The BarnBridge DAO earns fees off of protocol activity. These fees are earned in the associated assets users deposit into applications like SMART Yield, meaning that we can expect the DAO to amass a variety of stablecoins and ERC-20s in the coming year. In order to maximize the impact of these fees, it is imperative that the community come to a consensus on a guiding framework for how to deploy treasury assets.
Both community and core team members have expressed interest in deploying these assets in numerous ways: deploying them productively in other protocols, financing protocol growth, and reinvesting in BarnBridge products have all been floated as possible ideas. Without a clear consensus on a best path forward, this draft seeks to ensure that the DAO is on the same page as to what our priorities should be.
As we discuss this topic, it’s important to note that there are both a) traditional treasury management best practices, and b) new crypto project considerations that will need to be taken into account.
Growth vs. Distribution: DAO resources can either be used to further development of the BarnBridge protocol or to return value to BOND token holders. When considering which route is more appropriate, we can look to traditional corporations and cooperatives for precedent. Startup and growth-oriented companies do not provide investors with dividends, choosing instead to reinvest either profits or raised capital; cooperatives only pay dividends to the extent that their members bought its goods or services (e.g. patronage dividends). My view is that DAOs represent a cross between high growth startups and cooperatives.
Exposure to BOND Upside: The DAO currently has say over some 35% of BOND token supply through its treasury and set aside budgets for liquidity mining. It goes without saying that the DAO should be the biggest bull on BOND. A DAO cannot however persist on its native asset alone, so I would warn that this should not necessarily be viewed as a binary.
Cross-Protocol Investment: BarnBridge is dependent on other DeFi projects for its relevance. The DAO’s ability to accumulate governance tokens for its major dependencies will grow increasingly relevant over time. We should fully expect that such governance power can drive our own growth and, in a more adversarial environment, impede that of competitors who would rely on the same dependencies.
Community Funding: The core team’s multisig is not intended to last indefinitely. In order for BarnBridge to reach a stage where it can be purely stewarded by the community, infrastructure needs to be put in place for compensating contributors and keeping BOND holders abreast of how revenues are spent.
Education: Congrats, you’re participating in an experiment in a regulatory gray area. It’s one thing when your friends and family don’t quite get what you’re up to in crypto; it’s another when regulators don’t. BarnBridge’s position on the frontier of DeFi behooves it to play a leading role in shaping the narratives and information flows that shape public opinion.
With these considerations in mind, I’d like to lay out the following categories for prioritization by community discussion. If you think there’s a category that doesn’t fit neatly into any of the following buckets, please share it in this thread. They are ordered from most to least important, in my view.
- Security: Bug bounties, insurance investments, future audits
- Community Funding: Salaried teams, squad bounties, ad hoc contributions
- Cross-Protocol Investment: Providing liquidity, accumulating governance power
- Using Own Products: SMART Yield seniors, SMART Alpha and Exposure when they arrive
- Returning Value: BOND token buybacks, accumulating ETH
The DAO is currently sitting on $1.5M in fees. We are still early in BarnBridge’s development and so I think focusing on points 1 and 2 should be prioritized at this time. That said, the point of this thread is to aggregate the community’s thoughts over a week in order to inform subsequent proposals.
Please feel free to copy thoughts you shared on Discord in regards to this topic here.