BIP 0001: Jumpstart Liquidity Mining and Governance


BabelFish was born specifically to enhance stablecoin flow and accelerate hyperBitcoinization, yet the distributed team fell in the trap of analysis paralysis and delayed shipping on its original goals. Let’s stop drawing and re-drawing the whiteboard and move on to deliver the original promises.

To jumpstart the process, the first vote proposed here is to involve the immediate stakeholders in this important decision: XUSD holders and FISH stakers. This first vote is to commence the liquidity mining rewards by rewarding and empowering current stakeholders to vote on the DAO. We propose these FISH rewards, and all future liquidity mining rewards, to vest over six months (at least) and be automatically staked.


It behooves BabelFish to stick to this original plan and distribute the collateral currently resting unutilized on the bridge. The amount of collateral lent out can be gradually increased over-time through BIPs. This will enable BabelFish to hedge risk across protocols, earn yield to buy rBTC, and increase xUSD in circulation with liquidity mining incentives. Right now, we are keeping our collateral way too safe inside the bridge, and capital and users will flow to where it is treated best.

Let’s stop drawing and re-drawing the whiteboard and move on to deliver the original promises, and keeping it simple stupid.

The original promises:

  1. Incentivise stablecoin flow directionally towards RSK and Bitcoin L2
  2. Lend collateral on parent chains’ blue chip lending protocols
  3. Use yield to accrue rBTC for protocol insurance and FISH staker rewards
  4. Recalibrate lending and collateral parameters through bi-weekly votes
  5. Continue researching stablecoin landscape and hedging risk
    (see attached image)

Detailed info:

**Jumpstart FISH Liquidity Mining Incentives (to vest over 6 months and be auto-staked):** XUSD holders: Will receive 80% of the available liquidity mining rewards, distributed proportionately and calculated each block. FISH Stakers: Will receive 20% of the available liquidity mining rewards, distributed proportionately and calculated each block.

Short-Term XUSD Rewards for FISH Stakers:
Contingent on collateral being lent out, FISH stakers will receive ~20% of yield earned on collateral, in the form of XUSD, proportionate to their “voting power” (as in origins).The remainder (~80%) will be converted to rBTC Rewards and go to the insurance pool, which is also managed by FISH stakers.

Future votes will be to vote on the parameters of collateral lent out, liquidity mining rewards, and other priorities.


Love the idea of getting going. From a DAO yield perspective - Tribe/Rari/Fae merge team has claimed a willingness to collaborate to accelerate yield and liquidity. They offered up incentives (100 million in value) for cross platform projects on the Bankless podcast.

Personally love the project and holding a bunch of XUSD and FISH to cannot wait to see value!

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What would prevent people providing stablecoins to the protocol from playing with it - I mean providing stables for short term and withdrawing them from the pool? What would prevent them from doing it repeatedly?

So holding XUSD on the wallet will be incentivized - especially for early birds - as amount of FISH each month is the same.

What about XUSD held in the lending protocol - like on Sovryn? How about XUSD in the AMM? Will those be included in the rewards, as those are also the holders of XUSD - or this will be limited to wallets interacting with the bridge only?

Average block time on RSK is 30.9 seconds at the moment. That means monthly (every 4 weeks - 28 days) there are ~78 291 block. 80% of monthly LM FISH rewards is 4 760 000 - that gives ~60,8 FISH for every block. It is going to be calculated each block, but is it going to be distributed daily? Weekly? Monthly? Every x-blocks?

Another thing - any FISH rewards are going to be vested for 6 months and autostaked. Is there any period of time planned for this autostaking? I ask, because normally there is a penalty up to 30% for early unstaking (since we are using a fork of Sovryn’s Bitocracy - I assume that the penalties are going to be the same, until DAO decides otherwise). Maybe it would make sense to make the autostaking also for 6 months. Someone could remove 70% immediately - if he wanted, and loose the rest in favor of the DAO, or be patient and get the whole amount. BTW - what do You think @dolarcripto about including all collected penalties to reward pool only for FISH stakers?

There is also another aspect which has to be taken into consideration - we need to incentivize people to deposit one type of the stablecoin and incentivize users to withdraw another type of stablecoins - so that would help keeping the balance of the pools. Just as an example - 50% of the rewards goes to people providing BUSD, remaining 50% split for people providing another stablecoins, except for USDT, which has dominated the XUSD pool at the moment. People would be still able to provide it to the protocol, but without any further benefit. If USDT pool in the protocol would get lower to accepted level - it could be included in the rewards. People would be still able to provide it to the protocol, but without any further benefit.

I like the idea that 80% of the revenue/yield earned by lending out the collateral goes to the rBTC insurance, and 20% for FISH holders. Simple and clear. The question is how much of the rBTC collateral do we want to have - anything above 10% of the overcollaterization is already quite significant. That would place XUSD very high among stablecoins when it comes to collateral amount. I am aware that it will be very fluid. So what is the approach? Build the rBTC insurance fund with sky as the limit?

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Hey all,

This is my first time posting, and I’d like to have a better understanding and some clarifications on a few points in this proposal.

Firstly, thanks @dolarcripto for bootstrapping the discussion around this BIP proposal!

The points and questions I raise below are only to have a better understanding and to reinforce my understanding of the protocol. I do not have the financial knowledge to advocate for any kind of changes to the proposal :slight_smile: .

What’s the rationale behind giving a higher incentive to “XUSD holders” ? I do understand that by hodling XUSD they raise/aid the protocol.
In my humble (and naive) opinion I think that locked XUSD (locked: Lending, AMM…) should have a higher incentive, or the ‘definition’ of XUSD Holder, is in fact anybody that has XUSD in any form and ‘locked’ in a contract somewhere/anywhere, as well as simply having them in their wallet?

In regards of FISH stakers, I’d like to understand what would be their perks:

  • Voting BIPs in the Babelocracy, based on their “voting power” (like in Sovryn).
  • Will receive 20% of the available liquidity mining rewards, distributed proportionately and calculated each block.
  • 20% of yield earned on collateral, in the form of XUSD, proportionate to their “voting power”.

Please correct me if I missed something.

I am having similar interrogations as @Hyde :point_down: about the XUSD in AMM pools, lending protocols etc…

I am in favor of this :point_down:, very clear and straightforward.

Awesome idea !
How would that work, by incentivizing deposits to the pool which has the smaller volume? and withdrawals from the pool with the biggest?
Also, very interesting, where can I see what percent of the XUSD pool is backed by which stablecoin right now ?

Again sorry if my questions have been answered elsewhere, please do reply me with a link I’d happily read them, and thank you in advance.




In an effort to be as brief as possible with the BIP-0001, it appears that brevity created some additional questions. Fortunately, the comments made by @Seventh and @Hyde answered some of these questions already. To clarify: BIP-0001 is specifically to jumpstart Governance, and consequently vote on liquidity mining parameters not fully visualized on the diagram.

BIP-0001 in brief:
If approved, this proposal seeks to reward 1.42% of FISH once to XUSD holders (80%) and FISH stakers (20%). The reasoning is that XUSD holders must have a voice on future liquidity mining incentive proposals. Although the FISH rewards will have a cliff and six-month vesting (at least), the recipients will nevertheless have their respective amounts automatically staked and have a proportionate voting power. Early withdrawals are possible only after the initial cliff and vesting has passed, and will be the same currently used for Sovryn’s bitocracy. Hyde’s suggestion to use these “penalty FISH” to reward patient FISH stakers sounds logical.

Short-term liquidity mining rewards:
The reasoning here is to 1. incentivise stablecoin flow directionally towards RSK. The diagram states that FISH will be rewarded to XUSD depositors, but to avoid dilution of FISH and the system being gamed, this amount will be symbolic and capped between 1-10 FISH, depending on the amount deposited. This reward should also have a cliff and a 6 month vesting to start.

Liquidity mining rewards are meant to incentivize deposit, but not to be held idly, rather to be used across protocols on RSK. Consequently, we will engage protocols already accepting XUSD to provide lenders of XUSD with an LP token that can be used to earn FISH. This part has been left out of the diagram until further advancements are confirmed with participating protocols. These rewards ought to be calculated on a per-block basis to be as accurate as possible and visible in the UI. Alternatively, a UI can be designed within BabelFish to facilitate these processes and keep it simple.

Short-term XUSD Rewards for FISH Stakers:
The reasoning here is to 2. Lend collateral on parent chain’s blue chip lending protocols and 3. Use yield to accrue rBTC for protocol insurance and FISH staker rewards. IMHO BabelFish should start building an rBTC insurance pool with sky as the limit, rBTC should be BabelFish’s only protocol-owned liquidity (POL). One of the perks of being a FISH holder is deciding how to manage this ever-growing POL.

As for 4. Recalibrate lending and collateral parameters through bi-weekly votes, and deposit/withdrawal incentives for certain stablecoins (balancing curves), this requires us to 5. continue researching the stablecoin landscape and hedging risk and will come once the first promises are delivered. This does not mean it is the least important, it is a top 5 promise, and it is massively important to diversify the collateral further. Potentially a vote can be had to do a significant part of this manually at first (i.e. bridge back half of rUSDT to Ethereum and lend it out).

Hope this clarifies the intent and spirit of BIP-0001. Keep asking questions and let’s keep this conversation flowing in the right direction - forward!


Certainly helpful! I am in favor of forward movement and this seems like a reasonable first step. One key gating factor for me is the staking UI/experience. I understand that is coming but until we can stake and engage - this will still feel abstract. That said - I am supportive.

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I like this idea. I believe that it will be beneficial for BabelFish to have people coming to us and checking it on our UI. We could implement more products at some point, so people could learn about it or discover new features in our UI.

So to summarize the idea is:

My only question at this stage is how are we going manage the funds which are intended to be lend out? Some kind of smart contract? It will be sent to another multisig? Or maybe there is another way for protocols to cooperate when it comes to this amount of money - some kind of partnership? There are always some risk - so we have to be careful here.

What does this mean?
Any wallet holding XUSD will be eligible?

Ok, question was partly answered already.
Still opposed to the Idea of giving sort of an airdrop to like every USDT holder, just to spur up usage of USDT.

Imo for being eligible to this kind of rewards, you either have to bind capital and/or risk capital and time → means staking or providing liquidity.

If intention is to get adoption rolling, I believe other incentives would do a better job. Means incentives for actual usage, not just idling on a wallet

That’s why we have to implement another solution - incentivize providing specific stablecoins to the aggregator and incentivize also removing certain stablecoins from the aggregator.

Could You elaborate a bit more about it? How do You imagine that?

From my perspective - bringing stablecoins to the protocol, which are going to be used to lend out to blue chip protocols will be beneficial for all of us. We want the pools of the stablecoins balanced, so some kind of a mechanism has to be implemented.

If someone will provide stablecoins to the protocol - he will get XUSD. It is up to him what he does with it. If he decides to use it for LP on Sovryn and maybe on other platforms - he will be rewarded by the platform, if he prefers to have it liquid - he will be rewarded by BabelFish with FISH tokens. It is up to him to decide what is more beneficial for him. But there are people holding stables anyway, so why not to bring them here to RSK, why not to reward them for holding XUSD?

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Thank you @dolarcripto for drawing up the first Babelfish improvement proposal. I think it’s very clear how the protocol will jumpstart the liquidity mining incentive.

I also like how the FISH stakers are rewarded with 20% of the yield and of course, separately, the bitcoin insurrance.

I don’t believe this question has been answered yet, so I will take the liberty to show you:

If you scroll down a little bit here, you can see the distribution. At this moment a lot of the pool is in rUSDT. This has to be balanced as Hyde mentioned above :smile:

Hope this helped!

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Hello. I am in support of this protocol. :grin:

For incentivizing the allocation of particular stablecoins, would it be possible that the rewards for holding xUSD are distributed based on a sort of marker token similar to “atokens” on AAVE.

For example, I add USDT to the XUSD protocol and get XUSD in my wallet. I also get “XDUSDT” which would be the reward bearing token for XUSD rewards. This ways rewards could be distributed differently to the different types of “XD” rewards tokens based on rates decided through recalibration in goal #4. This could be used to give lower rates to discourage certain stable coins and higher rates to encourage others.

Maybe this would take some time to implement and would be a solution for later on.


That is quite interesting idea.

Lets say - that it is done as You propose - so for example I provide USDT, get 1 to 1 XUSD for that and XDUSDT. What happens to this XDUSDT when I decide to withdraw USDT from the aggregator? What happens when I decide to exit to another chain - lets say to BUSD?

It could be cool idea also, if for example we could have a let’s say 1, 2 or 4 weeks cliff and rewards could be claimed and vested after this period of time by using those XD tokens.

If the rewards would not be claimed within let’s say 6 months - those could go to the stakers rewards pool. Or for some other use…


In order to withdraw the USDT or switch to another chain you would have to also give back the XDUSDT. I guess of potential side effect may be that people cannot withdraw their tokens if they have traded the associated “XD” token, which could lead to a sub-economy of people trading the “XD” tokens for yield.

Would the claimed rewards involved burning the XD tokens or would rewards require manual redemption, but not destroying the XD tokens? (I guess it depends on if the rewards are recurring or a one time thing)

This proposal seeks to reward 1.42% of FISH to XUSD holders and lenders (80%), as well as FISH stakers (20%) helping test governance on mainnet. This amount is the allocation for the second month of the liquidity mining pool as indicated in the tokenomics. The reasoning, as previously discussed, is that XUSD holders must have a voice on future improvement proposals.

Approving this vote will help us familiarise ourselves with the governance system and begin experimenting with LP rewards for users of XUSD on Sovryn and other protocols. For the sake of brevity and simplicity, this would be the steps:

  • Snapshot: Soon after the vote is approved the calculations will be made
  • Transfer method: User will need to claim tokens to start vesting process
  • Proportional distribution of 4,771,200 FISH to XUSD holders and lenders
  • Proportional distribution of 1,192,800 FISH to FISH stakers (excluding vesting tokens)
  • Cliff: 12 months
  • Vesting: 6 months

The next expected improvement proposals are, respectively:

  • Balancing curves and withdrawal fees
  • XUSD LP’s and FISH liquidity mining
  • Collateral loans to acquire BTC insurance
  • [OPEN]

Please keep your questions specific to the BIP-0001 vote, let’s fishing go!

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So in other words - we are limiting this only for month 2 of the LM rewards - in total 5,950,000 FISH will be distributed among XUSD holders and lenders, and also FISH stakers. I was thinking that this is going to be ongoing until decided otherwise.

BTW. Are You sure about the numbers?
80% would make 4,760,000 and 20% 1,190,000 FISH

Just as month 1 of the LM fund allocation rewarded SOV stakers, month 2 can reward users of XUSD and voluntary FISH stakers and experimenters. The objective is to provide voting power to the stakeholders of babelfish in improvement proposals.

Stakeholders should then vote on the parameters to distribute the LM fund amongst depositors, lenders, stakers, yield farmers, et al. The LM fund should fuel the sustainable adoption and development of the protocol.

Your numbers are right for the amount, 1.4166666667%

I took the amount of 5,950,000 FISH from the tokenomics directly. Most likely the % value of 1.42 % in the tokenomics is an approximate.

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