BarnBridge — Will “Risk-Free” Products Give Birth to the Next Blue Chip?

Continue Capital
7 min readMar 17, 2021

The narrative and development direction of Defi

When we think about the value of DeFi products, we will simplify all complex products into two major categories: lending and trading, and experience the product itself from the most simple indicators, such as interest rates、yields、depth, etc. When we return to the most essential form of the business, we can first consider why funds will flow into certain potential DeFi products, and why the TVL that we track every day is such an important indicator, and of course a good product. It is also indispensable for the team’s innovation, a good token model and convincing narrative ability.

When history comes down to the details, we will marvel at how Defi can stumble but grow exponentially into the giant driven by the macro narrative today. How is it stacked and triggered by a series of innovations, if there is no Metamask plug-in for Chrome browser? What if Synthetic did not first proposed token mining? What if there were no such amazing innovations as AMM and flash loans?

When we are looking for DeFi’s innovation in product, we are also thinking about how narrative and intrinsic value push the industry back to the inevitable paths, thus guiding our investment, when Ethereum starts from the “ World’s Compute Revolution” returns to the “business-driven DeFi” valuation reconstruction, we have to think about how the financial evolution on the blockchain occurred and how it will continue to develop.

Imagination and narrative abilities are the driving force behind the development of human civilization. This kind of imagination is the “creation of credit” in the economic field, and finance is essentially risk-pricing the credit created.
Credit can be:
1. The imagination of the purchasing power of a certain currency, come from the credit of a sovereign country, or a consensus mechanism;
2. The imagination of asset value can be derived from the future cash flow, but also the narrative value ;
3. Imagine that a certain debt can be repaid, which can come from future cash flow or collateral, etc.

And we may now be experiencing the third underlying logic transformation in the Crypto field. When BTC brings the endogenous value of digital assets, when Ethereum brings the infrastructure that can build business and value, traditional trading and lending business will be impacted.

The maturity of DeFi makes it possible to build a reputation beyond the blockchain industry. A large number of traditional funds have gradually established trust during the development of DeFi, but the funds do not have a “risk-free” mature entrance. On the one hand, fixed rate lending and tranche risk products are as important as loans, trading, and assets like Bitcoin ,and they are also an extremely large market in traditional finance. On the other hand, “risk-free” products such as tranche risk products are also the main directions of DeFi product innovation.

And this is BarnBridge’s vision:
1. Help traditional financial investors to obtain DeFi products and services more easily and safely;
2. Tranche risks, providing high returns to those who can bear high risks, and stable returns to the majority of investors; Solve the problem of unstable interest rates in the DeFi field;

What is BarnBridge

BarnBridge is a tranche risk product, including:
1. Smart Yield Bond, a fixed-rate and floating-rate product secured by DeFi income;
2. Smart Alpha Bond, a derivative instrument that can hedge against any ERC20 token market price fluctuations

Its development process is:
1. On September 11, 2020, complete a seed round of 1 million US dollars in financing;
2. On October 14, 2020, liquidity mining launched, TVL grown up to 500 million U.S. dollars in two weeks;
3. On November 16, 2021, Bond staking mining launched;
4. On February 5th, 2021, BarnBridge DAO launched;
5. On March 15th, Smart Yield launched

Products of BarnBridge

1.Smart Yield Bond
It can be simply seen as the fund in the Pool obtains revenue from various Defi protocols, and then the fund classified into two derivatives
1) Senior Tranche (sBONDs) priority tokens: Fixed rate
2) Junior Tranche (jTokens) inferior tokens: More rate fluctuations
There are 1000DAI pools, including Senior 700DAI and Junior 300DAI
1) Senior income:
A fixed interest rate of 5%
2) Junior income:
If Pool’s income is 10%, Junior’s income (1000*10%-700*5%)=65DAI, 65/300, rate of return is 21.6%
If Pool returns 3%, Junior returns (1000*3%-700*5%) = -5DAI, -5/300, rate of return is -1.6%

BarnBridge just launched SMART Yield on March 15th, and first launched the compound pool:

2. Smart Alpha Bond
Various ERC20 tokens can be placed in the pool to reclassify the risk exposure:
For example, in ETH Pool
1) jETH (A junior tranche of ETH price exposure) bears 70% of the large risk exposure:
If eth rises by 10%, jETH has a high rise of 17%
2) sETH (A senior tranche of ETH price exposure) assumes a small risk exposure of 30%
If ETH falls by 10%, sETH only has to bear a lesser drop of 3%

Token Structure of BarnBridge

1.1/3 tokens for mining and 1/3 tokens for future communities:

2. BarnBridge mining will continue for 100 weeks:

3. In the early stage of BOND allocation, there is more than 500 million locked positions, which shows the high expectations of the market for BarnBridge:

The BarnBridge Team

1、Supported by top investment institutions:

2. The team has been working hard in the blockchain industry for many years:
The technical team is from Digital M.O.B, a blockchain technology company with a ConcenSys background;
Key components of the operation team: Proof Systems, which provides marketing services to ConcenSys;

Team from the Proof Systems is based in North Carolina, Florida, and Ukraine.
Co-founder Tyler (main) and COO Mark are in the team.

Team from Digital M.O.B, the blockchain technology company, and ConcenSys is based in Romania.
Co-founder Bogdan and Tech Lead Stefan are in the team.
Team from Rude Labs is based in Arizona, USA.
Co-founder Troy is in the team.

Comparison of “Risk-Free” Products

1、Comparison of types
1) Zero coupon bonds:Yield、Notional
2) Interest rate market:Horizon、Swivel
3) Tranche Risk:Barnbridge、Saffron
In the early stage, our principle is to put product usability in priority. For example, the threshold is higher and the rules are more complicated in zero-coupon bond products and interest rate market, while it only takes the products of Tranche risk to choose products with different yields according to risk tolerance.

2. Data Analysis
BarnBridge was launched on March 15th. There is only a compond pool, and the data is not enough for analysis.
Datas of Saffron, a similar project as BarnBridge, are used for analysis:

Among the TVL of Saffron:

1) Tranche accounted for 36.4%, indicating that there is a spontaneous demand for core products.
2) S:A=7 in Tranche, most of which are still LOW RISK demands, indicating that “risk-free” demands have great potential.

Potential of BarnBridge to become a new blue chip

1. It has a first-mover advantage in the direction of graded derivatives market and form a network effect; performing well in team innovation and execution ;
2. The team has maintained good relationships and contacts with many Defi head projects. It has been funded and assisted by Stani (founder of AAVE) and Kain (founder of Synthetix), and has been continuously recommended by them on Twitter.
3. It is possible to build reputation beyond the blockchain industry and be a pool which can absorb large amounts of money. (TVL grows up to 500 million dollars in the first two weeks of farming); makes full use of DEFI composability, and is expected to become a “hedging blue chip” with blue chips such as AAVE and Uniswap.



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Founded in 2016, Continue Capital focuses on investing in global blockchain technology, early-stage technology startup and providing Quant-Trading service.