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.
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
Social media links
Name: Uzair Qidwai
Social media links
Social media links
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.