FDV is now ~$67M after the market ran the price vertically a week ago. The asset is fairly fringe, given that its official Twitter account only has 9k followers.
Token distribution seems fair, given that 69% of tokens are distributed to the community. BABL is used as the main liquidity incentive, which tends to translate to selling (much like with CRV incentives).
They basically took every tokenomic idea and wrapped it into BABL. They have voted escrow, an Ohm-like bonding program, fees accruing like xSUSHI, buybacks, tokemak-like capital directing, and a Rari Fuse pool integration. The launch of their tokenomic program coincides neatly with a 50% price run-up.
I think the fact that Bablyon is deployed on Ethereum mainnet makes it less attractive to use — despite socialized gas costs, fees still suck for the people most likely to put capital into publicly managed funds.
Zooming out, it's hard to see a path to long-term success for any individual DeFi platform in this category: Enzyme, Set, dHedge, Babylon, etc (1) don't seem to be meaningfully differentiated from each other and (2) have a value proposition problem.
People only put money into a fund if they think management is good:
But if a manager is actually good, why didn't they just 10x their personal portfolio? Why open themselves to exploitation by publishing their positioning/strategies/intended allocations?
One could argue that maybe some algorithmic/swing traders don't care about telling everyone when they enter a position. But the Babylon protocol charges a 5% fee on profits. Why would any talented traders choose to create a fund when they can grow their own portfolio without a 5% haircut?
Perhaps there are opportunities which are only efficient at capital scale — but those already tend to be captured by e.g. Yearn. Thus, it seems like the main incentive to create these on-chain public funds is to collect management fees.
I think the fundamental value proposition of an actively managed fund platform is: "other people are good at growing capital, so let them do it for you." With this platform, my view is that the incentives don't seem to attract effective capital growers, but effective fee extractors.
Babylon markets itself as cultivating an "investment community," rather than as being a platform for manager-driven funds. But funds are still ultimately driven by managers — it just so happens that with Babylon, you need the community vote to deploy your strategies.
I don't think there's going to be a virtuous flywheel of good managers, who attract capital, which attracts more good managers. I think we're more likely to see strategies which maximize fee extraction, which doesn't bode well for growing a long-term userbase.
The value accrual mechanisms are favorable, and the team seems to be of good quality. But Babylon Finance is entering a crowded field, and it seems like it will struggle with capturing actual usage. I wish them all the best, but I personally won’t be allocating.