[BIP-53] - Revitalizing Bao through the Launch of Zhenglong

Summary

This proposal marks the beginning of a bold new phase for the Bao ecosystem: the launch of Zhenglong Finance, a modern synthetic asset protocol designed for scalability, sustainability and simplicity — and the transformation of BAO into a meta-governance protocol akin to Aura Finance or Convex.

This is a strategic pivot and revitalization of Bao’s core mission — one that positions our community to coordinate and grow an ecosystem of protocols with BAO at the center.

Zhenglong introduces a new governance token, STEAM, with a 25% allocation to the Bao Treasury, enabling BAO holders to influence emissions, drive cross-protocol coordination, and earn ongoing airdrops and revenue. In addition, veBAO holders are allocated 5% of STEAM tokens, which will be claimable as tokens are emitted.

Phase 1: Launch of Zhenglong Finance

Why “Zhenglong”? The name Zhenglong (蒸笼) translates from Chinese as “bamboo steamer”—a tool traditionally used to transform simple ingredients into something nourishing and valuable. In the spirit of this metaphor, Zhenglong will transform collateral into two powerful assets - a pegged token and a leveraged token.

Why This Pivot is Needed

Bao Synths offered innovative mechanics but lacked product-market fit due to complexity, lack of audits, and limited differentiation. Despite incentives (e.g., baoBTC), usage remained incentive-driven and unscalable. Zhenglong aims to achieve the vision of tokenizing data on-chain with a better foundation, stronger incentives, and more community-aligned governance.

⚙️ How Zhenglong Works: A Three-Token System

Zhenglong Protocol enables us to tokenize any market data using a capital-efficient, modular architecture built around three core tokens:

Collateral Token – Deposit any ERC-20 token (e.g., ETH, stETH) as vault collateral. Pegged Token (ZHE Tokens) – Mint pegged tokens (e.g., zheUSD) that track real-world prices with 1:1 accuracy, using oracles such as chainlink. Leverage Token (STEAMED Tokens) – Variable-leverage tokens representing the value difference between the collateral and the peg. Example: steamedETH = a leverage long on ETH priced in USD, without funding fees.

Zhenglong Protocol isn’t a one-off product – it’s a framework, a synthetic market factory built for flexibility. The concept is simple but powerful: any market can be created by choosing a collateral asset and a reference data feed for a pegged token. In the Genesis Vault, our ingredients are wstETH as collateral and USD as the peg reference (producing zheUSD). But this is just the beginning.

Stability Pools: Security & Yield

Stability pools maintain protocol solvency and reward users: ⚖️ Automatically rebalance when market collateral ratio drops (e.g., below 130%) ♻️ Pegged tokens are redeemed from the pool to buy back collateral or leverage tokens 📈 Earn real yield from collateral (like stETH) 🎁 Earn extra STEAM incentives for participation

STEAM Token Utility

STEAM powers governance and incentives across the Zhenglong ecosystem: 🔒 Stake or lock STEAM for veSTEAM 💸 Earn a share of protocol revenue 📊 Vote on liquidity incentives and emissions 🏆 Boost rewards in AMMs and rebalance pools 🗳️ Participate in protocol governance

The longer you lock STEAM, the more veSTEAM you receive — increasing your influence and earnings.

Initial STEAM Allocation

Total Supply: 100,000,000 STEAM

Distribution Breakdown:

• 🏦 Bao Treasury (25%) – Permanently locked as veSTEAM; revenue allocation governed by veBAO holders.
• 💧 Initial Liquidity (1%) – Combined with funds from the IDO to provide initial liquidity.
• 🤝 Aladdin DAO (3%) – Technical cooperation incentives
• 🏦 Treasury Reserve (10%) – Reserved for future use / new market genesis
• 🌱 Initial Dex Offering (6%) – A token sale that will pay for audits, protocol-owned liquidity and ongoing development of the protocol
• 🚀 Genesis (2%) - Allocated to participants of
• 📣 Boosters (3%) – Community marketing, content creation, and community management.
• 🧑‍💻 Founders (6%) – Allocated to key contributors (vesting applies)
• 🌊 Protocol Incentives (39%) – Stability pools, lending, and liquidity rewards
• 🎁 veBAO Holders (5%) – Distributed via ongoing airdrops across multiple epochs

Sunsetting Polly & Panda

The Polly and Panda protocols will be officially sunset as part of this proposal. To reward those communities:

🪂 50M BAO tokens will be airdropped to eligible Polly and Panda holders (based on historical snapshots, TBD) 🧠 These tokens are freely usable, but holders are strongly incentivized to lock them into veBAO, which will play a powerful role in the ecosystem moving forward

This ensures Polly/Panda communities are brought into the future of Bao with meaningful governance rights and upside.

veBAO Integration: A Renewed Role for BAO

The launch of Zhenglong repositions BAO as a valuable governance and coordination asset.

Here's what locking into veBAO will now offer:

🔒 Control 25% of the STEAM supply, permanently locked as veSTEAM in the Bao Treasury 🎁 Regular airdrops of STEAM (5% of total supply) distributed only to veBAO lockers 💸 Ongoing revenue share from Zhenglong protocol operations, distributed via veBAO voting 📊 Influence over emissions, gauge weights, and incentives across the ecosystem

🚨 There is a clear incentive to acquire and lock BAO — turning it into a revenue-generating, influence-wielding governance asset.

Locking BAO is no longer governance only — it will directly unlock access to protocol fees, emissions power, and new ecosystem tokens.

Phase 2: BAO as Meta-Governance

BAO will operate as a meta-governance protocol — like Convex or Aura — coordinating liquidity, incentives, and emissions across the growing ecosystem:

• Direct influence over Zhenglong via its locked veSTEAM position
• Potential to extend control into future protocols launched under the Bao umbrella
• A foundation for new wrappers, bribes, staking boosts, and cross-protocol coordination

Phase 3: Multi-Protocol Expansion

Zhenglong is just the beginning. Future phases will launch additional modular protocols — each governed and incentivized by BAO.

Every new launch will:

• Add to the utility and reach of veBAO
• Reinforce the role of BAO as a DeFi coordination hub
• Share upside and governance back with the core BAO community

Potential new protocols might include a similar deployment on Sonic with synths backed by S, Berachain with Bera and BGT-backed synths, or entirely new projects.

🧠 TL;DR

🔁 BAO evolves into a true meta-governance asset 🎯 Locking into veBAO unlocks STEAM, protocol revenue, emissions control, and airdrops 🪂 Polly & Panda sunset, with 50M BAO airdrop (encouraged to lock) 🧱 Bao will power Zhenglong and future protocols — all under unified veBAO governance

Now is the time to accumulate and lock BAO — not just to govern, but to earn, direct, and grow with the next era of Bao Protocol.