BarnBridge is an idea & whitepaper originally conceived in Q2 2019. At the time, MakerDAO was starting to garner mainstream awareness and capture the imagination of what is now known as the DeFi, or decentralized finance, community. Over a year later, with 60% of Global debt yielding less than 1% & over $15 trillion of global debt yielding negative rates, capital continues moving into higher risk yield streams.
Meanwhile, there is a decentralized financial system, referred to as Defi in this paper, burgeoning in the digital economy with digital assets and cryptocurrencies. While debt levels, which is referred to as TVL, or total value locked in decentralized financial protocols, has increased from hundreds of millions last year, to billions of dollars in 2020, yield on these instruments continues to dwarf the menial rates offered by comparable products in the legacy TradFi system. Conversely, due to assumed higher risk levels coupled with higher efficiencies provided by smart contract technologies, annual percentage yield (APY) is far higher on decentralized protocols than what can be found in the traditional financial system. Working capital is following the historical trend of following higher yield which is why we are seeing TVL moving to Defi at an accelerating rate. This is a trend that will continue.
The need for familiar TradFi instruments to exist throughout the DeFi ecosystem has never been stronger. BarnBridge is an idea whose time has come.
DeFi Primer: Risk Ramps and TradFi Bridges
The yield products in the decentralized markets which are yielding higher APY than yield products in traditional markets are currently crypto backed loans. Instead of selling crypto for fiat, borrowers are staking digital assets and receiving digital assets in return. While these loans have mostly been short term loans to traders, the system has proven to be efficient & ripe for expansion. These efficiencies will inevitably attract higher value, longer duration loans to decentralized ledgers. The efficiencies referenced are enabled by smart contracts’ ability to hold digital collateral until both sides of the transaction fulfill their obligations algorithmically. The reduction of custody, settlement, and escrow — labor-intensive, costly actions within the legacy system — to algorithmic actions is reducing the rent charged by the labor to perform these actions. These efficiencies, coupled with the perception of higher risk, are why the yields are higher on decentralized systems. As risk in DeFi converges on risk levels perceived in TradFi, by the nature of the loans moving from crypto backed loans to traders to collateralized mortgage loans to homeowners, for instance, the efficiency of smart contracts will continue to offer higher yield on decentralized systems than traditional centralized systems.
What’s more, the efficiency of smart contracts and DAO technologies allows for far more complex derivative instruments to be built & provides a level of transparency and security unfathomable to current financial networks.
All of these efficiencies are currently stemmed and built off of crypto backed loans.
As previously discussed, these efficiencies should extrapolate to mortgage debt and corporate debt moving to decentralized platforms on a longer timeline. This should also encourage more complex derivatives based on debt and yield to move to decentralized platforms. We will be able to structure far more complex derivatives and track them with far greater efficiency and transparency than possible before the innovations of blockchain, cryptocurrency, smart contracts, and decentralized autonomous organization technology were realized. $244 trillion in debt and yield based derivatives will continue to move to more efficient technologies over time. The migration of yield and yield-based derivatives from less efficient centralized financial systems to more efficient decentralized financial systems will be one of the largest movements of wealth in human history. BarnBridge exists to help facilitate this transition and make the decentralized financial system much more efficient, risk-flexible, and attractive to a wider range of participants.
There is a massive market for people wanting to get into crypto who (1) don’t want to bite off the entire risk curve of owning, lending, or receiving an entire digital asset & (2) will never take the time to use a decentralized autonomous organizations (DAOs) to create a smart contract which algorithmically scripts both sides of the loan or agreement. Over 99.9% of global debt is still structured via traditional markets and is starving for yield. Conversely, more advanced financial companies have different risk tolerances. This allows for different structures at each point of the yield curve with the riskiest (likely hedge funds) wanting to put the least money down with the highest return for their bet/hedge. On the contrary, more conservative investors are often willing to give up a large portion of upside opportunity in order to access safer instruments. “Riskless” products, as tradFi describes them, are not currently offered in the decentralized financial ecosystem. The opportunity to structure these types of instruments will allow for more risk averse investors in the traditional markets to move into the decentralized markets.
In the shorter term phase (DeFi) & medium term phase (Proof of Stake) risk ramps will continue to create markets and industries for traditional investment firms who want to “get off zero” or “get above 1%.” As this happens, more and more types of loans will move to decentralized ledgers. In the long run, and partially through this process, lenders and borrowers will understand why decentralized and trustless intermediaries are superior and less costly than the current 3rd party intermediaries. As this happens, larger portions of the $244 trillion in global debt will move to the chain, creating the opportunity for more yield, more risk ramps, and higher CD-like (collateralized debt) products for fiat and crypto depositors of the new age commercial banks & financial markets.
1. Fluctuation Derivatives Protocol
BarnBridge is the first fluctuation derivative protocol. Before the advent of smart contract technology it was close to impossible to track & attribute yield to a divided allotment of capital, trustlessly & transparently, to provide hedges against any and all fluctuations. Conceptually, you can build derivative products from any type of market driven fluctuation to hedge various risks. Examples include, but are not limited to, interest rate sensitivity, fluctuations in underlying market price, fluctuations in predictive market odds, fluctuations in default rates across mortgages, fluctuations in commodity prices, and a seemingly infinite number of market based fluctuations to hedge a particular position.
We plan to create the first cross platform derivatives protocol for any and all fluctuations. To start, we will focus on yield sensitivity & market price. Downstream, we plan to introduce a far wider variety of hedges against fluctuations in the decentralized ecosystem. BarnBridge aims to be platform and asset agnostic.
You can reduce the risk of digital assets & digital asset yield sensitivity by breaking them into essentially infinite, separate, dollar-denominated chunks, or tranches, and building derivatives off these tranches. BarnBridge aims to smooth out the risk curve and offer layered risk management to both DeFi & tradFi investors by building more efficient debt & yield based derivatives.
Interest rate volatility risk mitigation using debt based derivatives.
Currently, the decentralized financial system is primarily offering variable rate annuities. However, the ability to structure yield into fixed rates will come in the form of locked collateral with a maturity on repayments, or bonds, as well as fixed rate yields with no maturity, or annuities. We don’t believe this to be a novel idea & we believe naturally that these types of products will come to DeFi over time. However, the types of derivatives & complexity reduction in financial planning you’ll be able to structure and implement with the existence of fixed yield in smart contracts will be mind blowing to traditional financial markets.
Decentralized financial instruments are showcasing the power that a trustless financial industry can wield. Powerhouse projects in the DeFi space like MakerDAO, Synthetix, AAVE, Compound, Curve, and others are producing yields for users that have none of the constraints and rent seeking of tradFi instruments by replacing bookkeepers, escrow and various overhead with algorithms, trustless oracles, and decentralized ledgers. Different market driven yields can be found on numerous decentralized platforms, but there is nothing out there that services & pulls together all of the different decentralized protocols & allows for a normalized risk curve and derivatives for risk mitigation.
Furthermore, efficiencies across lending protocols are non-existent in the current DeFi markets. The ability to pull yield from numerous protocols and tranche them into higher and lower yield buckets is something that exists in traditional financial markets but is more efficient in decentralized financial markets, assuming an acceptable level of liquidity.
Flattening the risk curve across DeFi.Bundling and Rating.
Our first structuring will not only allow deFi users to get access to fixed yield but also pools yield from numerous protocols across the ecosystem creating a more efficient market, again, smoothing out the yield curve across the entire industry.
While we expect singular lending protocols to introduce concepts around fixed income on their platform, a major differentiation of a cross protocol based approach to fixed income is the diversified assets & diversified platform risk. By algorithmically pooling interest generating digital assets on a number of lending platforms, we will create greater efficiencies by spreading risk & normalizing the industry risk curve. Since BarnBridge does not lend money directly off a native platform, & instead pools lending across the industry, it allows us to be platform agnostic & digital asset agnostic which in turn will allow for more complex structuring and bond rating systems downstream.
Risk and Loss Scenarios.Scenario 1Scenario 2
Pooled collateral would be deposited into lending protocols or yield generating contracts, and the yield will be bundled up into different tranches and tokenized. So you could buy exposure to the most senior tranche and get a lower yield but have a much lower risk profile. SMART bonds are a way to buy and sell risk on yield with all of the pricing driven purely by the market.
Reference financial structuring can be found here.
2.2 Smart Alpha Bonds
Market Price Exposure Risk Mitigation using tranched volatility derivatives.
The SMART Alpha bonds will not be structured via traditional yield tranches but instead with various levels of market price exposure, which we will call risk ramps. The idea is that every bucket or tranche of price exposure does not need to be flat across the entire risk curve, meaning the first $100 of price exposure does not need to deserve the same upside and downside volatility. This is similar to having fractional ownership but with different risk/reward for the fractions.
For example, if the current price of 1 ETH is expected to be $1000, and moves to $900, the first tranche (the riskiest tranches) takes a higher percentage of the loss. Conversely, if the current price of 1 ETH is expected to be $1000, and moves to $1100, the first tranche (the riskiest tranches) takes a higher percentage of the gain.
How these gains and losses are measured & allocated across tranches can be done algorithmically with smart contracts. Each tranche can be traded as a unique digital asset. For example jETH (a junior tranche of ETH price exposure), mETH (a mezzanine tranche of ETH price exposure, and sbETH (a senior tranche of ETH price exposure). The tranches will exist as risk ramps in which users of various risk appetites can gain price exposure to digital assets.
The SMART Alpha product will make way to build tranches of single asset and multi-asset pools that generate yield and where lower risk ramps get lower returns when the underlying assets rise & lower losses when they drop. However, we can build this without needing yield attached at all. The opportunity for downstream opportunities to use various risk ramps for differing collateral obligations is a logical progression these risk ramps will create.
3. Token — $BOND
BOND is an ERC-20 token. It will be used to stake in the system, and as a governance token when the governance module is launched. As it conforms to the ERC-20 standard, the $BOND token is tradeable on any exchange and storable on any wallet — allowing anyone in the world to access it.
Tellor is a relatively new small-cap altcoin in decentralized finance (Defi). Defi is coming up incredibly fast. More and more crypto and blockchain projects are starting to deal in Defi. We are happy to explain what Tellor is, how it works, difference between Chainlink and Tellor and why Tellor is used.
Tellor Team
The experienced team is one of the essential points of success. A professional team behind a project is one of the most critical fundamental criteria for the sustainability of a project. The tellor team consists of 3 prominent members:
Brenda Loya (CEO)
Michael Zemrose (co-founder)
Nicholas Fett (CTO))
The CEO and CTO have experience and are Ethereum developers. They also founded DAXIA. This is a company that created Ethereum derivatives and smart contracts. They’re also both economists. The CEO has worked for the US government, and the CTO has worked for the CFTC. The co-founder has also worked at DAXIA.
They are three different profiles, but very experienced in their field and know each other well as they have founded a company about Ethereum before. So they know how to work together as a team.
The rewards for the tellor’s team
Also known as “Dev revenue share” it means that 10% of the total revenue generated by miners goes to the Tellor team’s wallet. That may sound weird and unfair, but it’s not. This project did not had any ICO or raised money in any other way. The team set up the project with their funds. That is why this is their way of continuing to finance the project.
This is, of course, the most challenging model to start with since you have to explain your project to everyone and you don’t ask for any funding. It is also the fairest model, to begin with, because the project has to be financed by the team itself.
What Is TELLOR (TRB)?
Tellor is a hybrid solution between Strike and PoW, It is a method that has proven its effectiveness in resisting attacks (Sybil attacks) and ensuring network life. https://request-global.czilladx.com/serve/view.php?w=300&h=250&z=325fe079eb73cc7840&c=72960993f87b539853&n=e5a3a05335eb1820fbd6ad31ba55d80c01f0b2ffb7379e7358b5faa4deec4a4d&integrity=eyJrZXkiOiJkZGM2MzFjNDY5ZGE0YzNkMWYxYWM0NGVmYmI1NDU2MGJmN2Y0MGFmMTk0MDAzNjEwMjdhMDkxMjFlZmU1ZmNhIiwidGltZXN0YW1wIjoxNjI3MDc5NjA2LjIzNTYwMSwiaWRlbnRpZmllciI6IjRkNTc0MmJlYmNhN2ZmN2FjMzYwODg4MmViMjE3ODZhNTdjYTQ1Y2E2Nzg2ZWNhMWFiYjYyYjFjZjYxMjQzMGMifQ
Tellor, like Chainlink, is a decentralized Oracle on Ethereum where Proof-of-Work (PoW) is used. Nodes compete with each other to retrieve data and place it on the blockchain.
Oracle makes it possible to send information/data from the real world (also called off-chain data) to smart contracts. For example, it is possible to check whether certain conditions of a smart contract have been met using data from the outside world.
Let’s say there’s a smart contract that ensures you get you aero plane ticket. This smart contract makes it possible that you automatically and without human intervention get your money back (without having to make a claim) if your flight is delayed or canceled.
At this point, Oracle will do its job. It retrieves data from airports (if the flight was delayed) or weather stations (if the flight was canceled due to a storm). The Oracle will then forward the information to the smart contract, after which you will be refunded.
Problems Solved By Tellor
Tellor wants to solve price problems for the Defi applications. The team is working to provide more secure and transparent data to the Defi world. Oracle is also a database for miners competing against each other.
The TRB token (Tellor’s token) was created to send information to Oracle. It is also the basis for the rewarding miner. Each time a request is made, the Oracle ensures that the best search can be performed by the miner every 10 minutes.
Another problem with Defi is reliability. As in the above example, it could happen that someone is supplying incorrect information. As an application, you have to assume that the data provided is correct. Checking the data is also one of the problems.
Tellor Oracle is an on-chain database where miners compete to add data points. To create a suitable incentive system, Tellor uses the TRB token. The parties pay TRB to send the data request to Oracle.
Based on the reward awarded per request, Oracle chooses the best-Sponsored query every 10 minutes to create a challenge for miners and thus to solve. Each query collects specific data (e.g., BTC/USD price) and transmits it to the chain.
How Does Tellor Work?
First, the user will send a query to Tellor with TRB to encourage miners to choose this query over other queries. It’s a sort of auction. There may be other users who want the same data. They pay or tip for that dataset to encourage the miners even more.
Every 5 minutes, tellor’s smart contract selects the best-funded searches and offers a new challenge for miners. Miners send their PoW solution and off-chain data points to the Tellor contract. The Tellor contract sorts the solutions when they appear, and once they have received 5 Solutions, the official solution (the average of 5 Solutions) is chosen and stored on the blockchain. Miners will then receive their payout.
Of course, it can also happen that someone provides false information. The network can vote on that. The day after the vote, the condemned can challenge the result by paying a high fee. If it eventually turn out that the supplied data was wrong, the miner loses the case? If it turns out the miner was right, he will receive an additional reward.
Tellor Technology
The Oracle can ask miners for new data every 10 minutes. The miners then send the data. An average of five miners data is made, and the miners share the reward of the request. Miners are encouraged to provide reliable data in two ways:
They earn TRB tokens for every search that is processed.
They must store a certain number of TRB tokens to be eligible to resolve queries.
If the miner’s data is not validated or incorrect, he will be punished, and the network will take the number of TRB tokens he possess. Tellor has opted for a hybrid system that makes it possible to both reward and punish an unreliable miner.
The number of TRB tokens required to qualify for Tellor PoW is 1000 TRB tokens. That is a significant amount of money that miners cannot afford to lose by adding false information to the blockchain.
Especially since the Oracle doesn’t use one source to validate data, and anyone can challenge a miner. So miners are proactive to avoid any conflicts.
Any holder (owner of tokens) can challenge data added to the Oracle and, in return, earn TRBS if a consensus is reached between holders, voting for the correction of the data in favor of challenger.
Tellor Security
Tellor use security model where it would cost 1000 TRB per block to hack the Tellor network. That a lot of amount to attack the network. The more data confirmations, the more reliable the data is. Since anyone can challenge submitted data and be rewarded if it is confirmed, it is unlikely that false data will remain unaffected for a long time. This defensive model is similar Bitcoin blockchain, where the costs required to carry out a double-spending attack are very high. And the attack is not of any worth if it is not profitable.
Tellor vs Chainlink
Many people think that Chainlink and Tellor are very similar. That makes sense because both blockchain projects are working with quite the same goal. Both projects ensure that off-chain data can be delivered to the blockchain.
ChainLink currently has more confidence in Defi than any other project. LINK has only a few nodes identified and given permission to publish data to Oracle, especially because nodes are very expensive since you need to have a lot of LINK in your node to publish data.
The Tellor team is focused on decentralization. Anyone with 1,000 TRBS can set up a node and offer data to Oracle. Miners are anonymous and compete to provide the requested data.
Tellor also has a feature that allows token holders to challenge the data. If the challenge is legitimate, the challenger will be rewarded. This is a trait that Chainlink does not have.
See below a video explaining the difference between Chainlink and Tellor.
Tellor’s token is called the TRB token. This token is extremely important, as it performs various functions. Many believe that the token is the most important thing for Tellor Oracle. Therefore, it is crucial to know what the token does and what it can be used for.
What can TRB be used for?
Payment: Users use TRB to retrieve the specific data they need. When miners submit data on the blockchain, they are paid with the TRB tokens as a reward.
Reward: When miners add data to the Tellor system, TRB is given as a reward for miners. The Tellor team gets 10% of the mining reward.
Compete: The miner must send 1,000 TRB to the Tellor network to participate in the mining process. This is a way to avoid dangerous situations with the network.
Dispute compensation: TRB is used to resolve disputes about the validity of data. Both opponents and supporters will vote on the validity of the data.
Tokens Adoption
Here’s how Tellor thinks TRB token adoption will go:
Always Retrieve reliable data.
Increase in the value of the token price.
Increased rewards for miners.
Increased demand for tokens, as miners want to bet for rewards.
Higher security of the Oracle.
Increased approval.
This upward spiral decreases the profitability (incentive) of providing partial data to Oracle, as cheaters are punished.
Tellor didn’t had any ICO or fundraising. The TRB tokens are therefore only issued through mining. Tellor’s total supply is determined by its use and extraction rates. For maximum supply, tellor’s coins increase with the percentage of remuneration * 144 requests per day.
Where To Buy TRB?
It is possible to buy TRB tokens on significant exchanges and also on many small exchanges. You can find TRB tokens on Binance, VCC, OKex, Huobi Global, Bibox, Bithumb, Gate.io, Poloniex, and Coinmerce.
In the beginning, few exchanges supported TRB. But there was an explosion in the price of TRB, as more and more exchanges started offering TRB. As more trading venues support TRB, there is more liquidity. This is healthy for maintaining future price growth.
Tellor Wallet
TRB tokens can be stored in almost any wallet that supports ERC20 tokens, as TRB is an ERC-20 token.
The popular ERC20 wallets are Trust Wallet, Metamask, Ledger Nano S, Trezor, MyEtherWallet, Atomic Wallet, Coinomi, Enjin Wallet. You can store your TRB coins in any ERC20 compatible wallet but always make sure that to store your coins in a trusted wallet.
You can also store TRB coins on exchanges that provide top security like Binance, but it is not recommended to keep crypto on exchanges.
TRB Price Prediction
TRB was launched in Oct 2019. The launching price was 0.010 USD. No one would have thought that the TRB price would reach an All-Time High of $87.63 in Aug 2020. That is insane for profit for early TRB holders in matter of months. That is why crypto is famous for such high yields. But always remember that crypto can give you losses in the same way.
Our TRB price prediction for 2021 is $45 to $80.
TRB price prediction for 2022 is $75 to $200.
TRB price prediction for 2025 is $500 to $1000.
Please remember that these are speculations, and no one can guess what will be the future for any crypto coin. Please do your research before investing in any cryptocurrency.
