Proposal to add BAL

Governance
#1

Proposal to add BAL

Proposal to add BAL as a capped collateral to Interest Protocol.

Overview

The BAL token is the governance token of the Balancer Ecosystem. Users who vote-lock their tokens (BAL + wETH => veBAL) receive a share of trading fees from the platform as well as a boost on their provided liquidity. veBAL holders vote to determine how the BAL inflation schedule is distributed across the various liquidity pools.

The proposed parameters and cap are intentionally very conservative. After the initial listing, a subsequent proposal could increase the cap.

Parameters

Token Address: 0xba100000625a3754423978a60c9317c58a424e3D
LTV: 70%
Liquidation incentive: 10%
Cap: 770k ($3m)
Oracle address: [To be deployed]
Primary oracle: Chainlink BAL/USD
Secondary oracle: Balancer v2 BAL/WETH

Liquidity

Market capitalization: $248m
Circulating Supply: 36,146,883
Fully Diluted Supply (Max Supply): 96,150,704
Balancer v2 liquidity: $193m
Coingecko 7-day average 24 hour volume: $26.6m
Notable exchanges: Coinbase, Gemini, Binance, FTX, Huobi, HitBTC

Technical Risks

  1. Type of contract: Governance Token

  2. Underlying asset: Governance Token

  3. Time: +800 days

  4. Value: Control of the Balancer Protocol and its various deployments

  5. Privileges: the owner of the BAL contract is the Balancer Authorizer contract.

    • Balancer’s access control solution is the Authorizer contract, which holds all permissions in the network, and is queried by other contracts when permissioned actions are performed.
    • The BalancerMinter is granted permission by the Authorizer to mint BAL (via BalancerTokenAdmin, which enforces the minting schedule). The minting schedule has pre-defined upper limits.
    • ‘VotingEscrow’ is the veBAL contract, which allows LPs to deposit and lock 80/20 BPT in exchange for veBAL. veBAL holders own the governance rights to the Balancer ecosystem. The BAL token by itself has no influence over the ecosystem.

  6. Upgradability: Yes

Volatility Data

The below shows the volatility of BAL relative to ETH.

Screenshot 2022-09-14 at 20.34.24
Screenshot 2022-09-14 at 20.34.241366×330 46.8 KB

The chart below (repurposed) shows the main Decentralised Exchange spot prices relative to the Chainlink Oracle feed.

Screenshot 2022-09-14 at 20.45.48
Screenshot 2022-09-14 at 20.45.481920×961 66.3 KB

2 Likes
Llama Delegate Platform
#2

Firstly, kudos to Llama for adding some energy to new asset listings at this early stage of Interest Protocol. The amount of well written, high quality contributions to DeFi by them is incredible.

With that said, I find BAL a strange choice of asset to be added as collateral on Interest Protocol.

There is considerable value to holders of BAL to stake with WETH for veBAL. veBAL holders are granted a share of protocol fees and have voting rights on BAL incentives. None of this would be possible in this proposal’s current form.

Interest Protocol generally allows depositors of collateral to maintain their voting power, but since BAL, not veBAL is deposited this would not be the case here. This nullifies a very important differentiator of IP.

The token is also already listed on lending markets where the value in holding the token mean it fetches high yields (~16% on Aave for instance). On Interest Protocol it would get the same treatment as less valued tokens.

I agree from a risk standpoint BAL does not endanger Interest Protocol. My point is that if there is an opportunity cost, then other tokens should take precedence as BAL is unlikely to add much value in adding to USDi supply.

I would view tokens without significant native yield, but established governance systems like AAVE as more appropriate collateral on IP.

Proposal to add CRV