The Redacted ecosystem is a product suite of smart contracts empowering on-chain liquidity, governance, and cash flow for DeFi protocols. We’ve built two core products in line with this mission, Pirex and Hidden Hand, which are described later in the report. Stay up to date with Redacted here.
Since the start of the quarter, the market situation has evolved drastically. However, our treasury remains strong, productive, and continues to allow us to solidify our position in the market.
We have taken efforts to de-risk the treasury away from non-core assets, and continue to look for opportunities while being cognizant of the current market situation.
The current treasury allocation can be seen below (source):
Irrespective of our treasury’s dollar value, we’ve still been able to leverage several of the assets for strategic partnerships, product launches, and revenue. For example, our CVX helped us bootstrap the Pirex launch and allowed us to seed the pxCVX / CVX Curve pool with essential liquidity.
In terms of revenue, the treasury generated ~$2.8 million in Q2 ‘22 through OTC bribes, Votium bribes, yield farming, and other opportunities such as Hidden Hand.
As of this writing, our treasury sits at ~$25,000,000.
This quarter our community passed several proposals outlining the details surrounding Redacted V2 and its associated tokenomics changes. For those out of the loop, “Redacted V2” refers to our transition away from rebasing tokenomics to a sustainable, fixed supply, revenue distribution model. The cornerstone of Redacted V2 is revenue-locked BTRFLY (rlBTRFLY), which will launch in tandem with the BTRFLY “METAMORPHOSIS” (i.e. new BTRFLY token) outlined here.
The new BTRFLY token will support ERC-2612 and gasless approvals. In addition, each new BTRFLY V2 token will be set to be equivalent to 1 wxBTRFLY. When BTRFLY V2 goes live, users will be able to deposit their BTRFLY, xBTRFLY, or wxBTRFLY to be burned for new BTRFLY V2 tokens.
After this transition, the BTRFLY V2 token can be locked for 16 week epochs as rlBTRFLY to receive revenue earned by the treasury and Redacted’s product suite (e.g. Pirex, Hidden Hand). rlBTRFLY lockers will also receive BTRFLY “pulse” (i.e. inflation) emissions. Note: Since rlBTRFLY is launching later than intended, early rlBTRFLY lockers will receive revenue that has accrued since June 1, 2022 — effectively boosting rewards for the first epoch after launch.
While we’re still wrapping up the audits and finalizing the UI, we expect this tokenomics transition to be complete by early Q3. No actions need to be taken by users at this time. When ready, we’ll provide all relevant information and required steps to users.
In Q2, Hidden Hand gained meaningful traction and established a key new partnership within the Balancer ecosystem. We also launched Pirex in Q2, a protocol which creates liquid token wrappers that allow for auto-compounding and the tokenization of future yield/vote events.
After soft-launching in Q1 of this year, Hidden Hand has found success in its vertical. Hidden Hand enables protocols to access a marketplace that lets others bribe their token holders to vote for their best interests. In other words, it’s a generalized bribe marketplace.
Thus far, Hidden Hand supports marketplaces for Aura, Balancer (pictured above), Floor_DAO, Frax, Ribbon Finance, and Tokemak — with Balancer and Floor_DAO seeing a large uptick in adoption in Q2. Borrowing from our case study Hidden Hand's Impact on Governance, one can easily see how launching a bribe market through Hidden Hand dramatically increases voter turnout:
“It’s difficult to determine the exact magnitude of the Cartel’s effect, but it’s clear, at a minimum, that the uptake on veBAL accelerated rapidly in the month after the Bribe Market’s launch.”
As a result of the success that Balancer has seen through Hidden Hand, their community decided to double down on the partnership through [BIP-19] Incentivize Core Pools & L2 Usage.
The TLDR is that the Balancer treasury earns yield from what they call “core pools''. Some examples of core pools include: wstETH/weth, rETH/weth, stMATIC/wMATIC, and others. BIP-19 proposes that Balancer reroutes some of the yield earned from these pools as bribes (paid in USDC) through Hidden Hand in return for a lower bribe fee on the marketplace. The Redacted community in turn passed a proposal to lower Hidden Hand’s 4% fee to 1% exclusively for the Balancer DAO to facilitate this partnership.
This means that in the near future veBAL holders will have a reliable source of bribes streaming through the Balancer Hidden Hand marketplace and that rlBTRFLY holders will have a reliable form of revenue generated via the Balancer ecosystem — a win-win for everyone involved. Users can expect to see bribes sourced in this manner during early Q3.
As mentioned above, we successfully launched Pirex in May of this quarter. Pirex is a protocol which creates liquid token wrappers that allow for auto-compounding and the tokenization of future yield/vote events.
We launched Pirex with initial support for vlCVX. If you’re unfamiliar, vlCVX is short for vote-locked CVX, a non-liquid wrapper that allows CVX holders to vote on Curve gauge weights each week in return for bribes from other protocols.
Pirex aims to make the vlCVX experience more user-friendly. It does this by providing a liquid wrapper for vlCVX, called pxCVX, that allows users to claim their vlCVX bribes as normal, while simultaneously allowing users to exit their vlCVX position at any time through the pxCVX / CVX Curve pool. Note: We’re in the process of getting a CRV gauge added to this pool. Proposal here.
It also gives pxCVX holders the opportunity to deposit into an auto-compounding vault built in collaboration with Llama Airforce. This vault automatically claims and resells bribe revenue for more pxCVX — giving smaller CVX holders access to vlCVX’s high yields. You can start using Pirex here.
In Q3 we’re hoping to launch Pirex’s final piece of functionality on the UI, called Expert Mode. This mode will allow users to tokenize (and trade) their future pxCVX yield/vote events. So users can stake their pxCVX, choose how many rounds of gauge votes they wish to tokenize, and receive in exchange spxCVX and Futures Notes for each of the future gauge votes. More on this soon.
At time of writing Pirex has received over 700,000 CVX in deposits during its first month live, with more coming in each day.
While Q2 was an exciting quarter, we have much more planned for the rest of the year. Hint █████.