BoringDAO (Symbol: DAO) is a protocol and cryptocurrency which aims to build decentralized assets ("Tunnels") among blockchains, offering the opportunity for people with non-ERC-20 assets to maximize utility and yield farming in DeFi (Decentralized Finance).

The protocol publicly launched on the Ethereum mainnet in November 2020.  BoringDAO will operate under community governance mechanisms, while BOR will serve as BoringDAO’s governance token.

Protocol

How "Tunnels" Work

The first DAO (called "Tunnel") is made for Bitcoin, which turns to an ERC-20 Bitcoin, and the first tunnel name is oBTC. It helps BTC holders bring their Bitcoin into DeFi.^[1]

For every different blockchain asset, there will be an exclusive minting tunnel operated in the form of DAO and performing bi-directional mapping between blockchain assets and ERC-20 tokens.^[2]

Tunnel Parameters

There are two important parameters in the creation of Tunnels: pledging coefficient (k) and commission rate (m, n).^[3]

In version 1, the pledge coefficient k of the tunnel is kept at 75-100%, while the commission rate for minting as well as redemption are both set at 0.2%, and the minting section requires extra network fees.^[4]

In version 2, however, we aim to let tunnel operators decide on the pledging coefficient and commission rate.^[5]

Tunnel Settlement

Tunnel settlement would only occur when the losses occur in the cryptoassets under custody. In V1 and V2 stages, in the event of cryptocurrency assets lost under custody, the corresponding minting tunnel will be frozen immediately for settlement. First, the asset custodian will confirm the remaining assets in the wallet and match them with the assets issued on the blockchain to calculate the exposure to be settled. Then, the tunnel pledge will be settled in an equal amount. After clearing, the multi-signature wallet will be replenished with assets, and then the minting will be available. In the V3 stage, dynamic clearing will be realized.^[6]

Insurance

50% of the redemption commission in the tunnel will be saved into the insurance pool. The insurance pool is wholly governed and controlled by the community. Only when the community proposal is met and the referendum is completed, the insurance amount locked in the contract will be used for claim settlement. Claim settlement is usually applied to deal with the Black Swan risk in the system.^[7]

DAO insurance will provide the BoringDAO system with the third guarantee, allowing all assets to roam freely, safely, and without trust in the Ethereum network.^[8]

Minting BTC

The Boring Token is the asset minted by BoringDAO, abbreviated as bToken. The bToken follows the ERC-20 Token standard which enables the wrapped assets to enter the Ethereum DeFi world.^[9]

The bToken minted by BoringDAO is an ERC-20 token backed by BTC and thus is named "Boring BTC", abbreviated as bBTC. The marketing prices of these bBTC reflect the values of Bitcoins backing them.^[10]

BOR Token

Minting and yield farming will be the two main ways for users to obtain BoringDAO's governance token BOR.^[11]

Mint Mining is the mechanism which users can wrap their non-ERC20 tokens to oToken, e.g. Bitcoin to oBTC and get BOR tokens as rewards. 30% of $BOR will be distributed through Mint Mining.^[12]

Boring Farm is the mechanism which users can use oToken, BOR LP Token, oToken LP Token, and Tunnel Pledge Token to farm BOR. 30% of BOR will be distributed through Boring Farm.^[13]

Investors & Strategic Partnerships

Investors of the BoringDAO project include DeFiance, Hashkey, SNZ, Youbi, Altonomy, Puzzle Ventures, and SnapFingers.^[14]

Strategic partnerships include HashQuark, Peckshield, and DODO.^[15]