Ever since blockchain technology was launched, many have been calling for the integration of the technology with traditional finance services. Blockchain would bring speed, efficiency, lesser fees, and above all, decentralization. The prospect of decentralized finance seemed bright. Several years after the launch of decentralized finance, there are still issues that haunt the industry. The biggest of which is market volatility. Cryptocurrency has proven far more volatile than anyone could ever expect. As such, new models for measuring the risk associated with cryptocurrency investing were needed. At least, if Defi was going to stay, investors needed a way to measure how much risk would be involved. Thankfully, that’s where Barnbridge comes in.
Hi and welcome to today’s video where we will be looking at BarnBridge crypto – a decentralized finance (Defi) protocol aimed at helping traders better understand and manage market risks. We will be looking at what makes up the Barnbridge network as well as its token distribution.
Finally, we will be looking at a few benefits of using Barnbridge cryptocurrency as well as plans for future developments of the network so make sure you stick around.
What is BarnBridge Crypto?
Barnbridge was the protocol created for tokenizing market risks. You see, cryptocurrency traders expose themselves to risk each time they enter the market. Calculating how much risk a trader is exposed to is difficult to tell as crypto assets can easily go from valuable to worthless in a market correction.
Barnbridge solves that difficulty by breaking market risk into smaller tranches which are more manageable for investors. Barnbridge allows crypto traders of all kinds including beginners and experts to invest in assets that fit their risk tolerance.
For example, beginner investors can choose from projects with low risk while veteran investors can choose to invest in high-risk assets.
Barnbridge is a much-needed solution in the world of decentralized finance which is haunted by high volatility. Barnbridge offers a range of tools that allow investors to properly manage how much risk their investment portfolio will be exposed to.
What makes Barnbridge stand out from other Defi protocols is that, unlike Aave and Compound, Barnbridge offers a fixed yield.
You see, Defi protocols like Compound and Aave offer high yields. However, these yields are not fixed. Barnbridge uses a process of aggregating yields via fixed income, then flattening them, thus improving the system’s efficiency.
BarnBridge was founded in 2019 by Troy Murray and Tyler Ward.
Troy Murray was head of a blockchain research and development firm that was focused on finding the benefits of adding blockchain technology to the media. He also served as director of strategy in another company before being a supervisor/technical architect at a blockchain foundation called snglsDAO.
Tyler Ward was working on Proof Systems – a digital marketing company focused on finance technology founded by Tyler Ward.
Tyler Ward also worked with several blockchain companies including Earn.com, NEAR Protocol, Consensys, DARMA Capital, and FOAM.
What Role Does the Native Bond Token play in the Barnbridge Crypto Ecosystem?
BarnBridge uses a native token called BOND. BOND is an ERC-20 token meaning its compatible with the Ethereum blockchain. BOND is used for distributing incentives among network users as well as betting and governance purposes. BOND can also be stored in any wallet that supports Ethereum.
There are ten million BOND tokens which is equal to Barnbridge’s maximum supply. Of that number, 7.2 million tokens are in circulation. The price of 1 BOND token as of august 03, 2022 is $7.86.
Barnbridge has released some information regarding its token distribution:
20% of BOND token was put aside for Uniswap Liquidity pool rewards. 17.50% was given as Var Pool incentives. Another 17.70% was put aside for community reserve purposes. Staking rewards also amounted to 4.8% while 8% was put aside for Yield farming.
The remaining 32 percent was split among the core team, advisors, investors, and the DAO treasury.
The core team received 12.50% while the DAO treasury received 10%. Investors were given 7% while advisors were given 2%.
How does Barnbridge work?
Like we said earlier, Barnbrige is a Defi-protocol that works by tokenizing market fluctuations thus allowing traders to better manage risks in their investment portfolio. Three main parts make up the Barnbridge network: They include:
Smart yield works by pooling together the yield from several crypto lending platforms like Compound. Smart Yield then breaks them up into different tranches. Each tranche has a different risk profile.
They are two pools – Senior pools and junior pools. Senior pools are represented by ERC-721 tokens. Senior token holders have the benefit of receiving a fixed return until the end of the bond. Junior token holders don’t have the same benefit, however, they have higher return potential as they carry more risk than senior token holders.
Junior and senior token holders share a unique relationship on the Barnbridge network
When the yield fails to meet the necessary level required for senior token holders, junior token holders will have their yields and maybe even their principals reallocated to cover senior token holder yields. This reallocation is done algorithmically.
Juniors on the other hand will benefit when yields from senior token holders exceed the average guaranteed yields. Junior token holders are also expected to have extra capital in their pools, unlike senior token holders.
In line with their plans to simplify decentralized finance, Barnbridge also launched Smart Exposure.
Smart Exposure allows traders to passively manage a token pair as part of their portfolio. Smart exposure reduces the time and effort spent analyzing the crypto market.
With Smart exposure, traders can have an allocation to a currency pair in their portfolio without actively managing the risks.
Smart Exposure works by closely tracking the market movement of a currency pair. It also conducts automatic rebalancing based on a trader’s instructions
With smart exposure, traders have greater control over the amount of risk their portfolio is being exposed to because they can automate their entire allocation to that currency pair.
For instance, traders who have strong faith in Ethereum can choose to hold 80% ETH and the remaining 20% in wBTC.
Mind you, Smart Exposure only works with Ethereum-compatible tokens. Smart exposure receives price feeds directly from Chainlink oracles. The fees for rebalancing in Smart Exposure are split between all liquidity providers on the Barnbridge protocol.
People who use fixed allocation strategies like Dollar cost averaging will benefit from SMART Exposure as it can help with the following:
- Tracking popular currency pair ratios
- Automating the management of treasury funds
- Control exposure to price volatility of assets
Smart Alpha takes trading to another level by giving traders full control over their exposure to specific assets. While smart yields function on liquidity pools and lending pools, Smart Alpha works on specific crypto assets.
Smart Alpha is very similar to Smart Yield in that traders can choose from either junior rates or senior rates
Senior rates refer to how much downward price movement an asset will experience before senior depositors begin to record losses.
Just like Smart yield, Junior holders will give a portion of their assets to seniors when the price drops while receiving more of the asset when the price rises.
Seniors get full-price protection up to a certain point. However, they get fractional bullish price movements.
80% of the junior pool dominance makes up the senior rate. Junior dominance refers to the number of junior depositors in a particular ERC- token pool. The senior rate also has downward protection of 35% for epochs.
Barnbridge claims that Smart Alpha is a great solution for projects holding large treasuries. For example, DAOs holding large amounts of their native token will benefit from downward price protection provided by Smart Alpha senior holders while reducing the cost of leverage for passionate users.
What are the Benefits of Using BarnBridge Crypto?
Barnbridge crypto seems like a magic bullet to the problem faced by the decentralized finance industry. As you all know, investing, in general, carries a fair bit of risk no matter the asset. When it comes to cryptocurrency, the risk is increased 100 times. Decentralized finance aims to bring all the services offered by traditional finance to the blockchain world. Unfortunately, the high volatility of cryptocurrency still stands as a big barrier to entry.
Barnbridge crypto seems to be a solution to these problems. Barnbridge crypto aims to make investing easier for everyone. Barnbridge crypto does this by creating a way for people to reliably measure and control the amount of risk they expose their investment to.
This reduces the barrier of entry to trading as everyone can invest in products and assets that match their risk tolerance. This increases people’s appetite for investing as they are less likely to record surprising losses since they can read how much risk is involved with a particular investment.
Another benefit of Barnbridge protocol is it creates an easy way for people to make trades. Thanks to some of their tools, people can simply choose an asset allocation – a currency pair, each supported by Ethereum.
After selecting a currency pair, people can choose how much risk they want to expose that allocation to. These instructions help the software manage a trader’s portfolio. This is a great option for traders who don’t have the time to analyze market charts all day. It is also helpful for beginner traders to watch who are still testing out new strategies as Barnbridge crypto actively manages the investment portfolio on their behalf.
Finally, BarnBridge is one of the only DeFi protocols that pays a fixed return on lending and liquidity pools.
Barnbridge aims to make decentralized finance activities like trading, lending and providing liquidity pools easier. Barnbridge does this by giving traders full control of how much risk they want to expose themselves to.
Behind the Barnbridge network, there are a host of products that make trading easier. SMART yield gives a fixed return via a system of senior and junior pools
Senior pools are exposed to less risk but also fewer rewards while junior pools are exposed to more risks but also more rewards.
BarnBridge can pay fixed returns to senior holders because if the return drops, then they are compensated from junior pools. On the other hand, when the yields exceed expectations, the balance is shared among junior holders.