DAOrayaki Research | BasketDAO：A Protocol Focuses on DeFi Portfolio Management and Exchange Traded Fund (ETF)

DAOrayaki

6 min readJun 2, 2021

DAOrayaki DAO Research Grant：

Fund Address: 0xCd7da526f5C943126fa9E6f63b7774fA89E88d71

Voting Result：DAO Committee Yes

Grant Amount：170 USDC

Category：DAO project coverage,DPI, BDPI, DeFi Pulse Index

Contributor：Jones, Herry@DAOrayaki

Financing:

BasketDAO Initial price: unfound, Current price: $798.38 USD.

BasketDAO Initial volume: unfound, Current volume: $10,26M USD.

Token name: Interest Bearing Defi Pulse Index (BDPI)

Token type: BDPI is issued under the standard protocol ERC20.

Chinese Version:https://daorayaki.org/daorayaki-research-basketdao-eng-chn-daorayaki/

Introduction:

BasketDao is the governance token for a protocol that focuses on DeFi portfolio management and Exchange Traded Fund (ETF). The Assets Under Management (AUM) tracks the underlying assets’ performance. BasketDAO’s first product on Ethereum: BDPI, an evolution of DPI with the following upgrades: Holds interest-bearing tokens from trusted protocols (Aave & Compound), No streaming fee, Community governed re-balances. In addition to that, BasketDAO takes the non-charging of management fees for the community as an essential part. Therefore, it will be capital efficient, that is farming yield safely, whenever there is a chance to. In other words, you get paid instead of paying for asset exposure, making the community the number one priority as much as possible in returning values. With the announcement of the new DeFi index: BDPI, BasketDAO concentrate mainly on replacing the DeFi token with their interest-bearing equivalents from Aave or Compound, where BDPI is considered as the second DeFi index token in terms of market cap.

To participate in governance and basket rebalancing decisions, BasketDAO launched a governance token known as “BASK” where cash flows can also be received with a 20% yield for to BASK holders. Also, incentivizing the migration of DPI holders by acquiring the same underlying assets and converting them to their yield-bearing equivalent.

The pillar of BasketDAO BDPI token:

At launch, BDPI follows the same token and weight distribution of DPI, except it holds interest-bearing version of those tokens where possible:

cUNI, aAAVE, aSNX, xSUSHI, aMKR, cCOMP, aYFI, aREN, LRC, aKNC, aBAL, FARM, CREAM and MTA.

By this fact alone BDPI will strictly perform better than DPI. But wait, there are also *no streaming fees * with a portion of earned yield going back into the protocol. Economies of scale will also make this process extremely gas efficient.

Team members:

The real identity of the BasketDAO creators is currently unknown, only their nicknames and twitters accounts are provided below:

0xpassionfruit: https://twitter.com/0xpassionfruit
0xlingonberry: https://twitter.com/0xlingonberry
0xtundra: https://twitter.com/0xtundra

BasketDAO goverance mechanism:

BasketDAO creators follow the community governance and rebalance voting. The specifications and details are not out yet to the public. But the way it works and the different used concepts are explained below:

Weighting methodologies:

The BasketDAO creators simply thought about what they can use for weighting whether a Market Cap or an Equal weight, or lastly a Market Cap/ TVL Ratio. According to what they conclude, a Market cap weighted indices are considered as the right choice when it comes to weighting.

Weight capping:

To prevent things getting out of control, indices required to have some sort of capping. And the reason for using such a capping is that buying an index just to hold 33% UNI is maybe not what they want for a diversified DeFi index.

Rebalancing:

Redundant failures in DeFi must be avoided. These kinds of failures are results of large management and performance fees charging, excessive trading and so on. To avoid such a failures rebalancing is required to update weights and edit tokens. However, when it comes to gas cost and slippage, the impact is highly concerned. Once a month rebalancing is what the creators came up with to keep things in balance.

Token inclusion criteria:

Common criteria will take into consideration the following concepts:

Market Cap (random coins are avoided by index mandating)
Liquidity (a reasonable cost for both rebalances and additions)
It has been here for how long (just like that adding ignorance)
Circulating Supply (not only founders can lock the tokens)

Fast token inclusion:

One of the new ideas that is in the community hands to vote whether to include it or not is the inclusion of tokens which doesn’t meet the BasketDAO regular criteria. The creators didn’t mention what is the reason behind this. However, this could affect the mechanism in a good way.

Acceptable farm criteria:

Funds securing is essential and not debatable, for this Compound and Aave are taken into consideration to start with in DeFi for BDPI. Whatever else to add will be up to the community to vote on.

The decentralization problem:

To control the decentralization problem, adding more variables for the community is important as long as it is well evolved and matured.

Transparency:

Providing a safe diversified blue-chip exposure is what matters to the BasketDAO, where the creators think that having a centralized index provider in Defi is considered a definite irony due to the fact of increasing costs to the end users.

BasketDAO Incentives mechanism:

$BASK Tokenomics:

Unlike our competitors, BasketDAO aims to only hold assets that are one of the following where possible:

Capital efficient — Yield farming behind the scenes
Interest bearing

This means you get paid instead of paying for asset exposure. All products launched by the BasketDAO team will charge 0 management fees.

Token Distribution:

The total supply of the $BASK token will be *200k, *emitted over a period of ~5.5 months. $BASK started its emissions on block 12132273. The vesting breakdown for $BASK distribution is:

*60% * for farming incentives.
*30% * to the treasury.
10% to the developers.

‌$BASK Distribution:

So how does BasketDAO operate without fees? Simply put, a portion of the yield accrued by the platform will be used to pay for operational costs, and be redistributed back to $BASK holders.

The breakdown for the yield generated in a basket is as follows:

70% will be reinvested into their respective basket.
*20% *will be distributed to $BASK token holders.
10% will be distributed to the treasury, used to fund operational costs like servers, marketing, audits, etc.

Yield Distribution:

BasketDAO developers believe this is a good incentive structure as:

Value accrued to $BASK tokens isn’t through management fees but through efficient capital allocation.
The developers, who are only paid in $BASK, are incentivized to create value-added products and avoid rent-seeking behavior and stagnation.

The security of held funds will of course still trump all yield farming concerns. To that end, there will be clear guidelines behind what methods of generating yield are acceptable, and all changes will be put to a vote and then be done behind a timelock. To begin with, the protocol will only use Compound and Aave.

$BASK tokens will also be slowly introduced to the product lineup in the BasketDAO platform (subject to off-chain voting), this is to further align holders of the BasketDAO products with the protocol.

Contracts:

Deployed Addresses for BasketDAO (Mainnet only)

Ownerships: