Enable gauge for baoUSD/WETH on Ethereum with 2% cap

Summary

This proposal aims to enable a gauge for baoUSD/WETH liquidity on Ethereum with a 2% cap on emissions. If successful Bao will accumulate LIT and lock it in order to vote for the gauge as well as incentivize LIT holders to vote for the pool via the new hidden hand market.

References/Useful links

Link to: Website: https://app.bao.finance/ Documentation: https://info.bao.finance/docs/ Github Page• https://github.com/baofinance Communities• https://discord.com/invite/BW3P62vJXT, https://twitter.com/BaoCommunity

Protocol Description

Bao Finance is a synthetics protocol whose mission is to create synthetic assets and markets for any data. baoUSD is the first synthetic released and will become a foundation for other synthetics to be built on top of. We would like Bunni to become a key marketplace for our synthetics. Integrations outside of our own liquidity gauges are key to the sustainability of our synthetics and we believe that the Bunni community will benefit from their growing adoption through trading fees and a relationship with the Bao Community. baoUSD is a fully backed stablecoin built with decentralization and security as primary focus points. It can be minted by opening a debt position with ETH, or bSTBL (a yield-bearing basket of “safe” stablecoins), or by using the PSM to mint with DAI. The total value of baoUSD minted has been steadily growing over the last few weeks. Currently there is one incentivized liquidity pool for baoUSD - a stable pool on curve. An additional ETH pairing on uniswap will open up arbitrage opportunities, deepen liquidity, increase exposure and make it easier to integrate with additional defi platforms. baoUSD has remained pegged since its inception and has various robust stability mechanisms. Currently the only exchange with baoUSD liquidity is curve. The baoUSD/3crv pool can be found here: https://curve.fi/#/ethereum/pools/factory-v2-84/swap

Motivation

baoUSD/ETH liquidity on uniswapv3 is essential for integrations with other defi projects, and to provide a more efficient trading route for ETH holders. It will also help to generate trading volume as it is a volatile pairing that will open more arbitrage opportunities vs is currently only stable liquidity pairings.

Specifications

Governance: Currently baoUSD is governed by the BAO community. Actions voted on are carried out by the community “council of guardians” via its 4/7 multi-sig. This multisig has control over various baoUSD parameters like its mint limit and collaterals. We plan on using governor bravo or similar in the future to improve decentralization. Oracles: Chainlink oracles are used to find collateral prices. Audits: Bao re-uses battle-tested compound, inverse, and curve code with some changes and is in the process of auditing Centralization vectors: The most centralized part of the project is the council of guardians 4/7 multisig. Bao strives to be as decentralized as possible. Market History: ****baoUSD has been closely pegged since its inception and has robust, battle-tested mechanisms to help it stay pegged. Value: baoUSD is in its infancy, but Bunni has an opportunity to become the primary source of ETH liquidity for it and future synthetics. The Bao protocol gained a lot of exposure during 2021, attracting up to $200m in liquidity with only a vision and now the community lead project is launching its first products. The Bunni baoUSD/WETH pool was created with the intention of generating liquidity so there is not any previous TVL and volume statistics. As a result the gauge is proposed to start with a 2% emissions cap.

Bunni Pool and Gauge Addresses:

Bunni pool address: 0x31aEf815610748aC339F769D77d8651686fD68B3 Bunni gauge address: 0x63Ea35Ea27319ab46bf888B93c3EB52111fC2106

Value: This pool is intended to be the primary baoUSD/ETH liquidity source on Ethereum. In addition the Bao Dao intends to give additional value to LIT holders by incentivizing voting for the pool for an experimental period with the view to continue incentives long term if successful.