Summary:

We propose a migration plan consistent with the evolving ecosystem, the development of new features, and the overall growth of Buffer V2. Buffer V2 is much more powerful than Buffer v1 and focuses on catering to the growing DeFi-native trader community.

It’s been a year since the launch of the Buffer V1 protocol. Since then, we have spent thousands of hours in core research and analysis, battle testing, designing, and reviewing the framework required to bring a new primitive to DeFi. Most importantly, we have collected the feedback of our community members, traders, liquidity providers, and industry leaders on the evolution of DeFi and how the Buffer Protocol should maintain a parallel evolution.

Our observations have led us to a strategic conclusion - Buffer V2 needs a new base layer to grow and mature, and Arbitrum seems to be the ideal base layer for it. Migrating iBFR tokens would be a key step in facilitating the deployment of Buffer V2 on Arbitrum.

Motivation:

Why Token migration?

The iBFR token migration will be a defining event for the Buffer Finance protocol and its community. As the protocol grows and we continue to add new and complex option-based products, the migration allows us to integrate and operate on top of Uniswapv3 to build new and exciting strategies and allows market makers to participate in Buffer V2. Additionally, the migration allows us to design a new tokenomics that offers more utilities and aligns incentives with long-term token holders and protocol users.

Why Arbitrum?

Arbitrum is the leading Ethereum Rollup, with hundreds of live apps, including most top Ethereum apps and infrastructure, including Alchemy, Balancer, Chainlink (23 active price feeds), Curve, Gnosis Safe, Infura, Sushiswap, Uniswap, Quicknode, and many others.

Arbitrum has seen strong DeFi adoption with growing volumes, liquidity, and active wallets. Currently, most of the trading volume predominantly comes from perpetual derivative protocols. Buffer V2 can offer new and defined risk instruments for trading and can tap into this growing trader community.

Arbitrum has over $942.23m in TVL, accounting for 51.56% of the total TVL across all Ethereum L2s (at the time of writing this proposal) tracked by L2Beat. The majority of this TVL has been built on the basis of organic growth without any token emissions or grants. Arbitrum also has numerous direct fiat on-ramps, CEX integrations, and application layer bridges, making it simple for users to bridge liquidity onto the platform. Additionally, on 31st August 2022, Arbitrum launched their Nitro upgrade, which increased transaction speed and reduced fees by 10X, making it one of the cheapest L2.

There are three main motivations behind this approach:

1. A new token economy will facilitate new utilities and a value accrual model for iBFR. It will allow us to bring in new tokenomics that incentivize long-term holding and accrues value to holders.

2. Uniswap V3: Uniswap V3 will allow market makers to participate more intrinsically on Buffer V2 while also offering tighter execution

3. Access to deeper liquidity

Specifications:

• To avoid confusion, the new iBFR token after migration will be labeled as a BFR token.

• As a part of the migration process, iBFR holders have the option to change their iBFR tokens to BFR tokens. Existing holders can transition at the ratio of 1iBFR to 1BFR.

• There is no change in the token supply, so there is no risk of dilution for token holders after migration.

• No changes will be made to the vesting schedules. All vesting contracts will be redeployed on Arbitrum with the same schedules.

If the proposal passes:

1. Migration details will be released, which will include new tokenomics and details on how to migrate to Arbitrum

2. $iBFR holders will get $BFR tokens on the Arbitrum chain in a 1:1 ratio - So no value or % ownership dilution

3. V2 Mainnet will be live on Arbitrum mainnet new and fertile ground for traders and Liquidity providers

4. New possibilities to develop exciting option-based products using complex option structures.

If the proposal fails:

1. Migration plans will be halted, and the iBFR tokenomics will remain the same.

2. Deployment of Buffer V2 on Arbitrum Mainnet halts until a new alternative to deploy Buffer V2 is identified.