. The split in token distribution could also be higher for builders.

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I am not sure if this is a satire post or serious proposal.

but few comments from my side, if this is a serious proposal.

$15M in TVL across the BarnBridge protocol

could you please provide data on OP chain ?

BarnBridge is moving its DAO to Optimism & will deploy its new

so its not live yet ?

1m for Smart Yield users (Fixed income on Optimism)

are you planning to give the reward in OP you are expecting from gov funding ?

1m Optimism LP (BOND/USDC) - to move all BOND liquidity to Optimism longer term

Only work short term and bring artificial liquidity.

500k for builders

This make sense

500k to move BOND’s governance fully to Optimism

How this will add value to OP chain ?

Upon launch, we believe BarnBridge on Optimism will be the MOST sustainable and MOST long term focused fixed income mechanism

Do you have any expected date? Does it make more sense to submit the proposal once you are live on OP chain? Do you think it will make your proposal stronger

We would look to incentivize our pools for 3 months with the OP tokens allocations

is there a typo with 3 ? do you want to spend 2M OP token as yield and LP reward in just 3 months ?

This is difficult to estimate because we are bonding our token to liquidity providers on the LP positions of SMART Yield

Its fine if you cant give exact number? Could you give a park figure ?

LP (BOND/USDC [or LUSD]): We want the most liquid stablecoin on Optimism or WETH to pair with our longer term liquidity incentives. I think it’s our responsibility, within reason, to match or exceed the incentives. However, we will begin porting liquidity to Optimism when our main net pool (that we cannot turn off) ends. At that time, we have no idea what the value of the token allocated for this will be and it could potentially exceed our treasury. For that reason I think we need to use discretion but recognize that we should not solely rely on Optimism tokens. So there are scenarios that our incentives will be higher and vice versa but I think the people reading this will be very happy if ours are less at that time due to a run up in the OP token price.

I have nothing to add here as I dont see any factual information here.

Let me summarize this.
3M token requested that will be used in 3 months, out of which 2M will be on LP/yield for a project that is not live on OP chain yet and no co-incentives, right ?

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I support the proposal as stated. Barnbridge has been an early supporter and adopter of Optimism. The Smart Alpha product has been available on Optimism since 4th quarter 2021. The second iteration of Smart Yield, V2, is soon to be shipped on both L1 and Optimism. Given the significant impact of moving the entire governance of Barnbridge to Optimism and cost to the retail user it would be both a sign of good will to support such an undertaking as well as giving support to a project that has already invested in Optimism as an early adopter in the DeFi space. Barnbridge has been battle tested and continues to thrive during market headwinds and deserves the support of the Optimistic ecosystem. Thank you.

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That’s a very large token request to be distributed in a short amount of time, which could just be a flash in a pan. If you trim down the token quantity significantly, this proposal is likely to incentivize usage and liquidity.

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Its not satire. We can obviously drop the amount being asked if people don’t think we are there yet. I’m not sure how to use the quotes like you did so I’ll go one by one.

  1. We stopped all incentives for BarnBridge while we worked towards a more sustainable product. At our peak we actually had over $600m in TVL if that helps.

  2. Wait, are you talking about posting the DAO on chain? It is all currently in audit.

  3. No it is not live yet, it is in audit and will launch in the next 30 days.

  4. Yes I think we would match a large portion in BOND though. We can put locks in place.

  5. Our liquidity is currently on main net and is incentivized for a few more weeks, at which point we would want short term liquidity to move any liquidity over to Optimism from main net. Since it is shorter term, I am fine with this number being lower.

  6. Expected date is early August (or earlier) depending on audits. We’ve been building it for almost a year and its very very close.

  7. Well, like I said earlier this is probably the most negotiable part of this proposal but we do need to move as much liquidity as possible to Optimism because that is where governance and our DAO will live.

  8. I’m a little lost here - a ball park figure for what? I don’t want to sound flippant here… I’m just a little lost on the quotes and which piece you are asking for harder figures on.

  9. Right now, we do have our product on Optimism (our SMART Alpha product). The 3M can obviously be lowered but I do think it is better if we have some portion of tokens in order to ensure that the DAO is activated on Optimism in an environment where less people are paying attention to defi.

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What do you think a reasonable number is then. We’re obviously fine dropping the number substantially but we’ve also been working with the Optimism team for along time and have been very dedicated to ensuring its our primary focus going forward.

The TVL is currently extremely low but we purposefully stopped all incentives while we built for a more sustainable product that would be a long term mainstay on Optimism. So I expect the TVL to be higher than $15m once we get everything up and running smoothly which we expect to happen in the next 30 days.

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So less for LP, more for builders?

We have been working with people on the Olympus team to bring over the Proxy contracts from Default to Optimism so I do think we will be able to attract builders through that framework… in which case I’d rather stack it higher for builders and less for LP which I think is the main pushback here.

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Bump and thank you. :smiley:

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As a project that was one of the first to go “DAO first” BarnBridge has certainly had its share of ups and downs. I don’t think anybody expected what BarnBridge set out to do to be easy, but it is important for those who aren’t familiar with BarnBridge to recognize the important contributions it has made in the past and what it can do for the Optimism ecosystem going forward.

  1. BarnBridge committed to moving its governance to Optimism back when “there-is-no-token-there-never-will-be” was a channel on the OP Discord so was not doing this to get a grant. This highlighted an import benefit in that Optimism was a way for decentralized projects to make it economically viable for all governance holders to participate despite the value of their position.

  2. BarnBridge takes a long-term perspective and is here to stay because it is committed to building something sustainable and would not waiver from that position even when TVL was leaving the system because market driven rates weren’t good enough. At one point in time BarnBridge had over $600M in TVL which I think is realistic again because the protocol is well positioned for serious investors who want yield that they can count on without taking outsized risks.

  3. I am familiar with the new governance framework and am confident that it will attract really smart people to focus on BarnBridge and Optimism. Also, I fully expect this DAO tooling to be something that others in the ecosystem borrow for their own protocols.

Because of the above I believe BarnBridge is deserving of a large allocation of OP tokens. We need to use these grants to incentivize protocols who have made important contributions and to get them to continue doing so on Optimism. I think this proposal does a nice job of incentivizing TVL, BOND liquidity on OP, the move of an entire DAO to Optimism, and builders.

If I had to make one change, I would probably take 250k OP from the LP incentivization and give it to builders so both incentives are 750k. I also see valid points that can be made to extend time period for the Smart Yield allocation to be spread over 6 months instead of 3, but I think aggressively incentivizing liquidity early on will be the most effective way to increase and retain OP TVL.

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Thank you for your feedback here. I do want to say that I think everyone should know we will be happy to get whatever we can from the Optimism community we hope to be long term supporters of.

We started building on Optimism and have vocalized our plans to move to Optimism for most of 2022 and this token allocation is really icing on the cake to something we wanted to do anyway. We had no idea there was ever even going to be a token involved. I also am not a seed round investor in Optimism and my interest in BarnBridge moving to Optimism is specifically because of the caliber in community there. When we saw other amazing projects like Synthetix, AAVE, Uniswap, and all of the projects within the Synthetix ecosystem moving to Optimism… we knew that was a place real builders were moving.

I also think BarnBridge taking a strong focus on being a long term sustainable source of fixed yield on Optimism will position both us, and Optimism for increased usage. I think with what you saw from Luna/Terra… there is an absolute fit for fixed yield in crypto… however, the sustainability of that offering was always the question. While we can’t offer those types of rates sustainably… I think it still showed the product market fit for fixed income on L2s/side chains (i.e. not ETH main net).

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I like the proposal, the Barnbridge has a proven track record and has delivered 3 dapps to promote risk management. I would like to see an updated proposal for a longer terms, say 6 months to 12 months instead of 3, and possibly working with Velodrome to make the LP incentives flow back to the protocol and creating a flywheel effect, where the protocol can reverse the earn fees back into the liquidity pool.

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Thank you for the proposal.İ fully support and appreciate your work to port Barnbridge(SY,LP,DAO) to layer 2 Optimism.İ think moving to Optimism,will definitely increase our TVL because many small investors cant make transactions because of high Ethereum fees.İ know some people who want to invest considerably small amount to fixed yield.
About OP token allocation; it will incentivize people to move their LP and SY to Optimism.Also i support this 3M amount of token allocation and 3 months time frame to attract investors to Barnbridge.Thanks again

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Happy to see the Barn shooting for an OP grant! It’s deserved. I don’t have critical input regarding the proposal structure.

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Thank you for this feedback.

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Rather than asking for a high amount of $OP, it is better to ask for a small amount and re-apply in the future. 2mil is way too high and if you check some of the other proposals, the average is probs around 500k or less.

Not only that but 3 months is way too short, maybe consider extending it to around 6-9 months instead. I’d encourage you to check out previous successful proposals to see comments people made around the amount of OP tokens and length of distribution. We look forward to seeing a reviewed proposal!

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Do you think the right idea is to drop it for 3-4 months hence cutting it down from 2m?

The reason for the short amount is we can incentivize liquidity on our end but this incentive is moving liquidity to main net.

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You request to many op!!

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We reduced it to 600k

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We reduced to 600k OP ask.

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