The past year has seen exponential growth in so-called vote-escrowed or “ve” tokens. Such token models allow holders to lock their holdings for a set period, creating long-term alignment between stakers and the protocol while decreasing the circulating token supply. Curve proved the efficacy of the model with the veCRV model. Following the success of veCRV, Balancer recently introduced veBAL.
Introducing Aura Finance, a protocol allowing BAL stakers and Balancer liquidity providers to boost their yield potential and governance power in an easy-to-use platform.
While Balancer will be Aura’s initial focus, the protocol has been designed to operate agnostically toward other vote-locked or vote-escrowed tokens. That’s to say, Aura can extend its influence beyond Balancer to other DeFi protocols over time. Details about Aura’s roadmap will be shared at a future date.
Contributors to Aura are numerous DeFi OGs, many of which were active in and familiar with the intricacies of the first era of ve tokens and the subsequent “wars” that followed. Contributors are abiding by a strict security policy that involves multiple audits. More information about security practices can be found here.
A core tenet Aura is being built upon is that of community ownership. This will be accomplished through the AURA governance token.
Distribution will not be focused on private investors or advisors; in fact, no tokens are being distributed to insiders aside from protocol contributors. Instead, a sizeable portion of the initial circulating token supply has been allocated to the Balancer community, along with stakeholders in the broader DeFi space, via airdrops.
1.3% of the total AURA supply will be distributed to stakeholders and contributors to Balancer, inclusive of BAL holders, BAL BPT stakers, and veBAL holders.
Those that voted “yes” on the proposal to whitelist Aura for Balancer’s ‘votingescrow’ contracts have been awarded an additional allocation equal to 3x their voting power. Those that voted “no” or abstained from voting will receive no bonus but have still been allocated an airdrop based on the BAL locked up in veBAL.
An additional 2% has been allocated to the Balancer community treasury with a two-year vesting schedule.
”Power users” of DeFi have been allocated 1.2% of the total supply has been allocated to incentivize the involvement of a wide variety of addresses that have historically operated as active and aligned actors for other protocols:
To further decentralize governance power and to incentivize wider participation, allocations across both categories have been power-scaled. (In layman, smaller holders will receive more AURA per BAL, vlCVX, or LobsterDAO NFT they hold relative to ‘whale’ holders). More information about the scaling of distribution can be found here.
Aura will also be conducting a Balancer-based liquidity bootstrapping pool (LBP) to properly kickstart the protocol.
Perpetual Protocol did a great post linked here on why it makes sense to use an LBP over other distribution mechanisms for protocol bootstrapping.
If you don’t want to read Perp’s post, in short, an LBP disincentivizes bots from hogging a majority of supply, creates natural price discovery, and allows users to obtain AURA at a price point they feel comfortable at.
2.2% of the AURA supply will be added to the LBP. ETH will be the base pair for the bootstrapping pool. At the end of the LBP, approximately 1.7% of the total AURA supply will have been distributed.
After bootstrapping concludes, up to 50% of the ETH contributed will be used to form a protocol-owned 80/20 AURA/ETH pool on Balancer, matched with 2-3% of the AURA supply (dependent on the final LBP composition). The remainder of the WETH liquidity will be allocated to the TreasuryDAO to fund bug bounties and development costs as directed by token holders.
The treasury decisions will be executed by a multi-sig consisting of key community stakeholders and respected names in DeFi.
The LBP will run for five days (120 hours) and begin in early June. Any updates to the timeline and exact details regarding the LBP will be conveyed via our social media channels, such as Twitter and Discord. Please beware of phishing attempts. You can bookmark/follow social channels to avoid such attempts.
The components of the initial token distribution laid out above only represent the first phase of Aura’s launch.
Future posts will outline the overall token distribution, along with highly-incentivized launch pools and rewards being put in place to catalyze a flywheel to incentivize further veBAL staking, governance participation, and efficient farming for the Balancer ecosystem.
Aura’s contributors are excited to make an impact on Balancer in a similar way to how Convex impacted and catalyzed Curve’s growth in both usage and mindshare in DeFi.
Stay tuned for further information!
See you soon.