BGOV Token Economics
BZRX is the primary token within the bZx ecosystem, it’s value is reinforced by BGOV, and other soon to be announced blockchain specific governance assets that comprise the bZx ecosystem.
When we launched yield farming on BSC with BGOV, we reached a record breaking $280m TVL in just 4 short days. A huge accomplishment, and we are pleased by the positive response we received by the community. Since we launched BSC, Yield Farms and Onsen, one of the most common questions we’ve received has been “how will we balance the equities of BZRX tokenholders with those of BGOV holders”.
As we wrote in our prior blog post when we announced BSC integration, BGOV is a BSC specific governance and fee token, whereas BZRX is the primary token of the bZx network. The protocol development and direction will continue to be led by the BZRX/Ethereum community. Below are a list of additional properties which differentiate the two tokens and a framework for understanding how future blockchain specific tokens will be added to the bZx ecosystem:
Role of BZRX:
BZRX is the primary erc-20 compliant Ethereum native token of the bZx ecosystem. BZRX maintains the most prominent role, wields the most voting power, and greatest fee generating weight. BZRX is the only cross-chain asset and the only asset that can be used to farm all the new tokens at extremely high Allocation Point weighting, and the only BZX asset that can be used as collateral on all chains.
BZRX won’t initially have rights to fee rewards or governance on other chains directly. We could consider a 10-25% share of fees from all chains to go to BZRX, and reduced voting power on chains other than Ethereum.
- Issuance: A fixed limited supply of tokens will ever be minted.
- Farming: BZRX holders may stake BZRX within liquidity pools and receive rewards (BGOV, and future tokens). Staking BZRX will receive the largest number of allocation points. BZRX holders transfer their BZRX to another chain using a bridge, and then stake BZRX within liquidity pools. By using a pricing oracle bZx calculates the multiplier based on the value of BZRX staked.
- Staking Protocol Fees: BZRX holders earn 100% of the protocol fees earned on Ethereum and in the future may also receive a percentage of the protocol fees on BSC and other blockchains bZx may integrate including (AVAX, POLKDOT, OPTIMISM, POLYGON, etc.).
- Governance: BZRX may be given a voting weight in non-ethereum voting proposals (BSC, etc.), and BZRX is the only token allowed to vote on ethereum governance proposals.
- Vesting: vBZRX vests into BZRX, can be staked to also earn protocol fees.
Role of BGOV
BGOV is a new BEP20 asset on Binance Smart Chain. BGOV is a fork of the Sushi token contract, and has an inflationary issuance model. This will make bZx the first lending AMM with Sushi-like token economics. BGOV allows bZx to experiment with interactive multi token models. Additionally, because the BGOV token model is capped at 250m, it gives us more latitude to experiment with liquidity incentives via farming. Furthermore, this allows us to create ongoing liquidity for vBZRX and BZRX, which will in turn drive value to BZRX token holders. All together, this opens the door to experiment with new strategies to increase TVL and drive rates down.
- Issuance: A capped 250m supply modeled after SUSHI, farming rewards will be available in perpetuity. Enabling reward support for new BSC assets.
- Farming: BGOV holders will be able to continue farming blockchain governance tokens (BGOV, and future tokens), with a greater multiplier compared to iToken farming. In order to achieve this, BGOV holders take their BGOV within the BGOV pool on BSC.
- Staking Protocol Fees: BGOV stakers will be able to stake their BGOV tokens within the BGOV pool and earn a portion of protocol fees generated from BSC margin trending, lending, and borrowing activity.
- Governance: BGOV is used to govern Binance Smart Chain protocol parameters for Binance specific assets on bZx and submit governance proposals for Binance Smart chain protocol assets. Holders of BGOV are more aligned with and attentive to the health of Binance chain lending pools when it comes to governance decisions and proposals. BSC governance impacts the BSC community. As the value of the Ethereum deployment grows relative to that on BSC, this could result in BSC stakeholders having their voices diluted, and vice versa.
When we launch our margin trading, borrowing, and lending product on Ethereum L2, we will once again set another record by becoming the first DeFi margin trading borrowing and lending platform on L2. In the near future we plan to launch multi network support including:
- BZRX for ETH - BZRX - launched
- BGOV for BSC. - launched on 4/5/2021
- PGOV for Polygon - coming soon
- FGOV for Fantom - coming soon
- AGOV or xGOV for Avalanche - coming soon
- PKGOV for Polkadot - coming soon
Adding new blockchain specific tokens to the bZx ecosystem will generate additional liquidity for the BZRX token and thus is not a zero sum game. Each new protocol specific token will add liquidity to the bZx ecosystem because it is being distributed to people who hold and stake their BZRX tokens and will thereby attract more capital and increase the yield to BZRX holders.
Adding new tokens requires a compromise between BZRX holders who will be able to move BZRX onto multiple chains, where they can stake them to earn farming rewards, fees, and participate in governance and will benefit from increased liquidity and collateral, but who receive limited or no voting and fee rights on other chains. Likewise, BGOV and other blockchain specific token holders are limited to one chain and comparatively reduced farming rewards.