The following is a proposal to invest $500k to $1m into the Bankless BED Index to diversify their treasury.
The BED is an index, created by Bankless and Index Coop, that represents Crypto’s most investable assets, 33.3% BTC, 33.3% ETH, and 33.3% DeFi Pulse Index (DPI).
The main purpose for purchasing(minting) $500k to $1m of BED is to increase on-chain BarnBridgeDAO liquidity and utility, helping to drive BarnBridge adoption through the marketing campaign listed below.
Buying the BED index can strengthen the partnership between BarnBridge Protocol and Index Coop. It can also establish a new partnership with the Bankless DAO, and in return Bankless DAO recognized for their educational content and their cultural influence over the industry will manage a marketing campaign with BarnBridgeDAO inside and out of the DAO to advertise BarnBridgeDAO.
The partnership with Bankless could increase BarnBridge awareness and adoption in the Defi space. The Bankless DAO is an inventive and leading edge DAOs, mixing on-chain and off-chain initiatives. It was born by and for the large community behind the Bankless podcast which has strong brand and marketing channels, with 87k followers on Twitter and almost 77k loyal subscribers on Youtube.
By holding BED Token, we can have additional exposure to DeFi through DPI and also to Bitcoin that is one of the less volatile crypto assets. BED is a vehicle that captures equal-weighted upside from the most promising use cases and themes in crypto: store of value, programmable money, and decentralized finance. It also rebalances to keep the exposure ratio over the long term. The smart contract risk between DPI vs BED is virtually zero (built on the same contracts but one just includes WBTC + WETH) and the governance around it is the same as dpi as well no multi sigs.
This would be the occasion for a coordinated and combined marketing campaign with the Index Coop and Bankless DAO to make sure everyone in the space is made aware of the collaboration. The ideas are plenty (for example NFTs, BANK token drop for extra PCV diversification, programmed social network communication, etc) so we can see what’s the most exciting and the most impactful for the communities.
Smart Contract Risk:
BED uses Set Protocol smart contracts that was audited by OpenZeppelin [in September, 2020.]
Despite its recent launch on 07/21/2021, BED has less smart contract risks because it uses the contracts from Set Protocol.
BED holders have no governance influence on Index Coop or the protocol within the index. The BED utilises TokenSets V2 smart contract that has privilege roles in many of the contracts.
There is a multisig responsible for initiating rebalances, performing meta-governance, adding / removing new protocol functionality. It does not have the ability to arbitrarily move underlying assets, mint tokens, etc. The signers are currently members of the Set team with the intention to add Index Coop community signers over time. While the multisig can’t arbitrarily move assets, it theoretically could rebalance assets into a fake token. The mitigating factors for these risks are the Set Labs, Bankless and individuals personal reputation.
Minting and redeeming BED represent the primary market of the indices, but many users can buy and sell indices on the secondary markets. The price on the secondary markets are kept at Net Asset Value (the market value of all the underlying components) through a network of market makers that redeem the tokens when price is below NAV and vice versa.
When considering liquidity, the average daily trading volume is $400,000, based on the last 18 days. However, as BED holders have the option to mint/redeem the underlying tokens within BED, it draws on the liquidity of the underlying assets and also allows for any deviation from NAV to be arbitraged away by traders. So liquidity goes beyond the secondary market for BED.
As BED is a basket of tokens, it has less volatility than the component assets by themselves.
As BED just started a few weeks ago, we calibrated the risk exposure by proposing a small deployment relative to the PCV.
$500k to $1m of BED can be purchased(minted) via Set Protocol.
Alternatives can be taking the composites ETH, BTC, DPI units and swapping it for BED to reduce slippage costs using usdc or other stable coins which can also reduce slippage costs too.
There is the potential for a joint Bankless, Index Coop and BarnBridgeDAO deployment on uniswap rewards and potentially other opportunities. More on this as information comes to hand. I am also part of the Index Coop treasury team and if there are any additional questions i can most certainly followup with the team and ensure all detail is disclosed correct and accurately.
We would like to gather feedback from the community about this post and invite communities to discuss how BED purchase could benefit BarnBridgeDAO Protocol.