Baklava Space aims to be a synthetic asset platform that allows the creation and exchange of synthetic assets. Synthetic assets are assets minted on a blockchain that mirror the price of another asset, for example, a synthetic BTC can be minted on Function X chain. The synthetic asset derived its price from price oracles and therefore exchanging synthetic assets incur minimal slippages.
As seen in the matured traditional asset markets, the synthetics and derivatives market size exceed the underlying asset market by size 10 times. We believe the same trend will happen in the blockchain market as it matures. Therefore, Baklava Space is positioning itself for the next phrase of explosive growth in the derivative and synthetic market in the blockchain space.
Below is a brief walkthrough on how synthetic assets are created in Baklava Space:
DEPOSIT LP TOKENS AS COLLATERAL
Existing LP tokens that are used for farming forms the underlying collateral for minting assets on Baklava Space. These LP tokens deposited in Baklava Space continue to earn rewards from their existing farms and Baklava Space helps to auto compound the yields.
Once LP tokens are deposited as collateral, users will have a choice to mint the stablecoin in Baklava Space by paying a minting fee. The stablecoin minted is called USB which is soft pegged to USDC.
MINT SYNTHETIC ASSETS
With the USB stablecoin, users are able to mint synthetic assets in Baklava Space. These synthetic assets include for a start synthetic BTC and ETH. These synthetic positions will be hedged through MarginX. The demand for synthetics will in turn generate volume and liquidity in MarginX.
SYNTHETIC ASSET EXCHANGE
Once synthetic assets are minted within Baklava Space, they can be exchanged through the process of burn and mint. For example, synthetic btc will be burnt to exchange for synthetic ethereum which will be minted.
FARMING WITH SYNTHETICS
Once synthetic assets are minted or created, they can be placed in LP farms as liquidity to earn farming rewards.
STAKING WITH BAVA
Bava tokens will be used as collateral for the minting of synthetic assets. To reward the use of Bava tokens as collateral, stakers will be rewarded with 100% of the fees generated from the Baklava Space protocol.
In summary, Baklava Space is unlocking the asset value locked in LP in farms by allowing these LPs to be used as collateral to create synthetic assets.
1. Amount of $FX requested :
For development of cross-chain synthetic asset platform where LPs on the FX chain can be used as collateral to create synthetic assets on the FX network
If synthetic assets are created on FX chain, it will be easier to hedge the positions on MarginX as well since both are on the same chain.
2. Proposal belongs to which segments:
Fully functional synthetic asset minting on Avalanche is expected to be live by Q4 2022. The aim is to offer the functionalities on FX chain.
3. Distribution timeframe and milestones
Milestone 1 by Q4 2022 : Fully functional synthetic asset platform on Avalanche chain and collateralisation of LP from Avax to mint synthetic assets.
100k $FX required for developer expenses to start the migration to FX chain.
Milestone 2 by Q1 2023 : Fully functional synthetic asset platform on FX chain. Baklava Space to accept LPs from FX chain and create synthetic assets on FX chain.
100k $FX required for the developer expenses for the next milestone which is to migrate Bava token.
Milestone 3 by Q2 2023: Bava token to migrate to FX chain. We are envisaging a portion of Bava tokens to be burned on Avalanche and re-minted on the FX chain. Total supply of token remains the same. These Bava token will be used to support the collateral and minting needs on the FX chain.
100k $FX required for creating the liquidity for Bava tokens on FX chain.
Note: milestones are projections and serve as guidelines.
Phase I (completed)
- Baklava Space and Bava token launched in Avalanche network allowing LP to be deposited for auto-yield compounding.
- TVL $8m-$10m
Phase 2 (by Q4 2022)
- Baklava Space accepts collateral for the minting of synthetic assets.
- Real token reward and Bava staking mechanism
Phase 3 (by Q4 2023)
- Expand to other EVM compatible networks such as FX chain
- Liquidation vault
- Integrate with core wallets of FX and Avax protocol
- Transitioning to DAO governance
- Listing of token on CEX
Phase 4 (by Q4 2024)
- Expand synthetic asset and collaterals offering
- Synthetic vaults where users can do carry trade
- Cross-chain collateralization where ETH can be used as collateral for minting.
4. Description of the proposal, including the name of the proposal, mechanics of the proposal, benefits to Function X, team introduction etc.
Name: Baklava Space
Target Markets: Defi synthetic asset minting and exchange.
Projected TVL: $10m - 1st year $50m - 2nd year $200m - 3rd year
Products: - Mint stablecoin
- Mint synthetic crypto assets
- Stake to participate in protocol fee
- Allow exchange of synthetic asset for another through mint/burn process
Benefits to FunctionX: Volume generated on MarginX for hedging any exposures on Baklava Space. Allow LP on FX chain to be collateralised for minting.
- Crypto OG since 2016
- Operations Director of Litecoin Foundation(LF), with LF since day1
- Ex Senior Vice President in Singapore’s UOB Bank
- Ex Head of IT of a department under Singapore’s Ministry of Finance
Marketing and community - 3 paz
Developers - 3 pax
Potential cooperations and Partnerships (both confirmed and in talks with):
- GSR for market making
- Chainlink for oracle pricing and cross-chain message protocol
- Cointelegraph for marketing
- Pangolin, TradeJoe, Kyber for LPs
5. Reasons why the project should be selected and supported and included an analysis of the competitive landscape.
Currently, the synthetic asset market is dominated by Synthetix.io as the leader in ETH. In the other networks, there are no prominent synthetic asset projects as competitor. Therefore, having a synthetic asset project in the FX chain will offer FX chain users an additional utility not found on other chains.
In terms of fee revenue, the Synthetix.io is mostly in the top 20 of all projects. In some days, their fee matches that of Uniswap. This illustrated the need for and demand of synthetic asset and synthetic asset exchange in the ETH ecosystem. Therefore, Baklava Space aims to be the top synthetix asset platform of the other non-ETH networks.
Unique selling point:
One key difference with our main competitor Synthetix.io is that they are using the global debt system whereas in Baklava Space each user is responsible for his own mint.
In the global debt system, all the SNX stakers will be responsible for all the synthetic assets minted by Synthetix.io. This means that the debt level of SNX stakers changes every day and there is no certainty.
In Baklava Space, if a user mint 1 synthetic BTC he will be responsible for making sure his collateral is sufficient to cover that amount. Therefore, it offers a cleaner and much easier to understand concept.
6. Include attachments, such as GitHub links, product prototype, video, planning, blueprint, twitter, etc.
Do not delete this part
Disclaimer: This poll is just a tool to get the sentiment around this proposal and it will NOT affect on-chain voting in any way. If your proposal is getting a good sentiment around the community, it might signal that the proposal is good to go to the next phase, otherwise, some modifications might be necessary.