Description
Bao Finance builds tokenized derivatives on Ethereum aimed at creating an open, transparent alternative to traditional and centralized financial derivatives markets. Its core products include baoUSD and baoETH, over-collateralized synthetic tokens backed by ETH and ETH-derivative assets (wstETH, rETH, weETH, sUSDe), with baoBTC (a decentralized Bitcoin-pegged token) in development. Users can mint these tokens by depositing collateral, borrow against yield-bearing assets using various leverage and yield strategies, and supply liquidity to AMM and stability pools to earn rewards in AURA and BAL tokens. The protocol also plans to expand into tokenized derivatives for real-world data such as weather, sports, AI performance, and economic indicators ("baoxyz").
Bao Finance describes itself as a small, community-driven team that emerged during DeFi Summer 2020, funded by contributions from over 200 DeFi communities rather than venture capital. Governance is conducted via the BAO token, which can be locked for veBAO to vote on protocol parameters, team composition, tokenomics, and roadmap decisions through Snapshot. The protocol integrates with other DeFi projects including Aura Finance, Balancer, Chainlink, Lido, Liquity, Paladin, Rocket Pool, Safe, and StakeDAO, and undergoes continuous security review via a bug bounty program on Immunefi.