A deeper dive into BabelFish Money Protocol
BabelFish’s vision is to enhance stablecoin flow across DeFi based on different bridge solutions and stablecoins in demand across chains. You can think of BabelFish as a decentralized bank with branches across chains accepting various stablecoins as deposits to provide users access to the aggregated market and utility of stablecoins in the space.
BabelFish’s purpose is not the exchange of stablecoins per se, but to create one liquidity ocean for all stablecoin brands. USDT, USDC, BUSD and DAI are the most used stablecoins across chains, respectively. BabelFish helps aggregate liquidity from these and other stablecoins that are native to specific chains to unite the fragmented ecosystem and provide deep USD liquidity, simplify UI, and hedge risk. XUSD provided by BabelFish is your preferred stablecoin travel partner, which also happens to have liquidity mining incentives.
BabelFish is first accepting deposits in Ethereum and Binance chains to issue XUSD on RSK, a Bitcoin sidechain. Under evaluation are xDai, Matic, Avalanche and other EVM-compatible chains with stablecoin demand, non-EVM compatible chains are also within scope, based on stablecoin demand and, of course, decision of $FISH holders. XUSD is backed by a hedged basket of stablecoins, which are lent out to AAVE, Compound, Venus and other battle-tested lending protocols — but the parameters will be decided by the DAO’s $FISH holders. The stablecoin yield earned would periodically be bridged to RSK to acquire rBTC for the protocol’s insurance. The DeFi and stablecoins are a nascent and experimental field and insurance is needed if we seek to create the internet of value. We’ve seen failures, exploits, hacks and other bad events happen. BabelFish protocols aim to make it as safe as possible.
Building the foundations of a decentralized autonomous organization is a priority for BabelFish. This is a collective experiment to remake and decentralize money and cannot be managed by a central authority, but by an active community of participants akin to the example being set by Sovryn. We believe in the benefits of decentralized organizations, from a legal and technological perspective. Futarchy governance is the objective to build an interest-driven decentralized protocol. Once governance is rolled out — after the $FISH token sale — potential liquidity mining incentives include refunding users’ minting fees from XUSD with $FISH. The BabelFish community ($FISH holders) can decide to change the original proposal which recommends 100% of yield be used to purchase insurance and choose to include rewards to $FISH stakers.
An important factor is that users should be able to withdraw to any chain and stablecoin plugged to BabelFish. In other words Babelfish protocol mints XUSD and can also be used to receive another stablecoin on another chain. There is of course risk of arbitrage, but once the balancer is live with the parameters, there will be limits on deposits/withdrawals to reduce this risk. It is also worth knowing that withdrawn XUSD is burned.
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