Bribe Protocol - A Governance Marketplace

0xEdwardyw

The Curve War has brought us that the governance is tradable, with money in exchange for votes. From the original Convex to the various bribery platforms around CRV now in the market. These DeFi protocols need to build liquidity pools on Curve so they pay for $CRV and $CVX holders in exchange for votes. Bribe, a new protocol that introduces a more general governance marketplace for all DeFi protocols, could potentially make governance tradable.

What is Bribe Protocol?

The mechanism of Bribe protocol is straightforward. Bribe allows DeFi protocol governance token holder (such as $AAVE & $COMP) stake their tokens in the Bribe pool. Incentivized bidders can lease voting power by bidding. The highest bidder can borrow the entire Bribe pool to support or reject a governance proposal, while the bid amount is distributed as income.

The Bribe pool is protocol specific . For instance, $AAVE token holders deposit their token in AAVE bribe pool, and bidders bid the $AAVE voting power from the AAVE pool. Thus, Bribe protocol can potentially support any protocol governance market.

Whales can significantly influence the current governance mechanism for many protocols, and they can also lease out their governance power over the counter with trusted parties. Bribe Protocol can enable retail token holders to benefit from the governance market and earn additional value from their tokens. However, one risk that needs to be noted is malicious actors can leverage the Bribe pool and initiate proposal that benefits themselves. If these malicious actors can successfully bribe the governance vote and the benefits outweigh the cost, this could even attract an organized governance attack using this bribe mechanism. Considering the possibility of the malicious proposal, the protocol integrated with Bribe Protocol needs to have a guardian mechanism. In the case of AAVE, it has a multsig backdoor guardian that can veto malicious proposals.

Team

The founder is called Condorcet, a pseudonymous, the background of the founder and the team is not clear.

Funding

The protocol has just raised the seed round of USD 4 million, Spartan Group led the funding with participants including Dragonfly, Hypersphere, Fundamental Labs, IOSG, Fenbushi Capital, Rarestone Capital, GravityX, Shima Capital, and Figment.

Token Economics

The protocol native token $BRIBE, is a governance and utility token. Token holders can participate in protocol governance and get revenue-sharing. The total supply is 100 million, token distribution is as follow:

Is there really a governance market?

The cause of the Curve War is mainly due to the strong utility and governance function of CRV token. There is the question of whether other DeFi protocol tokens could have the same governance value comparable to Curve. It may be true for blue-chip DeFi protocol such as AAVE, and AAVE will be the first protocol to cooperate with Bribe protocol for an AAVE Bribe Pool.

Even for AAVE, it is still to be seen how much the market will price its governance. Curve's governance token holders have the power to decide the emission of CRV for each liquidity pool, while for AAVE, the governance power mainly is to decide protocol parameters and to add new assets into the protocol. Thus, is AAVE governance as valuable as Curve? If the result is a very low bribing price, it may imply the bribing is only feasible for Curve only.

Bribe Protocol has started to test water from AAVE, the first protocol to integrate. It has initialed two AIP to add new assets. The first one is on Jan 17 and proposed to add MIM for depositing and lending as well as collateral. Given the recent news about MIM, Bribe Protocol started a second AIP to add Frax as new asset on Jan 29 and intend to initiate a series of new proposals. The current two AIPs don't attract much discussion yet.

Governance is an unexplored market, and the total addressable market is just unclear. That said, Bribe Protocol is a very interesting exploration and could also bring a better valuation method for DeFi tokens.

The implication on governance token valuation

There is a lot of research trying to value DeFi governance tokens using traditional financial valuation models, such as the dividend discount model, discounted cash flow model. While these valuations give some insight, there is a fundamental difference between DeFi token and traditional financial asset, the governance value. These financial valuation models only take into account the cash flow and assume the value of the token (or a company) is the sum of all future cash flow. However, governance power is a major part of DeFi token, there is no method to value the governance at present. An active governance market may be a first step for pricing the governance and a kind of solution for the missing piece of token valuation.

Governance

Marketplace

Curve

0xEdwardyw

Remember, away from the market, enjoy life.

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