Temple Core Update
The build is now on Rinkeby for testing. Both desktop and mobile versions. The vaults will separate our farming strategies from our "accounting" (recognizing where the farming rewards should go). This is the innovation Butler spoke about during the last CTP, and it's pretty unique in the DeFi space. This gives us a lot of flexibility with the vaults. Our farming strategies can be easily integrated across other L1 or L2 chains. It is also more secure because any exploit to the contract is just exploiting the accounting, not the actual assets.
The UI looks beautiful, and the mobile version is slick. We've had a few leaks showing the UI in discord, but we can't wait for the full release.
Investment Strategies Update
Our first primary investment strategy, which we released last year, was to put all our farmable FRAX into the FRAX3CRV pool, earning CRV and CVX. The rewards are auto reinvested (reinvesting our FRAX3CRV into staked CVX. Taking the CVX tokens, staking them, and earning yield. We're also swapping the CRV tokens we earn for cvxCRV tokens, and staking them. This is our primary strategy for getting a higher return on our yield and can be used for the first vault.
We also have our LP currently being farmed on the FRAX gauge. We're presently bribing via pitch.money and collecting rewards. We're guaranteed to get more value from the bribes than the cost of the bribes themselves.
Multiplier Effects in Vaults
The other puzzle piece is that whatever yield is generated from TEMPLE deposited in the vaults is subject to several multiplier effects.
The first multiplier is due to the number of farming assets relative to $TEMPLE tokens in circulation.
Example: There are 100M $TEMPLE tokens in circulation held by people who have staked into vaults, and 150M FRAX is invested. Ultimately, the revenue on that 150M FRAX will be shared amongst the 100M $TEMPLE tokens. In this way, the APY per $TEMPLE token will be higher than the APY per FRAX
The second multiplier is based on the length of time you lock into a vault. Locking for a longer time in the vault will give you higher rewards APY for the duration of the vault and thus a higher share of the rewards being farmed. It won't be a dramatic multiplier like 3x or 5x. We don't want to force everyone to max lock. But we want to give a little incentive if people want to find that balance.
Then the last multiplier is the Faith boost. FAITH will be used to boost the APY in the Temple vaults. The current thinking is to link the boosting rewards to the TEMPLE/FAITH ratio of the holder, to give an advantage to the truly faithful.
Example: You have FAITH, but you've sold a large portion of your $TEMPLE since the airdrop. In this scenario, you would still get a boost because you've got faith, but you'll get a much smaller boost because you have a lot less $TEMPLE than you started with. On the other hand, if you had a lot of faith and bought a lot of $TEMPLE, you get a bigger boost because you have a high TEMPLE/FAITH ratio.
There will be no Faith in the future. This will be an upfront one-off legacy bonus for those who stuck around before.
If we launch vaults and they do not perform (i.e. if we don't get yield above what users can create themselves and no price appreciation), then our exit strategies come into play. So nothing's changed from the latest AMA.
One of the things that we've been cooking up is how to get some additional leverage to boost every dollar being farmed. That is currently not a lot of good options out there in the market for borrowing ~50M+ stablecoins.
We have been in talks with the Bera Chain team about investing there. The basics of Bera is that it's a chain built on Cosmos, with an EVM layer on top. It uses Synapse as a bridging partner for moving assets from other chains.
It uses a unique Proof of Liquidity (PoL) system, which is a bit of a tweak to the old proof of stake system, but the assets go into a native exchange and provide liquidity to be utilized. The real innovation here is their three token system and emission dynamics.
The 3 tokens system they will employ will be:
- HONEY - Native stablecoin
- BERA - Gas fee token
- BGT - Governance token
The idea is to separate all of these tokens with their purpose. They are having users burning gas tokens that are losing vote weight over time if that’s also being used for governance. So that adds another level of tokenomics to have the ability to have on-chain governance built into the Bera ecosystem.
Most importantly, there's a native farming opportunity built into their chain. And the way that works is that you could farm FRAX, like we do today, and deposit that into a consensus vault on Bera. The chain also gives native leverage. This means that:
- We get to a hold our FRAX without having to convert it (safe stable coin)
- We get a lot of leverage at scale through both $FEI and $HONEY.
- We also get high emissions for being early in Bera.
Our FRAX3CRV pool is the safest large opportunity we have right now. But we are looking for some other really large opportunities where we can get potentially higher yield at scale.
Protecting Temple IV guides our investment strategy. We did have the opportunity to invest in the Bera chain in the early rounds, but we didn’t. We actually thought it was a good opportunity but we don't have the ability to do that within the Temple mechanics. We can't just swap a bunch of FRAX for a risk-on asset, because that would put our IV at risk. That’s the reason we don’t swap out a large portion of our treasury for a token like BERA. We will be keeping our FRAX, because we need that to back Temple IV. Instead we’ll use our FRAX to farm and get safe exposure to tokens like BERA and FXS.
We’re got a few ways we can play this. For example, we could launch a Bera vault that would allow people to stake their Temple in Bera, which would direct some treasury over to them. If we wanted to throw down a commitment for a certain amount, it would probably be phased in over time, safely.
Q: What kind of APY are we expecting with Bera?
Instead of your typical farm where there are fixed emissions and the more people who enter, the more the yield goes down, in Bera, the yields you'll get will be a function of market cap divided by TVL. Because as the market cap goes up, the price of the tokens will go up. But as TVL goes up, those emissions are shared amongst more people. So market cap over TVL is the most crucial metric to determine what kind of return we would get by farming on Bera.
Q: What are the timelines for partnering with Bera?
Bera Chain will not be launched for quite a while (no firm timeline yet but rumors are it’s a couple of months out at least). As soon as a decision has been reached about a partnership we will send out an announcement.
Q&A with Devbear:
The underlying infrastructure of Bera Chain. I know a lot of Templars and many others are worried about security and stability. On behalf of the Bera Chain team, I can say that security is our number one priority, which is why we've gone with Synapse as our bridging partner.
We are also building on top of Cosmos, which has been around for a long time, and it's relatively battle-tested. By having this core infrastructure for our new chain, the foundations are extremely well tested.
It's kind of the best of both worlds, you're able to create a new ecosystem with new mechanics, but 80 to 90% of your underlying infrastructure is super solid and ready to go. It allows us to push the envelope on what's possible with tokenomics and offer leverage yield and farming.
We can utilize this to mint our stablecoin HONEY as well. If you deposit $100 worth of ETH, we can take it in at a 200% collateralization ratio, so you take $50 of that and mint 50 HONEY and put that in the DEX.
What's excellent for Temple is that, by depositing FRAX, you can have a turbo vault strategy using leverage.
Background on the Bera team. A little knowledge on us is that we're pretty much just a team of serial entrepreneurs and DeFi builders, so. Our Team members have founded companies and invested 8-9 figures of capital in multiple family offices. We were able to get involved in DeFi early. As we started building, we wanted to make sure that we could do it in a way from an investing and a building side.
I was an engineer at Apple down in California for almost half a decade. And some of our core hires have been compiler engineers at IBM, and X engineers at Polychain. And we have multiple math PhDs that have been working on tokenomics and the vault system. So we have a solid team internally, both from an engineering side and a mathematic side.
Q: Do I need 32 ETH to become a validator?
No, you can delegate to a validator with as little ETH, AVAX, or BERA. There are no limits or anything on that. And you're good to go.
Q: So assets will need to be bridged over to Bera chain?
That's what Synapse is for. Your FRAX and all of our assets will be bridged via Synapse. They're all going to be minted and burned across, which helps protect against exploits because there's no escrowing of tokens on either side. Synapse will be able to mint and burn HONEY, BGT, and BEAR on every chain. We like that because it makes it clean and fixes some of the issues that other bridges have.
Q: Is there a global demand for another L1?
We wanted to make sure that we weren't just building another L1. During OHM fork season, we experienced a lot of times where you bridge onto a new chain over a sketchy bridge, and you don't know where your tokens have gone. You're waiting for them to show up on the new chain, then once you get on the chain, you end up in this environment where there's no liquidity. If you want to play with the new protocol, you're down 10% out of the gate between bridging and swapping and gas fees. We tried to find a way to allow an environment for the chain to have liquidity as a core primitive.
We look at the liquidity to market cap ratio, and we want to make sure that sustainable. Having this proof of liquidity system incentivizes the market cap of the chain to grow when the liquidity grows, which we feel is important to creating a sustainable ecosystem.
Q: Can we run a Bera Chain validator ourselves?
One thing that you can do to boost yields on top of just using the vaults is if you run a validator. You can get what's called the block proposer reward (a small bonus APY reward for each block validated). You can't delegate to earn that reward. Only a validator can earn it, incentivizing people to run the physical hardware. On top of that, if Temple ran a validator, there would be a small commission that most validators take. Usually, it's around 2% to 3% of all the yield. Running a validator could increase yield by 5-15%. It's something we encourage.
One of the Bera guys is working on creating an excellent app to set up a validator. You don't need to know anything about writing code or anything like that; you will just be able to use this app to set yourself up as a validator. We're trying to reduce the barrier to people running validators which is great for decentralization. So we want to make sure it's easy for people to do.
Let's bring STAX into this picture. STAX is the yield aggregator play, seeded by TempleDAO. We have our STAX Pre-launch coming together, which is a product that makes it easy for everyone to stake into the temple LP. If we wanted to, we would be able to bring that same technology over to Bera chain so that we'd be able to have STAX on Bera. We're going to have some community discussions about this, just like the last time we made the investment proposal for the Convex.
In closing, we're all pretty excited about this whole thing. STAX, BERA, Vaults. We have always believed in the vision of TempleDao being the place for long-term wealth creation for Templars. We've been through a bit of a price winter, but long-term, we believe value is going to be delivered through these vaults and STAX. We think these products are going to give way more than that.