xBalancer proposal

🌿 Proposals
#1

xBalancer

Proposal Information

Proposal description:
This proposal covers the creation of a DAO for the xBalancer Decentralised EXchange (DEX) and the completion of the DEX, particularly testing, branding and the development of the DAO community to align it closely with the 1hive DAO and community.

The DEX itself is mostly complete and is based on a recent fork of Balancer. The list of projects that have been migrated to xDai as part of xBalancer are as follows.

  • Exchange UI: Web based GUI for performing swaps
  • Pools UI: Web based GUI for creating and administering pools
  • Core contracts: Core smart contracts, completed and migrated to xDai
  • Smart Order Router (SOR): Router for calculating the optimal route from a source coin to a destination coin over multiple pools.
  • Subgraph: Subgraph for tracking pools
  • Assets Project: Maintains lists of approved, eligible and untrusted assets for the DEX.
  • Configurable Rights: Smart pool support
  • Custom Multicall: Convenience contract for efficiently extracting pool data
  • IPFS Push: Maintains a copy of pool data on IPFS which is used as a backup to Subgraph
  • Reward payout service

As well as these projects, Smart Pool templates being developed for Balancer are supported.
We also maintain infrastructure for the DEX including a QuikNode account for RPC calls, Fleek for IPFS and npm for publishing the router.

A supporting proposal document can be found here.

Proposal Rationale
Thriving ecosystems attract liquidity and so xDai needs more diversity for the types of decentralised financial service being offered so as to attract more liquidity from the Ethereum main network and competing networks.

Balancer is a project that set out to bring some missing capabilities to DeFi that are of importance in share trading and investment markets. Specifically, the ability to create liquidity pools that can act as index funds, investor clubs, accelerator/incubator funds or other types of specialised fund such as ESG, green or Shariah compliant funds. Within the main markets, funds report their ESG rules for guiding the investments they make and increasingly investors use these rules and the metrics for measuring their success in sticking to these rules alongside returns when choosing which funds to invest in. Other investors prefer to focus on market segments and to spread their risk within a segment and so turn to index funds. An often overlooked type of investor are investors who can only invest in Shariah compliant funds, something that precludes many investors including investors from wealthy middle east countries from investing in liquidity pools.

What Balancer therefore does is open up whole new families of liquidity pool to investors who are not being served in todays DEX’s.

Another important and new capability of Balancer are Smart Pools. Smart Pools are pools that allow a contract to extend the logic of a pool to act in a more dynamic way. For example, a smart pool could be created to represent other pools, projects or exchanges and shift the weighting of the representative coins within the smart pool according to the performance of the underlying pools, projects or exchanges. This means an investor can invest in a pool that dynamically optimises itself to maximise the returns from those underlying pools, projects and exchanges. Another use case would be a pool of new project coins that moved weighting over time as project milestones are hit, gradually releasing value to the project team as investors see progress and coin price rises. There are many more use cases for smart pools and there are a community of developers researching and developing templates.

The biggest drawback for all this flexibility and capabilities in Balancer is cost. Balancer is notoriously costly to get started with and to do business with. As a LP a user needs to create new proxy contracts which have high fees, need to pay to unlock each coin within a pool, needs to pay to load funds. Performing swaps also requires proxy contracts and swap fees. Overall, compared to exchanges such as Uniswap, Balancer is known as a highly flexible exchange packed with important capabilities but is very expensive to work with compared to alternatives.

To be competitive with the main Ethereum network, these capabilities need to be supported on xDai. The combination of xDai and Balancer is particularly powerful since it hits the sweet spot of maximum flexibility with low fees. xDai removes the cost issue for Balancer and unlocks the full potential of Balancer. Indeed, within the Balancer forums and community, the limiting factor of cost compared to other exchanges is the most talked about issue and a common request is to move Balancer to a more affordable network.

xBalancer is therefore an important opportunity for xDai to attract new types of investor who are not presently being supported, even on the Ethereum main network, and to draw a community from within Balancer itself.

Our proposal sees a 5% royalty going to 1hive to help align the new DAO with 1hive and 15% of newly mined coins going to community contributors which will in effect be predominantly 1hive community members.

After looking at current token models we have found that fair launch projects are around twice as popular as other models and so we have opted for a fair launch. This means there is no pre-mine and founders get no up-front allocation of coins. Instead, 60% of mined coins go to liquidity providers which is in line with Balancer, 15% goes to community members, 15% goes to an operations team which replaces the more traditional founders fund and requires founders to work long term to earn, 5% goes to 1hive and 5% goes to an insurance fund that available for liquidity providers to request compensation from should they suffer loss from issues in underlying assets. This borrows from ideas in fields such as mortgage backed securities and helps to spread risk for liquidity providers.

1hive members benefit from the 5% 1hive allocation, 15% community allocation and from the 60% allocation if using the service to provide liquidity. Indirectly, 1hive members also benefit from the new capabilities of the platform and new liquidity onto the xDai network. Our DAO is intended to work closely with 1hive including sharing our open source code base and supporting other projects in the 1hive ecosystem.

Expected duration or delivery date (if applicable):
The DEX is working but we have more testing and some small changes to apply to Smart Pools. Smart Pools are an extension to Balancer that were recently introduced and so are not needed for the main Balancer project to launch but we are working to complete testing and refining of Smart Pools for launch.

What’s required is rebranding, further community testing and the creation of the DAO itself along with completion of the payout service. We’ve held off creating the DAO until we have finalised within the 1hive community the rules of the DAO governance that are set out in our proposal document. The reward service is presently work in progress and is a fork of the Balancer reward service which is a stand-alone project. This is being modified to comply with the adjusted pay-out for xBalancer.

We have set a target of 1 month from the point of agreeing the proposal to fully launching the DEX under it’s final URL and brand. The current working URL and brand along with source code can be found below.

Pool Manager — https://pools-xdai.cent.finance

Exchange — https://exchange-xdai.cent.finance

All code is open source and available for inspection with no restrictions at https://github.com/centfinance

Team Information (For Funding Proposals)

Further details are in the proposal linked above but in summary:

Name: Darren Oliveiro-Priestnall
Alias: TheNewAutonomy
Social media links
https://twitter.com/TheNewAutonomy



https://www.linkedin.com/in/darrenop/

Name: Uzair Qidwai
Social media links
https://www.linkedin.com/in/uzair-qidwai-22204022/
https://twitter.com/UziQidwai

Harsimran Singh
Social media links
https://www.linkedin.com/in/hsimransingh

Erica Stanford
Social media links
https://www.linkedin.com/in/ericastanford/
https://twitter.com/ericacstanford

Skills and previous experience in related or similar work:
*Further details are in the proposal linked above.

Funding Information (For Funding Proposals)

Amount of HNY requested: 75

Ethereum address where funds shall be transferred:
A new address will be created

More detailed description of how funds will be handled and used:

10 HNY is allocated to cover hosting and IT service costs during the first year. This is administered by the hosting budget in the DAO, topped up by the community allocation as needed.

35 HNY is allocated to be staked onto the xBalancer DEX for seed liquidity.

30 HNY is allocated to marketing, team and operational expenses over the initial 3 months including the launch of the DAO using Aragon.

22 Likes
1Hive Monthly Recap - February 9th to March 21
#2

Looks good, if I had a HNY for every time I’ve said or heard “When Balancer fork” I’d have cavities from the sugar.

Are you planning on releasing v2 when they do, or waiting until they release v2 before you deploy?

3 Likes
#3

This sounds awesome! The Gardens Swarm is just getting started, but it could be that this project would be a good fit to become a Garden. (if I understand the purpose for Gardens correctly.)

2 Likes
#4

Very interesting.

I would ask, how come you haven’t reached out about this on the Discord/forums earlier?
I mean, of course, no doubt, but I am just interested.

Since isn’t it safer to first contact someone, then work on it, once they see if they like the project?

3 Likes
#5

I know V2 is being discussed by a few people within 1hive so our plan is to look at how to support that. We may fold this V1 into V2, it’s whatever gets the most support by the 1hive and xBalancer community.

2 Likes
#6

That’s not necessarily how we’ve been operating.
People shouldn’t just work on projects we like, and 1Hive has been exemplary at rewarding after-the-fact.

Also, as ani mentioned, we’ve been pretty incessantly wishing for this aloud on Discord.

1 Like
#7

That’s a good question.
To be honest we came across 1hive later.

The path we took was to start with the wallet on Ethereum main network then we looked to use Balancer from within the wallet but just found the cost prohibitive. We then went on to look at a few networks we could deploy Balancer to. xDai stood out so we started working on the port to xDai. At that point we hadn’t settled on a governance or tokenomics model, our focus was on the port and so we expected to launch with a governance and tokenomics similar to Balancer Labs.

It was after we’d made a lot of progress on the port that we decided to look more at governance and tokenomics and that’s when we decided that we wanted to deviate away from the Balancer Labs model for governance. Rather than a centralised control structure, we felt we needed to decentralise ownership of the project so a DAO became our focus. A DAO requires community so we joined the xDai and friends Discord and that’s where we came across 1hive and got talking to some 1hive members. I was struck immediately that 1hive has such a well run DAO, is contributing heavily to Aragon which we are using, has an active community and the members we were talking to had a lot of expertise and are so supportive that we just felt 1hive needs to be the place we launch this from. We couldn’t expect to improve on 1hive and so the discussion then became whether to try to launch directly through 1hive or through a separate DAO closely linked to 1hive.

We went with a separate DAO model simply because we wanted to ensure that we could create and run a tokenomics model that would be at least as attractive to Balancer users as what they earn through Balancer and so that means a coin with utility and high rewards for liquidity providers. 1hive has Honeyswap which is a great project, sitting Balancer direct next to it with a different tokenomics model just felt like it would cause more problems. A DAO that can focus on doing the best it could just for xBalancer while sitting very close to 1hive, sharing expertise and code and channelling some real value back to 1hive just seems the best solution. Also the fair launch model ensures no one, including founders, get an easy ride. We build it, launch it and earn with the community for contributing value over time.

6 Likes
#8

Well we came across 1hive later as mentioned above in my longer post. We didn’t know about 1hive until after we’d pretty much completed development but when we found 1hive it just seemed like a natural fit for what we wanted to launch.

1 Like
#9

Oh yes.
What you’re proposing seems well thought out and in line with the community’s wants and needs.

1 Like
#10

This is great! Looks great so far! I’d be happy to test if you need someone to help out.

1 Like
#11

Great to see more big brand DeFI forks being bought to xDAI. Every time I see one more of these really successful protocols being ported to xDAI… almost makes imagine what it must have been like when these protocols started out on the main net. I clicked through the links to the manager and xchange and they are pretty cool. As I have not really delved into balancer, so what is the incentive in forking liquidity out to another DEX and pool manager when there is Honeyswap which does not have as much liquidity already? Could anyone explain?

Also @TheNewAutonomy - Noticed that you were going to test, I would be really interested to test alpha/betas and be able contribute where possible.

1 Like
#12

Take my sword Bro. I really like Balancer.

1 Like
#13

I understand. Thank you for the answer. I was just asking since you basically appeared out of thin air, from my perspective.

2 Likes
#14

Sounds awesome. Do you plan on getting it audited before launch?

#15

Just curious why not use the $HSF and $HNY token?

#16

That’s great. The Honey family has a new member. Congratulations on joining us

#17

That would be great. I’m going to discuss with the best way to do this later today with the team. We have a fork that works on Sokol, I’d like to update that to the same level as xDai and then create a faucet for test coins to help with testing. Even without that there’s plenty of value from testing the current deployment on xDai, it’s just a case of coming up with the best guidance and making sure time is rewarded.

1 Like
#18

Looking forward to interacting with you, hehe

1 Like
#19

That’s a great question and is something I’ve been discussing for the past couple of weeks. Our aim actually isn’t to split liquidity from Honeyswap, not in a significant way anyway. Our aim is to split liquidity from Balancer and other main network projects.

Honeyswap has a decent amount of liquidity but not so much that we can expect to split a large amount out. Where we see the liquidity opportunity is from a few other sources that we want to bring into xDai.

  1. Balancer. There’s plenty of frustration in the Balancer community at the crippling fees that is leaving the project struggling to compete with other projects such as Uniswap. Feature and usability wise I stand by Balancer’s capabilities but with network fees being what they are, even a few percent difference in cost can be significant. There are plenty of people demanding that Balancer forks or moves to a more cost effective network. This is one source of liquidity to bring over.

  2. ESG, Shariah and investor clubs. Balancer sprung up in part to meet the needs of these groups because it’s a very real and significant market segment. The high fees though means the project delivers technically but not affordably. We’ve spent the last several years working in more traditional markets and so we will be targeting these sources of liquidity over to xDai.

  3. Bargain hunters. As we make progress with 1 and 2 then the project starts to stand-up as an important project in its own right and so if we get the tooling right so anyone can easily buy crypto natively on xDai through the wallet or web, stake or swap, earn and sell and we can show the real savings and benefits compared to doing the same thing on the Ethereum main network then we think we’ll attract bargain hunters and the 95% who can’t afford the main network fees.

Hopefully as more liquidity pours into xDai then that spills over into Honeyswap as well, and to Agave and other quality projects. The end goal is to create a thriving and well funded DeFi ecosystem.

I’d love to have you help with testing, I’m going to meet and discuss with the team today how to do this most effectively while ensuring work is recognised and earns value.

1 Like
#20

Thanks Kaselol, it would be great to have your help. I’ll discuss with the team where we need the most help and how to ensure any help is valued and earns from the very start.