Learn about the decentralized asset bridge BoringDAO cross-chain principle and mining opportunities in five minutes

BoringDAO provides more than just cross-chain asset capabilities; it provides a complete solution from asset transfer to governance.

Original title: "BoringDAO, this "boring" project, what opportunities are there for the first mine?"
Written by: Ikkiu

Today let’s talk about a “boring” project, BoringDAO.

The name of the project, Boring, is bound to make people laugh, but it will make people interested in the project. What made you choose a "boring" name for your project?

It turns out that the name Boring is a tribute to the Boring Company founded by Elon Musk. In the physical world, Elon Musk created tunnels to facilitate people to travel between cities in a short time; in the crypto world, BoringDAO hopes to build tunnels for all digital assets to help them circulate seamlessly and freely.

What problem does BoringDAO solve?

We know that the Ethereum and EOS ecosystems are prosperous, especially Ethereum, but their ecosystems are separated.

Take the recent wave of DeFi for example, Ethereum has the highest participation rate. EOS users cannot participate in the Ethereum ecosystem, and vice versa. For Bitcoin holders, they cannot participate in it.

However, according to data from the cryptocurrency market website CMC, as of the time of writing, the global cryptocurrency market value is US$432.13 billion, of which Bitcoin, with a market value of US$277.31 billion, accounts for 64% of the entire cryptocurrency market.

If Bitcoin and assets on other chains can be added to the DeFi market, the second phase of DeFi craze is expected to emerge.

What BoringDAO needs to do is to convert assets on other chains into ERC-20 assets on Ethereum through a concept called tunnel, so that they can participate in Ethereum's DeFi.

When you see this picture, you might say, this is the same mechanism as other things like WBTC, isn’t it just an asset cross-chain? There’s nothing special about it.

In fact, BoringDAO provides more than just a token cross-chain capability. It provides a complete set of solutions from asset transfer to governance. Asset cross-chain is just the starting point.

Let's look at how it works below.

How does BoringDAO work?

In order to make this mechanism work, BoringDAO issued its token: BOR. The total amount of BOR is 200,000.

BOR is used in all aspects of the entire BoringDAO system. Assets mapped on BoringDAO are called o-assets, such as BTC mapped to oBTC and BSV mapped to oBSV.

Creating a Tunnel

There is a concept in BoringDAO: "tunnel". For each blockchain asset, there will be a dedicated minting tunnel that operates in the form of a DAO and performs a two-way mapping between blockchain assets and ERC-20 tokens.

Any community user can freely create a new tunnel by staking BOR, but there can only be one tunnel per cryptocurrency.

For example.

Alice wants to wrap BSV into oBSV on the Ethereum network, but the BoringDAO system has not yet created a tunnel for BSV. Then, Alice can pledge a certain amount of BOR to create a BSV-oBSV packaging tunnel.

How much BOR is staked to create a tunnel is determined by the community proposal vote.

Activate the tunnel

Although the tunnel has been created, it still needs community approval before it can be used. How to get approval?

BOR holders in the BoringDAO community believe that BSV is a high-quality asset. They will pledge enough BOR (or other assets recognized by the community) to meet the requirements for activating the tunnel as a deposit. At this time, the tunnel is activated and can be opened to traffic.

These coin holders who pledge their assets for the tunnel become tunnel operators. In return, they receive transaction fees generated by minting oBTC through the tunnel as income, just like collecting tolls for the tunnel.

Note that the threshold deposit required to activate the tunnel is also a parameter determined by community proposal voting.

The benefits of this are obvious. Those low-quality tokens are difficult to activate. Because the usage rate of these tokens is low, there is less demand for casting oTokens through tunnels, so the BOR stakers get less income. Therefore, the incentive mechanism provides a way to filter out low-quality tokens.

Overall workflow

1. Alice pledges a certain amount of BOR to create a BSV-oBSV packaging tunnel BSV Tunnel.

2. BOR holders (Tunnel Operators) pledge BOR, activate tunnels, and obtain tunnel operating rights.

3. Users Bob and Charlie transfer BSV and redeem oBSV through BSV Tunnel.

4. Tunnel operators receive commissions as revenue.

How to make this process work

Faced with the above process, as a new project, how to attract people to it and make it run quickly? We need to answer a few questions step by step:

1. What motivates Alice to create a tunnel?

TA may be a member of the community or a project owner. In short, TA hopes that the usage rate of this token will increase.

2. How to attract BOR holders to participate?

Give them attractive economic incentives. Therefore, in BoringDAO, users need to pay a fee of 0.2% of the value of their assets when minting and redeeming coins. Who will pay these fees? 70% of them will be given to the tunnel operator.

3. How to attract users to mint coins?

The amount of coin minting transactions by users largely determines the income of BOR holders. As mentioned above, there are costs for users when minting and redeeming coins. So how to motivate users to mint coins?

In BoringDAO, users will receive additional BOR when minting coins. This process is called coin mining. When users have income in BoringDAO, they will come in to mine.

Now let’s talk about what everyone is most concerned about – where are the opportunities for first mining!

BoringDAO’s first mining opportunity

In this system, 60% of BOR is distributed through mining.

• "Coin Mining" produces 30% of BOR (60,000 pieces);

• Boring Farm produces 30% of BOR (60,000 pieces);

Let’s look at the first one first. The mining formula for coin mining is as follows:

m is the coinage fee, currently the initial fee is 0.2%. Amount is the amount of assets to be minted, and Reduction Factor is the reduction factor. It is because of this reduction factor that there is the term "first mine".

At some point during the first mining period, Alice minted 10 oBTC. The current price of BTC is 12,000 USDT, and the current price of BOR is 100 USDT. Then the amount of BOR that Alice can mine this time is:

• Expenditure BOR: 2.4 BOR, unilateral minting fee only.

• Mined BOR: 4.8 BOR.

Did you see that? During the first mining period, everyone minted and redeemed coins in BoringDAO for free.

But being free is not enough. Without profit, why would users go through the trouble of putting their assets on BoringDAO? This is where Boring Farm comes in handy.

In the above example, Alice minted 10 oBTC through the tunnel. However, due to the lack of oBTC scenarios in the early stage, oBTC assets cannot participate in other DeFi mining for the time being. Alice can stake her oBTC assets in Boring Farm and obtain BOR dividends.

In addition, according to its white paper, Boring Farm will also provide several pools for "farming":

• Before the tunnel is activated, different BORs can be obtained based on the proportion of pledged assets.

• You can also get BOR by depositing liquidity tokens of the BOR/ETH trading pair on Uniswap/Balancer/DODO/Curve.

• Other pools.

It seems that there are still some opportunities for BoringDAO’s first mining, but there is still a question: Are the assets placed in BoringDAO safe?

BoringDAO attaches great importance to the security of assets and has carefully designed a two-tier staking model to ensure the security of user assets to the greatest extent possible.

In simple terms, each bToken is protected by a two-layer staking model and has approximately 200%+ collateral.

• 100% composed of assets from the native blockchain;

• Approximately 100% consists of assets pledged at the tunnel contract layer.

In addition, it also has an insurance pool. When users mint or redeem coins, 50% of the handling fees will flow into this insurance pool, which will be used for compensation and liquidation when black swan events occur.

Precautions

When participating in BoringDAO mining, there are several parameters to pay attention to:

The formula for coin mining

If other conditions remain unchanged, the lower the price of BOR, the more BOR you will get from minting. If the price of BOR doubles, the amount of BOR you get from minting will be halved.

The reduction factor during coin mining

The reduction factor is related to the supply. Every time 10,000 BORs are successfully mined, the reduction factor will be adjusted. The initial value of the reduction factor is 100%, and the new reduction factor is 80% of the previous reduction factor. After the reduction, you need to re-evaluate the mining income and decide whether to continue to participate.

The distribution of BOR can be viewed at the following address: