INTRODUCTION

Goblins DAO (“Goblins”) was founded to solve the current problem of Defi 2.0 protocols: their divergence from protocol owned liquidity (“POL”) and the prioritization and use of Treasury reserve bonds (“RBs”) over liquidity bonds (“LBs”).

We believe the recent token price downturn in Olympus DAO (“OHM”) forks was primarily due to their prioritization and use of RBs over LBs. The Treasuries of these protocols held significant reserves and their bonders held equally significant amounts of their governance tokens. During the downturn, when investors needed to sell their governance tokens, there was not enough liquidity to support the downward pressure. Had the treasury been locking up their liquidity via LBs sales, this simply would not have been an issue. Adding to the problem, the protocols either a) did not have a buyback and burn policy in place, or b) had a policy, but did not implement it. Additionally, they refused to use reserves to help support token prices allowing the currencies to fall below their backing. To solve this problem, Goblins’ focus will be on POL, in its truest sense, to provide price support and generate revenue from liquidity pools (“LPs”) and from bond fees. We will support our currency by prioritizing LBs and implementing our buyback and burn policy when needed unlike other protocols. Risk Free Value (“RFV”) is not as important to us as supporting our currency.

DeFi 2.0

Initially, DeFi was about replicating what was in traditional finance and putting that into DeFi 1.0. DeFi 2.0 builds four additional functionalities:

1) There is an increased composability and capital efficiency by building on the previous layer of DeFi 1.0 applications. Developers can now come in and leverage existing code bases to be creative and create new financial tools that produce value for the economy and ecosystem at large.

2) Instead of relying solely on yield farming, there are alternative ways to source liquidity for protocols.

3) DeFi 1.0 was for users and DeFi 2.0 is for DAOs and their treasuries becoming firms in and of themselves. DAOs are starting their own markets for their coins and creating innovative applications. Incredible tools are being created by protocol developers that allow treasuries to utilize their funds, earn yields and interoperate amongst one another.

4) It is a lot more collaborative than the applications that were seen previously, including building bridges between protocols. DAOs are governed by their communities allowing for significant member collaboration and DAO direction.

All of us stand strong on the shoulders of the DeFi 1.0 developers who came before us.

PROBLEM & SOLUTION

The main problem that we see with OHM forks started back in April 2021, when OHM published an article, on their Medium, announcing DAI (a stablecoin) RBs. In their article, they stated that LBs have a value to the Treasury that is marked down a considerable amount to take into account any user deciding to sell their OHM for DAI. So, OHM decided to offer DAI RBs that they believed would have a higher RFV on the Treasury, resulting in a higher supply production of OHM. Subsequently, you saw OHM getting bigger and bigger in 2021. What followed were numerous forks replicating what OHM was doing with RBs and holding only a small amount of liquidity tokens in their treasury.

OHM was the genesis of DeFi 2.0 with their protocol innovation of POL, for which our team is extremely grateful. However, we disagree with OHM’s Medium article and subsequent extensive use of RBs. Goblins will focus solely on the POL innovation, but not on RBs. We will offer RBs to support additional functionality of the system, but it will be closely monitored and will never take up a significant portion of the treasury. This will result in significant liquidity in our Treasury that will allow us to generate revenue and token appreciation for our users and the Goblins DAO. By creating a focus on LBs and POL, we will be able to absorb any user liquidations, solve the problems caused by RBs and add more value to our community.

smartBCH

Sticking to the principals outlined above, we will be launching Goblins on the smartBCH chain. smartBCH has significant upside as a DeFi chain as it offers a unique value proposition that you cannot find in the cryptocurrency space. smartBCH offers a) a main chain, Bitcoin Cash (“BCH”), which offers peer-to-peer electronic cash with big blocks, and b) a side chain that can offer DeFi products. Transactions are confirmed far faster than most other blockchain solutions and cost a fraction of a cent. Additionally, in May 2022, an enhanced decentralized security feature will be added called SHA-Gate for BCH transfers between the BCH main chain and smartBCH.

We started with smartBCH, and our prospective roadmap came second. We have a long history with BCH and never considered a different chain to build on. We waited for BCH to add smart contracts and then put together our suite of products that we thought would be most beneficial to the community. We expect smartBCH to gain more traction over the coming months and years, as it builds its community.

ROADMAP

OHM remains the blueprint that all its forks are based upon. DeFi 2.0 is the foundation of the Goblins protocol and as an OHM fork, the core applications of our protocol at launch are Bonds, Staking, and the DAO. Goblins’ goal is to be the decentralized reserve and revenue protocol of the smartBCH Network, as we develop into an entire Ecosystem which will consist of various innovative developments and applications.

Some parts of that smartBCH ecosystem will include:

a) Lending & Borrowing: DeFi was created by lending and borrowing tokens back in 2017 by ETHLend (later rebranded to Aave). Once we have significant POL from bonding initiatives, we will launch lending and borrowing tokens to allow the community to leverage their GOB, BCH and flexUSD with different strategies.

b) Pool Design: Liquidity is the biggest issue in DeFi. We believe it is more efficient to have one big liquidity pool, rather than multiple smaller ones. So, we are going to innovate on our pool design and have our own Balancer/Beethoven-X type exchange.

c) Stablecoin: We will create our own stablecoin (GUSD) to protect assets during market downturns that will be over-collateralized by our GOB token.

d) Financial Derivatives: As any DeFi chain becomes more established, it can offer financial derivatives to run diverse types of investment strategies and protections. Two of those financial derivatives will be a) an options protocol to rent out BCH to other users by selling call options against them, and b) the ability to sell future yield.

e) Bridging: Bridges are important in the DeFi ecosystem to allow chains to talk with each other. We plan on building bridges to Ethereum, Fantom and Avalanche to allow users from those ecosystems to come over to smartBCH and use our financial products.

f) Investment Platform: Our investment platform will mirror one of the biggest markets in the mainstream financial world (stocks) by utilizing Mirror Protocol.

THE START & FOUNDATION

Goblins will launch with the GOB token on the smartBCH Network.

Goblins’ POL model is designed to be a safe place to park returns generated from high-risk, high-reward, investments. GOB’s policies and treasury management are designed to give confidence during unstable market conditions. Essentially, Goblins is creating a depository where investors can hold funds for stability, while enabling growth through compounding investment returns.

Bonding, at its core, is the chief action of adding value to the Treasury. When an investor bonds their asset, the bonding asset is directly deposited into the Treasury.

Goblins’ main income generation comes through the purchase of GOB bonds. This income is represented by GOB tokens minted through the bonding process, with the DAO Account receiving just as many tokens as bond purchasers at the time of bond purchasing. The DAO Account will allocate these funds for liquidity pools, direct asset purchases, market making, lending structures and investments, as well as developing an efficient, decentralized line of financial instruments. The DAO Account will also handle expenses such as marketing, transaction fees, team compensation, audit reports, or any other expenses associated with the running and management of the DAO.

BONDS

Goblins increases the size of its reserves by selling Bonds and allowing investors to buy GOB tokens directly from the protocol for a discounted price. Bond price will generally trail below market prices to incentivize Bond sales, allowing the protocol to offer higher APYs for Stakers and increase its reserves to raise the price floor of the GOB token by backing each GOB token with a greater value of assets.

STAKING

Supply and staking are key components of deriving value for investors. The primary way for the Goblins’ community to build wealth is to stake their tokens. Investors stake their GOB, locking it into the ecosystem and receiving compounding rewards in sGOB (which will always be exchangeable for GOB at a 1:1 ratio) generated by bond sales. Over time, the amount of GOB owned by stakers will increase, bringing more profit and reducing exposure risk. Staking GOB becomes less risky and more profitable over time since an increasing share of GOB will protect investors from negative price action and given that the protocol ensures a rising price floor, staking for long enough will bring an investor’s cost basis below the intrinsic value of GOB.

DAO

Goblins is a Decentralized Autonomous Organization (“DAO”). This means Goblins is governed in a decentralized manner. We do this because we want to become community-run by allowing community members (sGOB holders) to vote on proposals that guide the future of the Goblins’ project. Inclusion is the key word: we are creating an environment that values and makes use of initiatives brought forward by the community. Proposals can, for example, direct developments, rewards, choices for the introduction of (new) bonds, team members, marketing and investment strategies, feature enhancement and more. Decisions will be made via Snapshot, using sGOB as a voting token. At our Snapshot page, holders of sGOB can vote on proposals brought forward by the team or the community can bring their own proposals to a vote. The course and success of Goblins’ future can only be reached with the help of each member of our community.

1) Coin Structure

GOB

GOB tokens will be the result of bonding action from investors and is stipulated as the profit generated from bonding. These tokens will be used to compensate the team, generate liquidity pools, and be switched to manage the balance in the Treasury.

Stables

The DAO Account will always attempt to hold a portion of its value in stables. These stables will be used to pay for expenses that require payment to be done in other formats than GOB, such as marketing, subscriptions, etc. Their roles within the DAO Account will also be to top up the Treasury with stables or be used to acquire other assets to be placed into the Treasury for price stability and Treasury growth.

Other

As the DAO Account is used for other income generating activities, some of the profits may be paid in other coins or tokens. These will therefore enter the DAO Account and be converted to the required assets and be placed accordingly. These converted assets, other than GOB or Stables, will then be placed into the Treasury. At times, the DAO Account will hold assets from this category to set-up liquidity pools or assist in income generating or market making activities.

2) Operations

Bonding

Income is received from the bonding activity of investors. This takes place every time an investor creates a bond. While the investor receives their portion of GOB from bonds an equal amount is also sent to the DAO and acts as the primary source of income.

Lending and Borrowing

Portions of the GOB received by the DAO Account will be used to set up loans in the future. Loans will be discussed in detail with the community before implementation.

Expenses

Expenses are mainly human capital in nature. The team has been running on their own for the initial phase. This has allowed us to solely focus on getting Goblins launched. Moving forward, we are planning to self-fund until we have built a sufficient liquidity reserve for a DAO payment structure to be put in place, which will allow for team expansion.

Community Rewards

The community will be rewarded for specific tasks. This includes community management on Discord and Telegram, as well as a bounty structure in development to appeal to the more technical or artistic members of our community. Bounties will be offered at the needs of the DAO with payment scaling to the difficulty of the task.

Bounty compensation will be included in any allocation for team payments as bounty fulfillment is integral in helping the operating team reach its goals. A specific structure will be outlined and presented to the community on how they can participate in the bounty process.

CONCLUSION

Throughout history, goblins have generally suffered a poor reputation. However, not all goblins were dim-witted or evil. Some goblins became heroes. Those goblins may have found it difficult to overcome their temper and greed, but those who did often found it could be more rewarding, in the long run, to serve good rather than to serve evil. Those that served good, often made use of their ill-gained talents as “rogues.” We welcome all to join us as “rogues” in our quest to bring DeFi 2.0 to the smartBCH community.