Combine FIAT DAO into BarnBridge

Note: This proposal is a product of preliminary discussions between both teams.

Summary
Combine the FIAT DAO contributor team and roadmap into BarnBridge

Motivation
FIAT DAO launched one year ago as a proposed solution to the dearth of fixed income adoption in DeFi at the time. It spun out of BarnBridge due to a confluence of factors, namely a desire for credible neutrality of the FIAT protocol. A year on, these considerations have grown less relevant due to a shifted focus for FIAT II. It is our belief that combining resources and combining roadmaps is the best course for navigating current market conditions and ensuring the best product development.

Description
As neither BarnBridge nor FIAT DAO are associated with legal entities, execution of the proposal would need to be satisfied through the unification of both communities behind a singular governance token. This proposal assumes it to be BOND. Holders of FDT would be granted the ability to permissionlessly convert their holdings at a rate of 750 FDT per BOND through February 1st, 2024, with the converted amount vesting over 365 days.

In order to ensure long-term alignment, transitioning core contributors from FIAT DAO would receive a one-time grant of 220,000 BOND upon delivery of a production-grade implementation of the FIAT II protocol for BarnBridge, to be vested over the course of a year. As with the August 2022 retroactive compensation proposal, the BarnBridge DAO would retain community review rights over that vesting.

The following housekeeping items would be seen through:

  • All outstanding FDT vesting contracts will be burned
  • Unallocated FDT in the FIAT DAO treasury will be burned
  • Seed contributors will roll over remaining vesting
  • BarnBridge DAO would inherit the remaining treasury holdings of FIAT DAO

A Google Sheet would be generated with links to all transactions associated with the burn transactions prior to the deployment of the conversion mechanisms.

Cost
With the proposed parameters around the conversion, the potential impact of this proposal on BOND token supply is as follows.

  • Of the 1,000,000,000 FDT total supply, 550,000,000 FDT (55%) are found in the DAO treasury. These are to be burned.
  • Of the subsequent 450,000,000 FDT, ~94,000,000 FDT (9.4%) will be left in contributor and advisor vesting contracts as of November 14th, 2022. These are to be burned.
  • Of the subsequent 356,000,000 FDT, ~8,000,000 FDT (8%) will be left in the Core Discretionary Wallet. These are to be burned.

We thus assume that up to 348,000,000 FDT stands to be redeemed for up to 464,000 BOND. Assuming proper delivery of FIAT II and 100% FDT redemption, this results in the proposal costing up to 684,000 BOND. The BarnBridge DAO currently holds some 1,700,000 BOND and the majority of the redeemed BOND would vest over the next 12 to 18 months.

Please note that some 24,721,527 FDT (2.5%) are associated with the immutable BarnBridge airdrop smart contracts. Given the mechanics of the airdrop, half of this sum would be redeemable at the time of writing but a burn cannot be enforced on the remainder.

Reasons For
Please refer to the FIAT II Whitepaper and the BB+FIAT Synergies documents attached to this post. The protocol described within the former is designed to serve as a quasi-permissionless stablecoin architecture capable of facilitating lending against illiquid derivatives, long-tail spot assets, and unsecured borrowers. The role of governance within the protocol would fall in part upon BOND holders. The latter document describes how SMART Yield v2 can be integrated with it. In short, the combination the two projects is a bet on BarnBridge refreshing itself as an end-to-end solution for DeFi banking.

Argumentation
The tallied BOND figure amounts to a purchase amount of $3.4M for 35% of FDT supply while the fully diluted valuation of FIAT DAO is around ~$8M. Given the illiquidity of FDT, however, its FDV is less salient than the long-term value proposition of combining combining talent and resources to redefine BarnBridge’s role within the DeFi landscape. Moreover, as the grant for transitioning contributors is conditional on the successful delivery of FIAT II and continued contribution thereafter, the BarnBridge DAO can firmly de-risk its key man exposure at multiple points in time.

DAO Vote
Given the weight of this proposal, the usual forum discussion + Snapshot vote processes will be observed prior to any formal DAO vote.

5 Likes

I want to throw in my hat in support of this proposal. I naturally back channeled it with some of the larger holders before it was posted.

The main question that will be asked is how it affects runway. AFTER this, we loosely have 25-30 MONTHS of runway still. This is assuming we have no OTC, runway creation from the protocol itself, or activities the community brings like what we did with Olympus Bonding. At that point if we’ve done none of that we die of inertia.

My main love of this is that it fits a long term scaling bucket for us. Plus, I’d like to have the team back working in unison.

Edit: oof - months of runway not hours.

2 Likes

Hi. Can you clarify what you mean by “25-30 hours”. Who has 30 hours of runway left? That unit must be a typo?

Can you also clarify your comment about dying of inertia. I am unfamiliar with the latest progress of either project. A link or similar would be helpful. Thanks.

1 Like

I’m an idiot sorry. Was typing this thinking I have a call coming up on the hour.

I meant months. We have 2-3 years of runway after this merger.

In response to your 2nd part of the question… this is the best place to start on the BarnBridge side:

FIAT II whitepaper will be published in greater detail by Monday but there is a sneak peak in the proposal.

You can see FIAT DAO development aside from FIAT II on our GitHub.

The highlights would be:

  • Forked MakerDAO and optimized for fixed term collateral
  • Integrated with Element Finance, Notional Finance, Yield Protocol, and Sense Protocol
  • Built the Delphi v2 Oracle System, which is an optimistic collateral oracle capable of supporting any number of collateral assets without budget concerns
  • Built Consilium, a combined fork of Curve Finance and Element Finance governance architectures to allow for modular voting escrow functionality
  • Soon to ship an auto-leveraging solution for FIAT positions

FIAT II is a response to our experience over the past of unnecessarily narrowing our total addressable market. FIAT I serves stable fixed income collateral and there’s only a handful of projects that issue them + we were too late to move the needle on that before the bear market and its collapsed yields arrived. FIAT II can support a market for all on-chain assets, as well as reputations (if you dare!) - so, a complete 180 of the narrative, but building on the same tech stack.

1 Like

One of my favorite parts about this is that it brings Max and his team back, and that adds incredible value to the project that isn’t measured in runway. It means you guys are dreaming big and building a foundation capable of larger scaling.

3 Likes

This is my favorite part as well.

Plus the scalability the roadmap brings to BBV2. Match made in heaven since we all came from the same place.

2 Likes

In full support of this, let’s build the future of BarnBridge / FIAT II together!

2 Likes

Nice proposal. Got a bag of FDT. I’ll vote in favor. Will be nice to expand the team and reunite old team members while simultaneously expanding our ability to scale by another path through stable coins.

I’ll update my position after I get a chance to read the FIAT II WP.

3 Likes

Massive fan of this move at a high level. The vision and product spun out into FIAT DAO was always a critical component of BarnBridge’s ultimate ability to scale and become the preeminent super-liquid fixed-income market in DeFi. Eliminating the bifurcation of teams, treasuries, and governance for what really is one cohesive long-term product roadmap makes all the sense in the world.

With that said, as major holders of both BOND and FDT - we need to take a few more days to properly DD the implications of the FDT burn and overall merger. Look forward to coming back to the community with 4RC’s ultimate evaluation of this proposal. Cheers!

3 Likes

At first glance, I like it. The concepts are well planned under Fiat v1 for fixed income assets thereby making the integration of Fiat DAO and Barnbridge a symbiotic relationship that should naturally help scale Smart Yield v2. I too would very much like to spend more time to digest Fiat v2 but inherently feel that the eventual exit from current market headwinds would support the adoption more volatile assets into each product.
While the transition of FDT to BOND is generally received with much approbation by the community, the burn mechanism for the vested FDT seems rather simplistic. The immutable airdrop contracts indicate that some FDT will remain locked for another year lest some proportions are claimed earlier.
At a high level, I support the proposal and commend the Barnbridge DAO for embracing the idea though at some level it feels like a natural consequence of two well conceived plans.

1 Like

Agree. Like it on a macro level, but would definitely want to digest the tokenomics of the merger. As a holder of both tokens, on a cursory understanding before the white paper, I would prefer a treasury token swap instead of a merger, as I believe independent tokens would unlock more value for both in the future if all goes to plan, and if not, a token swap would address runway issues as far as FiatDAO is concerned.

Looking forward to the white paper and coming back with my updated opinion.

I shared my thoughts on why combining the two projects was my preference in response to @sclimited on Discord.

"My opinion is that what we are looking to ship requires actual champions and advocates to scale. It would forever be a regret to ship FIAT II as a tiny project only to see it get ripped off by larger incumbents or new-shiny-thing projects in the future. Our burn isn’t terribly intense and I’m sure we could have cobbled together month-to-month funding, but combining with BB gives us a far better shot at actually bringing it to market with some of the larger players in their network. Plus, it expands our solidity development bandwidth in particular with solid talent that would otherwise have already been spoken for.

Stablecoins moreso than any other DeFi app require a consortium approach beyond just technical development and that’s why I am advocating for aggregating as many resources and talents as we can + accessing BB’s network. This is especially the case for FIAT II as it will allow for all of DeFi to become a business development opportunity (permissionless collateral onboarding) as well as break new ground on the credit side of things"

Let me respond to this two ways… logically and emotionally:

Logically: The outcome is the same. BarnBridge has enough value to set up a swap contract and ultimately take over the DAO on conversion and vote all rewards back to ourselves nuking an amicable conversion (to FDT holders, team would likely be impartial here). If the talent has interest in moving over, what is there that we are actually looking out for FDT bagholders in this situation (with me being one of the largest ones)? Max built a proposal (with me & the FDT team) that looks to look less aggressive and vampiric but we are still paying a lot to bring in the team and create cohesion & ultimately the BarnBridge DAO’s goal should not be to make 100% right to every group on the FDT side. Keep in mind FIAT II is a whitepaper… not completed code. It will be BARNBRIDGE who pays out of our runway to actually complete this whitepaper to code even if its the FDT team who does the work. That still means we are paying for the team and concept. But either way… we are paying for it. FDT holders are not putting up cash to do so.

Emotionally:
As the largest staker on both DAOs I wouldn’t support this. Doubling governance for the same purpose dilutes the value across both. It also creates an issue where we have two tokens to defend that can create economic attacks across the protocol(s). One of the main touch points for spinning FIAT out is we thought it would be received as an unbiased party which is also why I abstained from every vote on FIAT. It never was. So in the hyper competitive environment of DeFi if these other counterparties don’t see the value in FIAT or it being unbiased… fine. It’s more valuable to BarnBridge as an asset under BarnBridge.

Speaking from the BarnBridge side of my mouth… Again, we are picking up the tab on costs and bringing the team in. I’m not saying this negatively as this is something I absolutely want. However, keeping FIAT’s governance as a standalone is underlying a premise that is failed (i.e. our competitors never saw it as unbiased so why should we even try to be). If everyone else wants to act hyper competitive (outside of Olympus) at the detriment to FIAT & we are who fills the void of product market fit for them because FIAT continues to get nuked through other protocol’s governance like we have had similar issues with large DAOs who don’t see the value in us (BarnBridge) due to biased interests of those DAO’s token holders then I don’t see why we don’t join forces and go after the bigger carrot.

BarnBridge & FIAT shouldn’t try to be the only nice DAOs when others are blatantly biased. If we move forward with this I’d want the FIAT team focused on an outcome beneficial to BarnBridge and the BarnBridge team focused on an outcome that’s beneficial to FIAT. Otherwise, our competitors will be busy little bees as they said in Gladiator.

3 Likes

One additional point that shouldn’t muddy this proposal if it’s contingent but since Zach has been CRUSHING since he came on in September I think if we are giving the 3 founders .7% in incentives we should top Zach (sole Solidity developer on BarnBridge since September 1st) to the same .7% so he is on a fair level with the incoming groups. I hope this isn’t contentious to anyone as it’s a .2% increase for ask.

3 Likes

I want to throw my thinking in here.

I strongly support this initiative. FIAT was born out of Barnbridge and a lot of thinking ended up being that we should spin it out because of the limitations of Smart Yield v1 and we, the community, did. With the release of Smart Yield v2 it makes a lot of sense to bring this back because the reasons to spin it out are now fixed. It didn’t make sense at the time to slow down the development of FIAT because the structure in v1 didn’t allow it to exist. The community was thinking through product market fit of v1 and the FIAT concept fixed a lot of the problems but the structure of v1 just didn’t work at the protocol level with FIAT. Smart Yield v2, with the fixed architecture, took a lot longer than any of us thought, but we watched the world burn and decided against the easy out copy pasta tokenomics. Protocol liquidity is the future of DeFi IMO if we want any of this to work. FIAT II brings the decentralized stable built on top of this. In the same way that Synthetix introduced a stable in the last bear on top of token value as a derivative, we now have a stable that is a derivative of the yield of DeFi. Make no mistake, this is a 1up for Barnbridge.

3 Likes

The current FIAT II whitepaper has been edited into the original post.

You can also find it here.

1 Like

Fully support this. Having Max & team back into BB is a tremendous value add.

The BB+FIAT Synergies document has been edited into the original post.

Please also note that after revisiting the terms of the proposal, a new topline figure of 684,000 BOND, rather than 665,000 BOND, has been proposed. While slightly higher, this increase would be paired with a refreshed vesting schedule for those involved.

1 Like