bSTBL
bSTBL is a DAO managed, interest bearing basket of low risk stable coins.
The stables are selected by the community to diversify risk between different types of industry leading, fully backed stables.
The yield options available to be used by tokens in bSTBL are again selected by the community to be as low risk as possible, with projects like Aave and Compound being used to increase the capital efficiency of deposited tokens.

Objective

To provide exposure to a diversified basket of stable coins with a focus on yield and decentralization.
By spreading risk over a number of coins, you reduce the impact of problems any single tokens face. Since the basket does not automatically rebalance as prices change, one stable losing its peg would not affect the other tokens in the basket.
By using decentralized stables, you also reduce exposure to regulatory risk and do not rely on central issuers to continually act as they should.
The basket will start with a mixture of centrally issued and decentralized stable coins and deposit them in a variety of protocols to earn yield on them, swapping strategies regularly to maximize the yield earned.
Rebalancing will occur when the community no longer believes the underlying tokens used are the best available options or the weightings have changed for one reason or another.

Criteria

For a project to be included in the Bao Stable basket, it must fit the below criteria in order to reduce the risk of the basket and fit the desires of the community.

Characteristics

  • Be a stable token project available on the Ethereum blockchain.
  • Be in liquid markets and being used in different lending protocols.
  • The protocol must be running for 6 months before qulaifying to be included in the basket.
  • In the event of a safety incident, the team must have addressed the problem responsibly and promptly, providing users of the protocol a reliable solution and document a detailed, transparent breakdown of the incident.
  • The protocol must be running for 3 months before qualifying to be included in the basket.
  • In the event of a safety incident, the team must have addressed the problem responsibly and promptly, providing users of the protocol a reliable solution and document a detailed, transparent breakdown of the incident.
  • Must be sufficiently decentralized and/or collateralized.

Strategy

It is possible for the underlying tokens to utilize strategies that will earn yield, maximising value for basket holders, who benefit from this productivity without having to perform any actions themselves. These strategies will be changed over time to take advantage of new opportunities or to maximise the yield earned.

Management

The Basket is maintained quarterly in two phases.

Determination Phase

The determination phase takes place during the final 2 weeks of the quarter. During this phase the changes needed for the next reconstitution are determined. Strategies and allocation % will be revisited in order to reach the balance between decentralization and having the most optimal yet secure yield possible for those stables. Proposed changes will be published on the governance forum for 1 week then a governance vote will run for the community to approve changes.

Reconstitution Phase

In the two weeks following a successful vote, the basket components will be adjusted as per the instructions published during the final 2 weeks of the quarter.

Emergency Maintenance

The multisig holders are authorized by the community to re-balance baskets outside the usual schedule during moments that they collectively deem to be critical emergencies. This clause will allow for quick re-balancing in the event of a protocol or basket being in danger of failing.
An example of when this would be utilized would be if a stable coin begins losing its peg/ becoming insolvent, or a protocol suffers an exploit that is not dealt with sufficiently. These scenarios may be time sensitive and require immediate resolution. Thus the team may decide to act without warning and explain their actions in a governance forum post afterwards, or if there is deemed to be time, an emergency governance vote will be posted.
This is intended as a safety mechanism only, to prevent loss of users funds and as such would be a power exclusively exercised under extreme circumstances.