bZx Releases BZRX Governance Token Model

bZx – the lending protocol behind Fulcrum and Torque – has just unveiled a finalized model for the distribution of their native governance token – BZRX

We have been working to continuously improve and refine the protocol and its governance. Over the years, the $BZRX token model has evolved along with the industry, presenting fresh new ideas in the process. #defi #ethereum
👇👇👇

— bZx (@bzxHQ) June 29, 2020

While the project has been quiet in recent months, the release of an upgraded BZRX token model shows that bZx is set to make a major comeback with the release of bZx V2 in the coming weeks.

Given that BZRX has been ideated on since 2018, it’s now undergone a suite of workshops to incorporate the best ideas DeFi has to offer including governance, insurance, and a bZx DAO. Today, that model got a little sweeter through the introduction of fee sharing and liquidity mining.

Here’s what you need to know.

BZRX Fee Sharing

bZx has three key fees broken down as follows:

• Origination fee: 0.09%
• Trading fee: 0.15%
• Interest fee: 10% of interest paid

With this new model, those fees are directed to two Balancer pools. Rather than issuing them directly to BZRX token holders, those who stake their tokens on bZx will receive Balancer Pool Tokens (BPTs) representing a claim on the assets in the revenue pools. This design not only encourages staking, but it also gives stakers a means of capturing BAL governance tokens from liquidity mining in tandem with a fraction of every asset supported on the lending protocol.

“There will be two Balancer fee token pools, a stablecoin pool with no impermanent loss, and a variable fee pool that holds more volatile assets such as ETH and other ERC20s.”

Here’s a visual representation of what this looks like:

This update will also be accompanied by a staking dashboard to easily participate in Fee Sharing, along with viewing historical stats about earnings and rewards collected to date.

BZRX Liquidity Mining

Next on the docket is the BZRX Protocol Disbursement Program aka Liquidity Mining. With this program, 20% of the total supply will be allocated through liquidity mining as follows:

• BZRX Rebates (17 %) – Each time a user pays a fee, 50% of the value of the fee is refunded to them in the form of BZRX.
• Protocol Usage (3%) – BZRX will be distributed in batches of 2,575,000 (0.25% of the supply) every week for the first three months in accordance with the fees generated from lending and borrowing – similar to the COMP model.

On top of this, bZx will look to incentivize BZRX LP staking similar to the SNX/USDC liquidity incentives, basically rewarding those who stake their proof of staking participation with extra governance weight and perhaps higher staking rewards.

Token Distribution

With BZRX set to go live in the coming weeks, here’s a look at how the supply is being broken down.

According to the original blog post, the distribution is set to start in September. bZx will also introduce an interesting governance model in which the top 3 BZRX delegates will form a Legislative branch while two members of the core team head an Executive branch. While Legislative delegates (aka the community) will hold all the power, the Executive branch is an interesting solution to keep the community in line.

“Much like the executive branch in traditional political systems, the executive has no power to propose or pass proposals on its own. Instead, the executive is to simply act as a check on the legislative branch, vetoing malicious proposals and attempts by representatives to form cartels.”

Last but not least is the Judicial branch – aka the smart contracts which dictate how the protocol can actually be used.

bZx’s Comeback

As someone wondering how bZx would respond to the Flash Loan attacks back in February, this new token model suggests that the protocol is set to make strong headway upon the launch of V2.

With the best aspects of the past few months fused with a new, battle-hardened foundation, BZRX is definitely worth keeping an eye on as the distribution goes live.

In the wake of so many yield farming opportunities, it will be interesting to see how bZx fairs against competitors like Compound and Aave. If one thing is for sure, it’s a great time to be a DeFi power user, and token models like this go to show how rapidly DeFi tokens are advancing relative to other assets in the wider cryptocurrency industry.

To stay up with bZx, be sure to follow them on Twitter!