BED INDEX Proposal

Basic Summary

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).

Motivation

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.

Risk Analysis

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.

Counterparty Risk:

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.

Liquidity Risk:

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.

Market Risk:

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.

Specification

$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.

Voting Rules

We would like to gather feedback from the community about this post and invite communities to discuss how BED purchase could benefit BarnBridgeDAO Protocol.

5 Likes

I like all ideas that gives Barnbridge more exposure and I actually like BED index a lot.

3 Likes

Awesome very happy for your feedback the bed index is a great asset to be involved in for sure

1 Like

I’d support this if there was a chainlink BED/ETH price feed. The marketing/media proposition is obviously a win. We could keep with current precedent and deploy treasury stables. I’d also like to use liquidity to bootstrap an SA pool when the time is right.

Fwiw, BarnBridge isn’t a stable coin.

3 Likes

That is something we are defintely looking to integrate in the foreseeable in having an oracle chainlink price feed

So I’m new to this and have all of 50 votes but I think this is a great idea. Index Coop seems to really be executing at a high level (just look at all their proposed indexes on the way). I just wish the BOND token was included in DPI. Seeing as I’m new here, I’m not sure which criteria BOND doesn’t comply with. Here is the link with their methodology for token inclusion if anyone else is interested.

2 Likes

Hi everyone, joining the discussion for BanklessDAO! Don’t hesitate if there is any question regarding the Index, the marketing campaign we can develop around the BED acquisition and any project or product you would like us to talk about; or ideas in general to explore to make this happen :slight_smile:

The BED index is a strong diversification tool for treasuries, and we know DAOs have a strong interest for it, so instead of going in all directions we’re now considering BED acquisition as a good first introduction to actually collaborate on a DAOtoDAO basis. We’re a Media DAO so we like narratives and storytelling that make sense to bring value to the actors of the space. There’s definitely something to do with the recent launch of SMART alpha or maybe deployment to L2s.

Other protocols have moved forward on similar propositions, opening up many perspectives in terms of collaboration. The fact that our DAO is only being rewarded with our share of the BED annual fee makes it safe and cheap for DAOs, while reflecting the fact that this can be just the beginning of a relationship since we have incentive to keep the BED warm if i may say.

Visor finance was the first protocol to invest in BED index (100k $) : see here. This came along with a marketing campaign.
More recently the UMA protocol also invested in the Bed index, actually minting new BED tokens on L1 without any technical issue. For 1M $, see here. This also came along with a campaign and marks the start of a partnership with BanklessDAO.

We’ve realized through these experiences that the minimum BED investment for our partners to commit to in order to make it fair for us has to be between 0.5 and 1m$. So regarding the initial proposal we cannot offer the same terms for only 100k$. Depending on what you guys would want us to do we can also look for other arrangements. So really feel free to drop ideas because of course the investment in BED is the main subject here but it’s a window for more!

1 Like

At a future date when our available treasury assets are larger I would support this allocation. Right now I don’t think it’s the best use of our funds.

Any updates on availability of Chainlink oracles? I’d love to see BED/USD in Smart Alpha.

1 Like

Is the use of BED simply to park funds that are not already creating return? Is the use of the BED token something that can be swapped out as needed for other investment options? If its just parking- and you get the bonus of the added parternship with Bankless - then its a total win. But if there are plans for those funds, and they are locked in some way - then that makes the question an economic one - what value to place on the marketing partnerrship vs having treasury funds to put to use on something in the future.

1 Like

Hey dfsdf the purpose of the bed index is to park and earn returns and the bonus is having the bankless partnership! They arent locked away somewhere at all.

The marketing/exposure benefits of this through the Bankless podcast is good. Love the podcast and seems to be a great spot to be advertised.


How exactly do you see the BB treasury minting $BED, considering that 99.2% of the treasury is in $BOND tokens? Creating a $500K BOND / $500K BED liquidity pool?
I don’t think that the BB community will support a $500K sell of $BOND to buy $BED since it will represent a -3.95% price drop for $BOND at current price, unless there is a mechanic in place that somehow buys the other side.

$500K is 0.06% of the BOND treasury balance at current price, in my opinion it would be a great investment, considering the growth/exposure BB can get through the Bankless podcast outreach but this will have to be very well framed and clear on goals (a.k.a. not just a friendly mention in 1 podcast but instead a dedicated episode with special invited people in the space to explore all the potential of BB which is huge, it literally is a game changer with tons of innovation), so that the 500K investment generates an initial $500K more in TVL via SA, SE and SY that could build momentum for BB and BED-BB partnership.

Overall, I like this proposal mainly for the exposure to the DeFi community and educational component through the podcast.

1 Like

Hey Javier, my Name is Marc I am from Index. Excited to be here!

As you know Index is behind the DPI component of BED and helps facilitate the Bankless Vision on BED.

You have hit it 100% On the diversification benefits of BED and the marketing potential of the partnership with Bankless. What you also get is a partnership with us here at INDEX. I know we are fans of your work so I am excited to see that in motion.

INDEX is one of the largest DAOS with a huge active community, and we would love to contribute to getting the word out about what you do.

Your concern about “I get why, but how?” It is a common one - the benefits are obvious but the concern is causing token price impact. This is also a benefit of partnering with Index. We have accomplished several large buys and have the experience and connections to assist in this process.

In the past we have done Bonded Curves (requires Chainlink), used our market-making partners, direct swaps, or have done smaller systematic buys.

What’s most important is to determine how much would be meaningful to your community to diversify the treasury. (We can help with this discussion if you like).

From there, Index can determine the how. We would only go ahead once we have a solution to your wanted amount that would have minimal impact to price.

Let me know if I can answer any questions, here to help!! Looking forward to a growing partnership.

5 Likes

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