[BIP-9] – Split Expansion BAC 80/20 between BAB/BAS while Bonds are Outstanding

[BIP-9] – Split Expansion BAC 80/20 between BAB/BAS while Bonds are Outstanding Authors: @yyctrader, @Morty

Summary Currently, 100% of BAC minted during expansions goes to the Treasury when there are Bonds outstanding. We propose to modify this as below:

• 80% of minted BAC flows to the Treasury to be made available for BAB redemptions (from 100%)
• 20% of minted BAC flows to the Boardroom

This will continue until the Treasury is funded to cover all outstanding BAB. Once the Treasury balance = BAB outstanding, 100% of seigniorage will go to the Boardroom.

Motivation Currently, Boardroom BAS stakers have to wait for BAC rewards until the Treasury is funded to the extent of all outstanding Bonds (BAB). This has led to a severe drop in BAS demand, as we have issued nearly 38M BAB in this cycle, which will likely require multiple expansions to pay off before Boardroom stakers can expect any rewards.

Further, we now have various DeFi projects farming BAC/DAI. While this is positive for BAC demand and generates greater exposure for Basis, it results in added selling pressure on BAS, and we need to address the demand side of the equation by making it attractive to hold BAS even during contractionary phases.

We recognize that this amounts to changing the terms after the fact for current BAB holders, who were expecting 100% of Seigniorage to be made available for redemptions. We do not take this decision lightly, but feel that it is essential to ensure the long-term viability of the project. This is also the motivation behind a staking pool for BAB holders.

This proposal is complementary to CDIP-5 (Staking Rewards for BAS/BAB), which follows below. Since staking rewards are expected to come from CDF funds, it has been proposed separately as a CDIP.

Taken together, the team believes that these changes will better align incentives between BAS, BAB and BAC and ultimately lead to a more stable Basis Cash protocol.