BoringDAO: Bridging DeFi and Non-ERC20 Assets for Maximum Utility
In the interconnected world of decentralized finance (DeFi), BoringDAO is pioneering a protocol that seamlessly integrates non-ERC20 assets into the DeFi ecosystem. Launched on Ethereum’s mainnet in November 2020, this innovative protocol aims to maximize the utility and yield farming potential of assets beyond the ERC20 standard through decentralized governance.
How Tunnels Work
BoringDAO’s first decentralized autonomous organization (DAO) initiative targets Bitcoin, transforming it into an ERC20-compatible asset named oBTC. This essential tunnel allows BTC holders to tap into the DeFi world. Each blockchain asset has a dedicated minting tunnel designed for bidirectional conversion between native blockchain assets and their ERC20 counterparts.
Tunnel Parameters
Key parameters in tunnel creation include pledging coefficient and commission rate. In version 1, the pledge coefficient is set at 75/100, with a commission rate of 0.2% for both minting and redemption processes, accompanied by additional network fees. Version 2 introduces flexibility, allowing tunnel operators to determine these rates themselves.
Tunnel Settlement Process
Tunnel settlement occurs when custodial crypto-assets incur losses. Both V1 and V2 protocols dictate an immediate freeze on affected tunnels for settlement. Custodians first confirm remaining wallet assets, matching them against issued blockchain assets to calculate exposure. Settlements equalize pledge amounts before resuming minting activities. V3 aims for dynamic clearing solutions.
Community-Governed Insurance Pool
Half of all redemption commissions feed into an insurance pool governed by the community itself. The community decides usage through proposals and referendums, ensuring funds are available for Black Swan events or other emergencies within the system. This insurance mechanism backs BoringDAO assets with an extra layer of security on Ethereum’s network.
Unlocking BTC Value Through Minting
Boring Token (bToken) standards follow ERC20 guidelines enabling BTC-backed wrapped tokens (bBTC) to integrate seamlessly within Ethereum’s DeFi landscape. These bTokens reflect Bitcoin values directly while enabling efficient participation in various decentralized financial services.
BOR Token: Governance & Incentives
Users can obtain BOR governance tokens via two primary methods: Mint Mining and Yield Farming. — Mint Mining rewards users wrapping non-ERC20 tokens into oTokens like Bitcoin into oBTC. — Yield Farming allows users employing various token types such as oToken LP Tokens or Tunnel Pledge Tokens to farm BOR efficiently. Each method dedicates approximately 30% of total BOR supply towards incentivizing these activities.
Strategic Partnerships & Investments
Notable investors supporting BoringDAO include DeFiance Capital, Hashkey Group, SNZ Holding, Youbi Capital, Altonomy Ventures, Puzzle Ventures among others. Strategic collaboration partners encompass industry leaders like HashQuark Analytics, Peckshield Security Firm & DODO Decentralized Exchange Platform providing robust operational support for BoringDAO’s expansion endeavors!
Are you excited by how protocols like BoringDAO revolutionize access across different blockchains? What other innovations do you foresee enhancing cross-chain asset utilization? Share your thoughts below!