[BIP-51] - Become a friendly fork of f(x) Protocol

Summary

This proposal outlines a strategic partnership between Bao Finance and Protocol f(x), establishing Bao with the upcoming minter as a friendly fork of the f(x) Protocol. Through this partnership, we aim to integrate fxUSD as a collateral option, provide benefits to both communities and establish a collaborative framework for ongoing development and liquidity support.

Background

As Bao Finance prepares to launch its new minter, this development represents a significant milestone for the protocol. The minter will be based on the f(x) Protocol’s framework but with targeted adaptations to optimize its performance and alignment within Bao Finance’s ecosystem. Recognizing the shared goals and potential for mutual growth, the Bao and f(x) teams have negotiated terms for a friendly fork to facilitate collaboration and maximize value for both communities.

By structuring this partnership, we aim to leverage the strengths of the f(x) Protocol’s established framework while ensuring it meets the unique needs of Bao Finance users. The collaboration will focus on building liquidity, expanding collateral options, and creating additional revenue opportunities for both protocols.

Proposed Terms and Structure

The friendly fork arrangement includes the following terms:

• Profit Share: Bao Finance will allocate 15% of the revenue generated by the minter above $250k per quarter to Protocol f(x) for the first three years. This profit-sharing model supports Protocol f(x) and aligns both parties’ interests for shared success.
• Token Supply Allocation: 3% of the total token supply will be airdropped directly to veFXN holders. An initial 20 million tokens will be distributed upfront, with additional allocations each year based on any increase in the token supply.
• Collateral Integration: fxUSD will be integrated as a collateral option within the Bao Finance ecosystem, expanding the collateral choices available to users and increasing flexibility within the Bao platform.
• Community and Liquidity Support: Protocol f(x) will assist Bao Finance in establishing relationships within the f(x) community, co-marketing efforts, and liquidity initiatives. This collaboration includes pairing fxUSD with other assets, building depth in liquidity pools, and fostering mutual community engagement.

Regulatory Compliance and Liability

Protocol f(x) waives any liability related to regulatory actions concerning assets that Bao Finance integrates into the platform. Bao Finance assumes full responsibility for ensuring compliance with regulatory requirements, including any designations as securities or otherwise. This provision enables both parties to operate with a clear understanding of their respective roles and responsibilities regarding regulatory considerations.

Goals

• Enhance Collateral Options: The integration of fxUSD as collateral for Bao synthetics provides a stable ETH backed asset for users within the Bao ecosystem.
• Alligned Incentives for mutual growth: The profit-sharing agreement creates a new revenue stream for Protocol f(x), incentivising the f(x) community to help Bao grow.
• Increased Liquidity and Market Depth: Co-marketing and liquidity pairings with fxUSD foster liquidity and engagement, benefiting both communities by enhancing trading opportunities and market access.