The BarnBridge DAO has signaled its intent to support a one-time SMART Yield senior tranche rewards program in lieu of renewing junior tranche rewards at this time. Please read the following program description closely, and feel free to ask the community clarifying questions in our Discord.
Terms of the Program
100,000 BOND will be distributed from the DAO treasury to users who mint or have minted Ethereum mainnet SMART Yield senior bonds prior to September 1st, 2021 with maturities dated January 30th, 2022 or beyond. Program progress will be tracked manually by the BarnBridge core team, with a public dashboard already available for cross-reference.
Rewards will be vested over the course of February 2022. A user’s share of the rewards will be calculated as a function of a) their total deposit size, and b) when they deposited. Please refer to the following mapping to understand the impact timing of the deposit will have:
- Prior to August 9th: 100% of sBond value
- On August 9th or before August 16th: 50% of sBond value
- On August 16th or before August 23rd: 25% of sBond value
- On August 23rd or before Sept. 1st: 10% of sBond value
This means that, were you to mint an sBond with a principal of 91 USDC and a gain of 9 USDC on August 5th, it would be counted as $100; were you to do so on August 18th, it would be counted as $25, and so on. On September 1st, all sBonds will be tallied and a public Google sheet will be made available indicating what each participating address can expect to be distributed over the course of February 2022. Note that, while all integrated originator markets on Ethereum mainnet SMART Yield will be considered eligible for this program, those on Polygon will not be.
Reasons for the Program
The SMART Yield junior tranches were incentivized because they are the pools that take on the risk within the application. In normal circumstances, incentivizing the senior pool would result in a market distortion where rates would get pushed down to the point where new entrants would stop coming in and the system could potentially stall out.
We currently find ourselves in abnormal circumstances — or rather, cyclical ones. Because SMART Yield seniors currently lack any secondary utility aside from locking in a rate, they lack appeal in deleveraged market periods. This will be the case until the launch of an ancillary app currently codenamed FIAT. By incentivizing senior tranche participants for the moment in time prior to the junior tranche rewards lapsing, and presumably, TVL plummeting, we would see a TVL floor form in that the excess yield earned by the senior side would represent meaningful APR for some amount of juniors, regardless of there being rewards for them or not.
It is currently the core team’s view that reviving the junior tranche rewards program in some capacity will make sense in the lead up to the release of the FIAT project, but this has not been discussed in the community.
You can find the community discussion regarding this program here.
BarnBridge is a risk tokenization protocol for DeFi. Its applications allow users to select from opposing pools, referred to as tranches, and take positions on risk factors like interest rates or asset prices. Its first application, SMART Yield, offers fixed and levered variable yields on stablecoins deposited into underlying lending markets like Aave, Compound, and C.R.E.A.M. Finance. Its second application, SMART Exposure, automates user position management between any two ERC-20 assets at set ratios. Within the coming months, its application suite will expand to include SMART Alpha and FIAT. BarnBridge is currently live on Ethereum and the Polygon Network.
Keep up to date with the BarnBridge community via the following channels:
BarnBridge DAO Votes in Favor of SMART Yield Rewards Period was originally published in BarnBridge on Medium, where people are continuing the conversation by highlighting and responding to this story.