A New Era for Mortgage Financing

With a mortgage market totaling a staggering $13 trillion, mortgages have long been the domain of banks, governments, and large institutions. These entities leverage mortgages due to their collateralized nature, providing reassurance that loans are backed by homeowners’ promises to repay or the ability to sell the house to cover the loan. Moreover, the fixed monthly payments made by borrowers offer a steady stream of reliable income for holders of $HOME.

$HOME introduces flexibility, accessibility, and accelerated processes for homeowners seeking mortgage financing. To date, the RWA protocol has facilitated the funding of over 46 home loans, showcasing its effectiveness and potential. The native utility token, $HOME, allows the crypto community to benefit from the stability and growth potential of mortgages.

Key benefits of $HOME include:

1. Transparency on the loans backing the coin:  At any time, all overcollateralized loans backing the coin may be viewed on the blockchain. The information includes the home's location, value and lien amount, among other things. Other stablecoins rely on auditors.

2. Current return is 2-5%: The loans backing $HOME generate a 2-5% return from borrowers repaying the loans without incentives. Other stablecoins rely on incentives to reward the people who stake their stablecoin, but the core assets that back these stablecoins generate minimal or no return.

3. Every loan is backed by a home that is worth more than the amount of the loan: Every loan is overcollateralized. The average loan in the pool backing $HOME is overcollateralized by 30% or more making the value of the home higher than the lien and loan against the home. Other stablecoins may hold more assets than needed to maintain a 1:1 ratio between assets and the coin value, but there is no guarantee the individual assets are overcollateralized.

4. The assets and the creation of the loans are decentralized: The assets backing $HOME are distributed around the United States. The platform is open to any loan officer to originate loans, as well as financial institutions. The collection of payments can be done through anyone licensed to be a servicer or directly through the blockchain.

Unlocking New Possibilities with $HOME

The RWA protocol is working to give consumers and homeowners a simplified, faster and much improved experience. It gives consumers access to the same financial products banks, governments and institutions use to preserve and grow wealth. We help homeowners by giving them faster, more flexible and uniquely beneficial loans. By leveraging the ultra-fast, low-cost and carbon-neutral, XRP Ledger, it plans to help people both consumers who need home loans and those XRP holders who want to use the benefits of stability and reliable payments from Real World Asset backed loans.

You can create trustlines and start exchanging into HOME today.

There are 3 tokens on XRPL and the sologenic exchange, corresponding to the 3 levels of lockup and the corresponding return

• HOM, no lockup,no return and stable

  Trade HOM on Sologenic

• HMQ, 90 day lockup, 2% return and stable

  Trade HMQ on Sologenic

• HMY, 365 day lockup, max return (currently 5.77%) and stable

  Trade HMY on Sologenic

The token is HOM on the XRPL. Use this link to setup a new trustline. Then exchange into HOM using your favorite wallet.

https://xrpl.services/?issuer=rNznCpngEzpshY33USk8VdGMUCSvnziCAx&currency=HOM&limit=100000

To explore the capabilities of $HOME and delve deeper into its features, you can visit the official website at https://www.homecoin.finance/about.

About $HOME

$HOME is a next-generation stablecoin backed by the mortgages commonly utilized by the U.S. Federal Government, banks, insurance companies, and wealthy individuals to safeguard and increase their wealth. With $HOME, anyone worldwide with a DeFi wallet can access the safety and returns associated with these mortgages. By boosting (locking up), $HOME users can earn returns and RWA governance tokens.

HOME has led the way in bringing Real World Assets to the blockchain with $46 million of home value represented by the protocol. The mortgage market is $13 trillion, so we have plenty of work to do in bringing those assets on chain. The duty of our governance and RWA holders is to both help in this process and begin to explore future assets to add to the protocol.

As in all change, it's somewhat bittersweet but necessary as we move forward and into a world focused on providing real value and real returns to the community vs some of the more fanciful things we have seen in the past.

We believe there are 3 critical requirements for the next generation of stablecions to be successful.

Transparent

The key issue stablecoins of old have is lack of transparency. Those that hold assets in bank accounts or elsewhere require people to trust their banks, auditors or the company backing the coin. Auditors are human too and make mistakes. Algorithmic stablecoins had the opportunity to be completely transparent but, as we all found out with Terra, not only wasn’t this the case but they couldn’t liquidate fast enough to satisfy the needs of their redeemers.

We propose the next generation of stablecoins must list each asset backing the stablecoin in a way that is both human and machine verifiable. In the case of HOME, this is why we chose to make the coin stable against liens on U.S. homes that are registered at the county level (in the real world) and on the blockchain every time we lend money against a home. Here are the current liens on homes that back HOME. Further, 2.0 Stablecoins need to be transparent about how much of their asset base is liquid and available to handle redemptions. Current fiat backed stables attempt to be 100% liquid even though they are backed by assets that are not instantaneously liquid. To be fair even banks would require approximately 1 month to completely liquidate the tens of billions of dollars that a coin USDC holds in deposits and treasuries.

The HOME approach to this problem is to further define the intent of those who purchase HOME. This is done at 3 levels:

• Buy HOME with zero lockup: This group gets a 1% return

• Buy HOME with a 90 day lockup: This group gets a 2% return

• Buy HOME with a 1yr lockup: This group gets max returns (currently around 5%)

The advantage of this system is it gives the protocol a “signal” about what to do with the money flowing into HOME. If the money isn’t locked up then the protocol can make better decisions about liquid the remaining assets should be vs other stablecoins who “guess” how much they need to keep liquid to satisfy withdrawals. For money that is locked up the protocol can put the money to work in longer term assets, like mortgages and pass some of the increased return to the HOME holders who are locked up for longer. As an example of how this is working today about 50% of HOME is locked up and cannot be redeemed providing a base of assets that are not subject to a “bank run” scenario. One way to think about this is a metaphor of a house. The foundation is rarely if every replaced (1yr lockup) so you can rely on it being there. The walls are less likely to stay and so are considered less reliable from a longevity perspective and finally the furniture which is easily changed and shouldn’t be relied on to have any particular longevity. Here is the current breakdown of locked vs unlocked HOME:

Durable

A stablecoin needs durable returns from the assets backing the coin. A common technique in stablecoin 1.0 world was rewarding holders of a coin with governance tokens from the project that were subject to price fluctuations thereby inflating the “claimed” yield. A promoted yield of 30% or more was common. Stablecoin 2.0 products must list their yield solely based on the return from the assets backing the coin. In the case of HOME, this entails showing the return based on people repaying the loans against the homes on a monthly basis. Further this return must be durable i.e. there must be some indication those returns will continue and in the case of HOME the loans are from 15yrs to 30yrs in duration. Often yields on 1.0 stablecoins was day to day at best.

Decentralized

As if 2022 didn’t contain enough lessons already, we learned post-FTX the critical need for systems we build to be decentralized from the start and at the core. 2.0 Stablecoins should be based on decentralized assets. In the case of HOME, those assets are houses distributed across the United States with each of over 3000 counties responsible for maintaining records locally. This means that even a catastrophic event in one state wouldn’t bring down the HOME ecosystem. This is in stark comparison to 1.0 stablecoins that store their assets in banks or other financial institutions which increases centralized risks. 2.0 Stablecoins also must maintain cashflows even in the event of a shutdown down in the banking system that would freeze all the stablecoins based on centralized assets. While HOME doesn’t have fully decentralized cash flows yet, there are several homeowners who pay their mortgage every month without ever passing money thru the banking system. A network of these homeowners and corresponding smart contracts in the system to process the payments would provide a truly decentralized stablecoin solution.

We hope you join us in building the first Stablecoin 2.0 that is transparent, durable and decentralized.

Here are some examples of ways you can verify yourself:

How does the Protocol get paid back?

The ownership of the liens that back HOME are listed both on chain and at the county where the house is located. The protocol uses a particular type of lien called a “real estate lien” or a “home lien”. The lien system has been around for hundreds of years and has been tried in court thousands of times and remained intact. For each lien placed on a house by an originator (someone who creates loans), they record the lien at the county. The lien is held “for the benefit of the loan owner.” A servicer is licensed and regulated to collect payments and enforce the lien, i.e. foreclose on the house to repay the lien if payments aren’t made.

In the HOME Protocol’s case, the servicer handles the lien for the benefit of the protocol. LoanSnap Inc. is licensed and regulated by both state and federal laws to collect payments and enforce the liens that the HOME protocol has rights to. LoanSnap, Inc is obligated by contract to do what the HOME DAO directs with respect to the liens. In the future, this company will change to an independent entity fully controlled by the DAO.

For every lien backing HOME you may go to the site www.homecoin.finance and view the address, the lien amount and, soon, a link to the county record, if its online. If the county doesn’t have a website yet, you may contact the county and they will provide documentation attesting to the lien. You will also find a link to the blockchain record and, finally, a link to all the liens backing HOME on opensea. We are working with several third party groups to verify and provide this information on chain.

What loans are used to back HOME?

In mortgage there are many types of loans from those that are considered “safe” and often called qualified mortgages to those that are considered “risky” often called non-qualified mortgages. In addition, these loans are conforming meaning they can be sold to Fannie Mae, Freddie Mac and other institutions affiliated with the US Government. A discussion of mortgages types is beyond the scope of this document but the protocol has a smart contract that only allows mortgages that are qualified mortgages i.e. they are approved to be sold to Fannie Mae or Freddie Mac. The US Federal government is the largest buyer of qualified mortgages. They hold approximately $3 Trillion of qualified mortgages in the U.S. Federal reserves. Below is a summary of full guidelines for those mortgages.

The protocol does allow some loans that don’t meet the qualified mortgage requirements in one way. SMARTLOCs are underwritten to qualified mortgages guidelines, except they can be second liens. Here are the requirements for those mortgages as currently enforced by the protocol.

In summary, the only types of mortgages allowed in the pool of mortgages backing HOME are underwritten to Fannie Mae qualified mortgage guidelines except for SMARTLOCs where the only difference is the lien type. In addition, SMARTLOCs are only allowed into the pool if both the 1st and 2nd lien can be combined and underwritten to qualified mortgage guidelines and sold to Fannie Mae or Freddie Mac in the future.

Worst Case Scenario

The protocol is often asked what would happen in a “worst case scenario.” The first scenario is when a borrower stops repaying one of the loans. In this case, the servicer uses their power as the lien holder to foreclose on the house, sell the house and repay the money to the HOME Protocol. A more dire scenario is a global financial crisis. However, first we have to consider how HOME differs from other stablecoins. Most stablecoins today require 100% liquidity meaning their promise is you can always redeem 1 coin for 1 dollar (or some fiat). A classic example is USDC. That is why USDC keeps the assets backing the coin in cash or short term treasuries. HOME is different because it allows HOME holders to lockup their money for longer periods of time and earn a higher return. This means holders of the coin cannot redeem them until the lockup expires. Here is a graph of the total amount of HOME and how much is locked up and can’t be redeemed today. This means the total that could be redeemed is just under half of the total value locked.

This greatly reduces the burden of a worst case scenario since a large amount (today 40%) of HOME is unredeemable for a year. This results in the protocol only having to liquidate a small portion of the loans backing it to support redemptions vs other stablecoins who could (and have had) redemptions of up to 100% of the assets backing the coin.

When a worst-case scenario comes up people often highlight 2008. For context in 2008, which many believe to be the worst crisis in the history of mortgage, several things happened. While it was a terrible event for many homeowners, when you look at the data only 10% of loans went into default, i.e. people stopped paying. This was across all mortgage types including many types that are now forbidden by law.

Mortgage regulation and licensing were completely revamped to eliminate the types of loans and behaviors that many felt led to the crisis in the first place. This is known as the Dodd-Frank Act. This act transformed the regulation for banks and mortgage lenders which are now much more strict and require considerably more checks and balances. However, as we have all found bad things can still happen. In a liquidation scenario, i.e. the DAO has determined all HOME holders who are not locked up must be repaid, the protocol would sell mortgages in the pool (potentially all of them) to satisfy this obligation. Since they are qualified mortgages they could be purchased by Fannie Mae, Freddie Mac or any one of a number of mortgage buyers in the $13 Trillion industry. Since they are considered “safe” these mortgages are generally in high demand.

While we have done a lot of work to ensure you can verify what we say, there are areas where the protocol needs to improve. In particular, the DAO needs an entity that it fully controls vs controlling the actions of a person controlling the entity. This is underway. While many counties are online, today some are not, this makes verification of liens difficult as you would need to contact each individual county. We are working with counties and data providers who will aggregate and verify this data on chain in the future. We hope you join us in our quest to bring a transparent, decentralized and durable return stablecoin to the world.

Once you have your HOME Coin or Bacon navigate to the “Farming” tab Here you will find two options one for Curve and one for SushiSwap. Today, the Curve pool is for HOME Coin and the Sushiswap pool is for Bacon, but there will be some overlap as we plan to expand our presence on both.

Curve

For this opportunity, visit Curve to deposit HOME and/or USDC, USDT, or DAI. You will get Curve LP tokens in return for your deposit. Once you have your Curve LP tokens (which you MUST get from the Curve Pool for this to work), you return to www.homecoin.finance and click the Farming tab. Then choose Curve and then follow the step by step. Your first step is to deposit the Curve you got back from purchasing HOME Coin. Here’s the link to the Curve deposit page where you can get Curve LP tokens:

https://curve.fi/#/ethereum/pools/factory-v2-123/deposit

Now you have HOME Coin and Curve LP Tokens Use the interface below and stake and now you will receive Bacon rewards. When the Gauge is up and running this will be automated and done thru the UI at www.homecoin.finance. Today, you can claim bacon rewards on the app.

SushiSwap

For this opportunity once you have your BACON, then go to the Sushi pool and stake them. The pool is here:

https://www.sushi.com/earn/eth:0x5396adde2ceeae35aa719542dc7b22a1bd6161cc/add

Now you should have Sushi LP tokens. Come back to www.homecoin.finance, click on the farming tab. Choose Sushi and then follow the step-by-step. Once you deposit it and stake it you will receive Bacon rewards.

Enjoy farming for Bacon rewards!

What you will need

• HOME Coin that is not boosted

• USDT, USDC or DAI equal to the amount of HOME you want to deposit

• Some Ethereum for gas fees

  Go here https://curve.fi/#/ethereum/pools/factory-v2-123/deposit

1. You will need to approve access to your wallet. Curve is a very trusted and well-known liquidity provider with over $5 Billion in total deposits.

2. Enter in an EQUAL amount of HOME and either USDC, DAI or USDT You will need to have both HOME and one of these other coins.

3. Click Approve Spending, then approve in your wallet and enjoy the rewards! You will be able to see this was successful by clicking Dashboard in the Curve interface.

Having people provide liquidity helps the protocol overall by making it possible to trade our tokens with others.  This is important because people want to be able to exchange all kinds of different coins for HOME and BACON.  Since you are helping the protocol the protocol will reward you in several ways.

Here are the active pools in the large DEXes with details on their current incentives.

Curve HOME/3CRV (USDC/USDT/DAI)

https://curve.fi/#/ethereum/pools/factory-v2-123/swap

On June 8th, the community voted to give an incentive to liquidity provided to the Curve pool. The approved incentive is for staked LP tokens from this pool to earn BACON rewards at the same rate as staked HOME.  Right now this would be .05 BACON per day for every curve LP token. 

Curve gives you LP tokens for putting HOME and USDC, USDT, or DAI into the pool. Those are called Curve LP tokens and we use those to determine how much BACON you earn.

This means that a Curve LP token, which you get from putting coins into Curve, would earn as much BACON as 1 HOME in the protocol. Since June, there’s been around 6M HOME staked on average and around 300k Curve LP tokens.  These will be airdropped to people who provided liquidity on November 14th when we launch on-chain LP rewards. After the airdrop, they will automatically show up in your wallet and you can track your rewards at https://www.homecoin.finance.

To figure out how much BACON LP tokens will receive, we use the same calculations for LP tokens as for staked HOME. Each Curve LP token will have earned around 0.1 BACON per day up through the first year (September 28th) and 0.05 BACON per day after.

The exact numbers will have varied slightly day to day. The incentives have been calculated precisely for the upcoming airdrop using the on-chain transaction data.

Going forward, LP tokens will be able to be staked in the dAPP and the staking contract will allow claiming each week.

Sushi BACON/ETH and Uni v3 BACON/USDC

The protocol started an LP incentive for these two BACON pools with the launch of the BACON token in February 2022. Here’s the blog post announcing the program.

https://mirror.xyz/homecoinfinance.eth/-OMSAvJUFBx870m5Afib_bzLsz4gQN5vLuIlMw5xfnA

As the post describes, there are 10M BACON that will be distributed over the year between Feb 2022 and Feb 2023. The incentives will be split between these two pools based on their relative liquidity.

Recently, the liquidity on the two pools has been fairly consistent around 40k to 60k for Sushi and 100k for Uni. Given those numbers, the average dollar of LP in either pool earns about 0.2 BACON per day.

UniSwap v3 HOME/ICHI

This pool launched as a partnership with ICHI protocol. ICHI is providing rewards to the pool and you can stake the tokens on the ICHI dApp.

https://app.ichi.com

UniSwap v3 BACON/HOME

This pool has good promise since it’s based on both of the protocol tokens. We haven’t promoted it yet, choosing to keep the liquidity concentrated in other pools at the start.

UniSwap v3 HOME/USDC

This pool hasn’t been incentivized yet in favor of focusing liquidity In Curve.

Future Incentives

It’s important to the protocol’s ongoing success to make it easy for people to trade in and out of BACON and HOME easily. We will continue to evaluate new pools and adjusting incentives as a community. Please start a discussion in Discord if there are other pools the community should be considering for incentives.

We have learned by founding many projects to always start with a simple version of an idea, ship it, and quickly iterate while always keeping the end goal in mind. Over the last year of watching Home grow, and with a ton of input and feedback from the community, we’ve learned a lot about what’s working and what can be improved.

Today we’re excited to share some about the next iteration of Home.

Since its launch, the Home contracts have minted HOME from USDC deposits. When someone deposits USDC, the contracts mint an equal amount of HOME and hold the USDC for use in lending. While this model has worked to get the protocol to where it is today, it has some downsides that make it less suited to growing for the future:

1. Liquidity for HOME can get sparse in down markets. Adding Boosts recently helped, but didn’t solve it completely.

2. HOME is highly reliant on USDC and limited because it’s not independently created from home loans.

3. It’s not capital efficient. The AMM tries to hold 10-15% of the TVL in USDC that provides no returns to HOME holders or revenue to the protocol.

Now, it’s time for HOME to continue to move towards true decentralization and independence with improved incentives so it can grow and help millions more people in the world and scale to Trillions in TVL.

Freedom for HOME

Through the last few decades, the Federal Reserve (the Fed) has minted trillions of dollars backed by home loans. As of October 2022, $2.7 trillion dollars are backed by home loans. The number of dollars backed by home loans is second only to the amount backed by US Treasuries ($5.6 trillion). The Fed’s balance sheet is publicly available at https://www.federalreserve.gov/releases/h41/current/h41.htm.

The Fed mints dollars from home loans through the financial system. A person buys a home using borrowed dollars. This creates a new mortgage that can be bought and sold. After passing through many hands, each of which takes a fee, that mortgage is bought by the Fed using newly minted dollars. Effectively, the Fed has minted dollars by lending to the homeowner. In fact, all dollars are minted by lending, mostly to home owners or to the government through US Treasuries.

The new model is the same as used by the Fed and also similar to the way that DAI is created by borrowing against ETH.

The simple change to make HOME truly independent is to stop minting HOME from USDC and to start minting HOME when a home loan is created. HOME will be created by borrowing against the value of a house.

This solves many of the problems described above and creates some cool new abilities for HOME.

For example, an interesting option is for borrowers to borrow HOME and immediately turn around and boost it. If their borrow rate is lower than their boost rate, they will be able to benefit from the extra value of their home that’s usually locked up.

Roadmap

What are the next steps to reach this vision?

1. Complete selling the loans from the recent Snapshot vote and return the liquidity to the protocol through the Curve pool. This is in process through capital markets and agreements with loan buyers.

2. Finish on-chain LP rewards to increase the incentive to participate in HOME DEX pairs. The contracts are in place and the final website changes are being completed and tested.

3. Continue to work with centralized exchanges to support HOME. Home is in process to be listed at many and will continue to build partnerships with the largest and most trusted exchanges.

4. Discuss, take feedback, and vote on the proposed changes. This blog post will kick off more official discussions to continue the early conversations over the last few months.

5. Implement the change to start minting HOME independently from USDC. The changes to the contract are fairly simple and as with all changes, will get thorough testing and review.

6. Adjust the AMM to be market-driven instead of liquidity driven. To start the AMM will move to a simple off-chain mechanism.

We’ll be publishing and sharing in discord more thorough details on how these pieces work together and solve some of the important issues.

Borrowing and Lending Example

An example may be the most useful to show the new benefits and how all the pieces work together.

A borrower comes to the originator and asks for a $100,000 loan. The originator sees that they qualify and the home is worth enough.

They go to look at the DEX pool for USDC/HOME to see what's available. There's a few possibilities:

1. The pool doesn't contain $100k in stablecoins that can be converted to fiat (USDC/USDT/DAI). In this case the loan just can't be done at all if the borrower needs USD out. They'll have to wait until more liquidity comes into the pools. (If they just want HOME to hold or boost, though, no problem since no exchange to USD will need to be made).

2. The pool has over $100k in USDC and HOME is trading at a discount. The loan can be done, but the borrower will have to pay an up front fee. If HOME is trading at $0.99, then the borrower effectively will pay a 1% fee. They trade 100k HOME to only get 99k USD out. (if you're familiar with "points" on a tradfi mortgage, this is almost identical).

   When this is the case, less borrowers will want to borrow, so the price won't be pushed further down. But, investors get a bonus when they buy HOME, so the price will tend to come back up.

3. The pool has over $100k in USDC and HOME is trading at a premium -- $1.01. Great! The borrower gets a bonus (similar to a "rebate" in tradfi). They take their 100k HOME and get $101k USD out.

   When this is the case, lots of borrowers will want to borrow and it will drive the price of HOME back towards $1. Investors will be less interested above $1 and generally wait to buy HOME.

Let's say we're in case #2 and HOME is trading at a slight discount of $0.99.

First, the loan is completed, the lien is applied, and an NFT representing the lien is minted.

The NFT is used to borrow 100,000 HOME from the contracts. When the NFT is deposited as collateral, 100,000 HOME is minted (created) right then and sent to the borrower. It doesn't come from the boosted HOME. It's minted. The amount of HOME increases to keep the balance between loans, collateral, and amount of HOME.

This borrower wants USD, so they take it to the pool and get 99,000 USDC. The price of HOME falls a bit so the next borrower may decide to wait until investors buy HOME and the price moves back up.

Now, an investor comes and sees the low price of HOME and buys it at a discount. They might spend 98,500 to get 100k HOME. They take that 100k HOME and boost it to earn from the interest that will be paid from the loan that was just created. When a borrower makes a payment of HOME to the contract, some HOME is burned, for the amount of principal they repaid, and the HOME for the interest they paid is sent to the HOME boosters/holders.

So the path for borrowers is this

Loan -> minted HOME -> Curve/Uni/Sushi -> USDC -> USD -> Borrower

Another interesting path is an investor buying HOME to boost. In the new world, the only way to get HOME to boost is to buy it from an exchange (well, aside from borrowing minted HOME yourself through an originator).

Loan -> minted HOME -> Curve/Uni/Sushi -> Investor -> Boost

The third new feedback loop is the borrower repayment path.

USD -> USDC -> HOME (through DEX) -> Repay HOME Contract

When HOME is trading low, there will be a new incentive for borrowers to repay their loans early because they get a slight discount on their payments from fiat. There are definitely borrowers willing to come in and make early repayments to get a 5-10% bonus on their mortgage payment.

That incentive would have brought the pool back up to around $1 so we could fund new loans again.

It's all these new feedback loops that I'm most excited about for the upgrade. We don't have them today and they are the flywheel for growth that will break us out of our current chicken and egg situation.

Conclusion

We hope to quickly get feedback on the proposals and get them implemented so we can all benefit from a more lively, growing protocol soon.

Beyond this proposal, there’s much to be excited for in the future as we all work together to build a new, stable, transparent, yield-bearing future.

There is much hype surrounding Ethereum moving from proof of work (POW) to proof of stake (POS). The main difference is that in proof of work, the blockchain is validated through energy use (i.e. a computer doing calculations to secure the blockchain) vs in proof of stake where it is secured by capital. I.e. in proof of stake someone is willing to put up some amount of ETH to guarantee their validations are correct (at the risk that this money is slashed if the validation is incorrect or fraudulent).

Ready for the most important part of the merge? In POW, MEV (Miner Extracted Value) (aka the money) went to the people who had powerful machines working to secure the blockchain who received new coins in exchange. With POS, since we don’t need to rely on miners, this MEV can go elsewhere, particularly to the proposers and builders, aka the “new miners”. This shift in value extractions is the most overlooked benefit of the merge.

Many of the people at the proposer/builder level (the new miners) will share that money with people who are willing to put up some smaller amount of money (ETH) so proposer builders can use it to validate transactions. Where do they get all that ETH? That’s where you come in. Proposer builders willing to pay you to use your ETH! This is where sETH products like sETH stETH etc. stem from. They are basically someone’s token that represents staked ETH through their system. An example of this is cbETH from Coinbase. When you stake your ETH with Coinbase, you receive cbETH and the ‘new miners’ use your Eth to validate transactions, allowing you (with zero effort) to access core rewards from the Ethereum translation network.

Tapping into these core transactions is like tapping into the Visa network and getting a piece of every credit card swipe. Interested? Well it gets better and a bit more complicated. Stacking refers to a concept that was done by degens in ETH 1 but now could be available to pretty much anyone. So, stake ETH→ETH2 then take the sETH and deposit it elsewhere and stack the return. This can theoretically be performed in an infinite chain such as ETH-ETH2->sETH->SOMETHING->sSOMETHING->.

Let’s do some simple math on this chain. If SOMETHING returns 5%, you would receive 10% for sETH on top of SOMETHING locked up for a year and you get...15% and that's just one level of stacking. Sounds too good to be true? Just watch the post-merge money to see this in action. It’s going to be a fascinating post-merge world but you only have to remember two things

1. You can earn money from transactions that happen on Ethereum, where before only miners could.

2. if you are willing to take more risk you can try stacking in order to make more money.

Interested in learning more about a protocol that gives consumers access to the same financial products banks, governments and institutions use to preserve and grow wealth? Check out homecoin.finance to get HOME in your wallet today.

HOME’s “HODL Vault” will provide users with great rewards for deposits while helping to build sustainable liquidity.

Today, we are excited to announce we are launching a new rewarding liquidity program through DeFi project ICHI. The new HODL Vault will enable our community to get the best rewards on their deposits of $HOME. Community members will be able to keep their $HOME while earning more rewards through this new Uniwap V3 liquidity management protocol!

ICHI’s HODL Vaults are an innovative new way to design liquidity programs that build liquidity our community will truly own, while providing you with the best rewards available. By building liquidity that our protocol owns, we can conduct our day-to-day operations like trading, lending, and profit sharing while remaining decentralized and without fear of centralized entities impacting the $HOME price. The HODL Vault is a Uniswap V3 liquidity management protocol that will allow us to create single-sided and concentrated liquidity pools with $HOME and $ICHI.

By launching a HODL Vault with ICHI, HOME users can save money on gas fees while also earning high rewards that Uniswap V3’s concentrated liquidity offers. This is a win-win for our community and our users! 

How does the new HOME HODL Vault work?

• Users deposit $HOME to the ICHI HODL Vault

• The ICHI Vault is a Uniswap V3 liquidity management protocol that allows users to deposit $HOME, and as a concentrated liquidity protocol, users earn great rewards.

• ICHI’s protocol automatically adjusts the parameters based on price changes, so depositors are always earning the highest rewards.

• The HODL Vault combines the simplicity of Uniswap V2 with the concentrated liquidity benefits of Uniswap V3.

• Users do not have to worry about resetting liquidity positions as ICHI automatically adjusts liquidity positions as the token price changes.

• After you deposit in the HOME HODL Vault, you will begin to earn trading fees in both the deposited token and $ICHI, depending on how the pool rebalances in relation to the price of both tokens. When withdrawing, users will receive a combination of HOME and $ICHI.

Head to app.ichi.org to start depositing in the HOME HODL Vault and begin earning trading fees today!  

** **

Holders of $HOME can now earn additional rewards by boosting their tokens for 90 days to earn 2% rewards or for 1 year for max rewards, currently at 4%. Holders will continue to earn 1% passive yield in their wallet just by holding $HOME with no boosting required.

HOME offers a new way to put your digital assets to work and earn passive income without needing to sell by holding a coin that’s backed by the same kind of mortgages that the banks use to power your savings account. When you deposit into HOME, the protocol uses that money to purchase overcollateralized mortgages on homes throughout the U.S. The money from people making payments on those mortgages flows back to HOME and then to you as a $HOME holder. So not only are you receiving passive yield, you’re also helping diversify your portfolio at the same time. Win. Win.

Boosting Benefits

When you simply hold $HOME in your wallet, you receive 1% yield. But when you boost, you lock up your assets for a set amount of time and in exchange receive a higher yield of 2% for 90 days and maximum rewards (currently at 4%) for 1 year of boosting. When you choose to boost you’re also benefiting the protocol itself, as your locked coins not only show your commitment to the protocol but also help ensure its longevity by providing a sign as to how capital can be used.

When you boost, you will receive an NFT that represents your total boosted $HOME and yield. These Boost NFTs are tradeable like any other NFTs. Boosters who would like to access liquidity without withdrawing their boosted $HOME prematurely will be able to trade this NFT for the boosted amount and past yield. There are no limits to how many times these NFTs can change hands before the end of the boost duration, and new owners of these NFTs can simply return to the Home platform to withdraw the boosted $HOME and yield, thereby burning the aforementioned NFT.

Extra Rewards

To make things even more exciting, until the 31st of August 2022, 23:59 EST, we’re giving out EXTRA rewards for those who boost above certain amounts.

Boost 5,000 $HOME for 90 days to receive an additional 100 $HOME or boost 20,000 $HOME for 90 days to receive an additional 500 $HOME. These rewards will be paid to your boost balance to earn and compound even more yield! ** **

Countdown to Boosting

One more note on boosting; 60 days from now, on Oct 15th, all staked $HOME will be automatically moved into a boost. The decision for which boost this staked $HOME will be moved into (90 days or 1 year) will be decided by the DAO this week. Stay tuned for more information and updates on the the HomeCoin Twitter.

In case you’re new to Home…

Launched in 2021, $HOME is a stablecoin backed by US home mortgages and is the first stablecoin to generate returns where yield is generated from mortgage repayments made in fiat. This allows holders and boosters to tap into a revenue stream that is predictable, hedged against movements within the crypto markets and hence durable even in a bear market.

If yes, you are at the right place, fren.

Here, we will start outlining what it means to be an ambassador for HOME.  HOME  ambassadors are key community members and at the core, $HOME hodlers. At Home, we place emphasis on education and technology. Therefore, as you deepen your knowledge about HOME and contribute more to the ecosystem, you can acquire titles indicating your seniority in the HOME community.

Benefits being HOME ambassadors:

• Swag

• Develop skills in community building and moderation

• Early team updates

• Work closely with the core team

• Paid google courses to expand your knowledge and skill set

• Insights on the mortgage and real estate market

• & more..

How to get started:

Anyone can participate! We are seeking out anyone who is active in the community, keen to help build our community and learn more about HOME.

Areas we need support in:

• Moderation

• Photoshop (memes)

• Written content

• Assistance

• Forum platform users (4chan, reddit, etc)

• Video making

• Content writing

• Translating

• Educating about our protocol

These are all valuable to HOME. If you’d like to know how you can be part of the HOME Family, reach out! Knowing multiple languages and being part of different communities is a plus!

How to apply:

Before you start, make sure you join our Discord, Telegram, and Twitter so we can easily reach you and apply to become a HOME Ambassador here.

Disclaimer: This is a beta version of the Ambassador program. As we further develop it, we will be releasing patches internally with the core team and current ambassadors.

Bacon Protocol was launched in 2021 with the vision of bridging the gap between DeFi and the real estate and mortgage market. We believe in the ethos of permissionless access, transparency and decentralization, and we’re employing these DeFi-native concepts to innovate in the real estate and mortgage industry. Bacon Protocol has come a long way since our launch, so we thought it was time to do a recap and reintroduce you to the suite of products within the Bacon Protocol ecosystem.

Home Coin, $HOME

A stablecoin backed by US home mortgages and the first stablecoin to generate yield for holding. $HOME is overcollateralized by US home mortgages, a real world asset which has less correlation with other crypto assets, making it more resilient against negative movements in the crypto market. Yield for holding or staking $HOME is generated from mortgage repayments made in Fiat, which means tapping into a revenue stream that is predictable and durable even in a bear market.

Homecoin.finance is the new home portal for HOME coin. Find out how you can hold or stake to earn durable yield through our mortgage-backed stablecoin.

Baconcoin.com is the place to find out the latest happenings on our governance token.

Eggs

Every lien on a U.S. home backing $HOME is represented by an NFT on-chain. Data storage on the blockchain means you are easily able to access home value and mortgage information at the click of a button This information is also recorded at the county where the house is located and is a public record. The process for Eggs is actually quite simple. First you head to a mortgage originator (today us). They make the loan which conforms to all the guidelines, regulation and compliance. Then HOME Coin purchases the loan (if it meets the criteria). Viola, Eggs.

Bacon Coin

The governance token that powers Bacon Protocol. Voting by the BACON token holders drives all major policy decisions. The community is empowered with decision-making control over the creation of new Pans, adjustment of AMM parameters, changes to protocol behavior, usage of treasury funds, allocation of liquidity incentives, bonding for servicers. For updates on BACON head  to www.baconcoin.com

Stake $HOME tokens to earn additional returns in Bacon Coin.

Bacon Protocol

The blockchain that powers it all. The Bacon Protocol brings the same power and value that mortgages give banks, financial institutions, and governments to anyone who can buy cryptocurrency. It is a decentralized system built using smart contracts on the Ethereum blockchain.

Move over. There's a new cook in the kitchen and he’s bringing the $BACON.

One of the most powerful features of Web3 is composability. To boil a huge concept down into a brief summary, “composability” describes the innate ability of open-source blockchain technology to be permissionless-ly built on top of by other projects and developers. This unlocks unprecedented innovation, creating global network effects that have (and will continue to) change the way we interact with everyday applications.

When we see composability in action across Web3, two terms often pop up: “DeFi legos” and “NFT utility.” But what are they and what do they mean for the Bacon Protocol? Lastly, how can we leverage these concepts to maximize the financial opportunities for everyday Bacon users?

In the Bacon Protocol, NFT utility and DeFi legos come together to allow users to invest in mortgages in an easy, open, fair, decentralized, and crypto-native way, all while offering the most competitive interest rates on mortgages possible.

That was a mouthful, so let’s dive in and explore in more detail.

NFT Utility

NFTs are a massive technological innovation, but most of today’s NFT utility is just scratching the surface of what is possible: Pictures of Bored Apes that give you access to parties, gated Discord communities, etc…Where is the real innovation? We believe Mortgages are a use case that demonstrates the real power of NFTs with sustainable utility.

Bacon Protocol is ushering in a new era for NFT utility by introducing tokenized mortgages. During the loan origination process, the protocol’s Originators will issue an NFT that represents the lien on an actual home. This NFT, known as an Egg, can then be staked in the Bacon Protocol and used as collateral to be borrowed against.

The model is very similar to what happens when people or institutions borrow against US mortgages. However, instead of these mortgages being held, assessed, and monitored in walled financial gardens, in the Bacon Protocol they’re represented as distinct tokens on the Ethereum blockchain. This allows them to be securely and indefinitely tracked across the Web without fear of fraud or lost recordkeeping, thus opening up access to a wider consumer base.

To take the utility of the NFT Egg one step further, Bacon Protocol is introducing Smart Loans. Smart Loans are sliding scale loans taken out against an NFT Egg that provides homeowners more freedom and flexibility in putting their mortgages to work. Smart Loans have a few significant advantages over loans taken out against traditional mortgages:

1. Lower rates = Lower payments: Using Bacon’s AMM, as more funds enter the protocol, the interest rate for mortgages is lowered based on demand for loans vs. funds in Pans.

2. Speed: Smart Loans with Bacon Protocol, when approved by Originators, can be processed in as quickly as one or two days in order to mint an Egg representing a lien on your home.

3. Repayment Flexibility: Simply pay back monthly interest due, the entire balance, or anything in between.

4. An open line of credit: You no longer have to refinance your home to get more money. You can have up to a 80% credit line against the value of your home that you can withdraw and repay as you need.

These are all critical innovations that were impossible prior to provable digital ownership in the mortgage industry. We call that a win-win-win-win. But the main dish hasn’t even been served yet.

DeFi Composability

$bHOME and Egg NFTs are each independently significant within the Bacon Protocol, but with composability, these two digital assets become immensely more powerful. Beyond the Bacon Protocol, $bHOME and Eggs will be able to be leveraged across the DeFi ecosystem and provide compounding benefits to users. This is what we call DeFi composability, or DeFi legos.

We envision a world where these assets live beyond the Bacon Protocol and are able to open up a new world of composability in DeFi. Take, for example, the tricky problem of DeFi collateral:

One of the holy grails of DeFi is secure, stable collateral. Nearly every major project relies on collateral and liquidity to superpower its permissionless offerings to consumers and institutions. The issue, however, is that these protocols are starved for resilient collateral. Currently, the three most common assets used as DeFi collateral are BTC, ETH, and USDT - none of them perfect. Each asset comes with its own set of risks:

• BTC faces the price risk of liquidation. As a volatile asset BTC is not stable enough to be safely used as a widespread asset for collateralization.

• ETH faces smart contract risk. Any small, exploitable bug can carry significant risks. As we get more composable, one small issue in a smart contract could cause a cascading “Jenga effect.”

• USDT faces a “run on the bank” risk. Tether has never claimed a 1-1 backing of USD to USDT. If too many users attempt to exchange USD for USDT, Tether might not be liquid enough to cover user funds, causing Tether to lose its $1 USD peg.

DeFi has been steadily building its set of composable legos. First came borrowing/lending protocols like Compound and MakerDAO. Then we saw apps built on top of smart contracts to maximize yield in these borrowing/lending protocols such as Yearn Finance. What we have now is an immensely robust DeFi ecosystem ($125B USD on Ethereum alone), but a vast majority of which is collateralized with assets that, in the grand scheme of things, are unproven, inaccessible, and highly volatile.

In the search for alternative forms of DeFi protocol collateral, many teams are exploring using NFTs. However, in the current NFT landscape, we find that most of these assets are subject to the same type of volatility, cultural sway, and security risk as fungible digital assets. This doesn’t bode well for the stable utility of today’s NFTs as DeFi collateral.

How is Bacon different?

Bacon, on the other hand, is taking on a new approach, bringing the most historical stable and collateralized asset in history into Web3 and DeFi: homes.

What if we enabled these DeFi protocols to suddenly access a remarkably greater pool of collateral – say the $17.9T US mortgage market? Instead of having digital assets rely on other digital assets for support, we used a different layer of support and stability. This is where DeFi legos and Web3 composability come into play.

What does this look like? It looks like taking your mortgage out as an NFT Egg and then using that NFT Egg as collateral to take a loan out and use it across the DeFi ecosystem – powered by the Bacon Protocol.

Imagine a world where you could collateralize your home to buy derivatives to hedge your risk of oil price volatility if you were involved in the oil business.

Imagine collateralizing your farm home to short corn futures in the case that your crops die out and you lose a majority of your farming season. This is using your home as a financial instrument to protect yourself, your business, and your family.

We are at the absolute beginning of the financial possibilities that DeFi can unlock. As new paradigms continue to be innovated, so does the need for a better, safer piece of collateral - and Bacon is leading the charge.

Utilizing and Composing Bacon

Bacon Protocol is changing the DeFi and NFT landscape by bringing one of the largest, most secure, and most collateralized assets in history to Web3. Whether you’re a homeowner or investor, Bacon Protocol allows individuals access to a lucrative industry traditionally reserved for the institutional elite.

It all starts with #Bacon and #Eggs. Join us at baconcoin.finance.

Today, we’re releasing a significant update to the protocol that increases security, improves usability, and reduces gas fees. We’re also announcing the completion of the recent security audit.

Along with that, here are a few of the biggest news to catch up on from April:

• Lots of activity in the core protocol: 9 new homes. $391,000 borrowed. $5.8M in home value added.

• $BACON got listed on both CoinGecko and CoinMarketCap so the coin icon and value now show up in most apps and wallets.

• LP rewards were officially announced and how-to guides were posted for SushiSwap and Uniswap.

• The marketing team wrote and published deep dives about the protocol, the Automated Market Maker, Loan Originators. More coming!

• $BACON from the first coordinape epoch was distributed to the community. The next vote is coming this week on the BaconCoin Snapshot.

• A lot of work by our mods and community to have some fun discussions in Discord and Telegram.

• Bi-weekly live community calls with the team on Discord. Our next one is just three days away on May 5th at 8am Pacific Time.

What’s New?

Three big updates to the protocol were released today along with a number of small adjustments.

BlockSec Audit Completed

The BlockSec team has been digging deep into the smart contract code and working with the team to increase security across the board. They came highly recommended and have advanced tools and techniques that we were highly impressed by. You can find the new audit here.

The audit identified a handful of risks in the current contract implementation that have been fixed or mitigated. Most of the findings were small and fixing them helped shore up the depth of the protocol’s defense.

Two of the risks were classified as High severity. Neither of those risks could have been exploited at any point because of other measures in place. They have also been fixed in the contracts and released as an extra precaution.

Convert $BACON and $BHOME from ERC-777 to ERC-20

As part of the audit fixes and as described previously, both $BACON and $BHOME have been changed from ERC-777 tokens to ERC-20 tokens. The ERC-777 standard can have advantages and makes it harder to accidentally lock tokens up by sending them to the wrong place.

Despite those advantages, ERC-777 support across the ecosystem has lagged and the increased risk of reentrancy bugs made it clear that ERC-20 is still the best option. This was a small change to the contracts and shouldn’t affect day-to-day usage of either token. It will increase security and open up many more possibilities for integration with other projects.

Lower Gas Fees for bHOME & Paused BACON Claiming

High gas fees to buy and sell bHOME and claim BACON have been on our radar and a consistent problem raised by the community. Our first design for the bHOME staking and BACON rewards system was meant to make it easier-to-use and more precise than other protocols we saw.

We knew there was a chance it would have higher gas fees, but our estimates predicted a small increase, not the large fees that we’re seeing. Part of this is because the protocol was so popular -- more transactions meant higher gas for staking. The worst part is that this punished the protocol’s most fervent supporters that wanted to stake more and more bHOME.

The past month, we’ve become experts on the gas system and had a new systems architect join the team that went through the contracts and transactions to find the problems. So far, he was able to bring gas costs down by 50%, which is a huge improvement! But, not good enough, knowing how fast the protocol is growing. We’re now deep in a new approach that will grow with the protocol.

So, today, we’ve paused the connection between BACON claiming and bHOME buying and selling. This will make gas costs for bHOME transactions only a bit more expensive than a token transfer.

This does mean BACON claiming will not be available for the next two weeks while we finish reworking that part of the contract. Don’t worry, you will still be earning rewards that will be available to claim on-chain again shortly, but with much lower gas fees.

What is an AMM?

The Automated Market Maker (AMM) is a model popularized by decentralized exchanges (DEXs) like Uniswap as a more efficient replacement for traditional order matching and order book systems. AMMs are autonomous protocols that use smart contracts to define the price of digital assets. In AMMs, protocols pool their liquidity into smart contracts in order to create liquidity pools. These liquidity pools are replacements for the traditional buyer and seller markets that have required market makers to help create and solidify markets on centralized exchanges.

In an AMM, providing liquidity for trading pairs is automated by creating permissionless pools for specific pairs - for example ETH/USDC. This allows anyone to provide liquidity for the pool by depositing both of the assets represented in the pool. By using liquidity more efficiently, these pools are able to regulate the asset prices and reduce price volatility.

How does it work?

With no counterparties to execute trades and provide liquidity, AMMs rely on mathematical equations to eliminate discrepancies in the pricing of pooled assets. Uniswap innovated the original equation but since then many other DEXs have tweaked the design and created new relationships better suited to particular assets.

To best understand this, let's use an ETH/USDC liquidity pool example:

• When ETH is purchased, in order to remove ETH from the pool, USDC is added

• This causes the total amount of ETH in the pool to decrease, which causes the price of ETH in the pool to increase to maintain the balancing effect of x*y=k

• On the opposite side, more USDC has been added to the pool, causing the price of USDC to decrease

Where traditional market makers use order books to analyze and regulate prices, AMMs are algorithmically regulated, creating a more capital efficient trading system. More liquidity in a pool makes the pool less sensitive to larger swaps

Bring on the Bacon

This capital efficiency is why we envisioned implementing these concepts in other supply/demand-driven economies like the mortgage market. Bacon Protocol employs a similar AMM as the one above to decide which interest rates borrowers will pay and that bHOME holders will earn. This Bacon AMM creates a supply-demand curve that incentivizes borrowers and liquidity providers to increase participation in the protocol when needed.

The interest rate curve is set by the total amount of liquidity (USDC) in the Pan that can be lent out. When the Pan has excess liquidity, the AMM lowers the rate down the curve to incentivize borrowers to use the protocol to borrow USDC for loans. Similarly, when there is low liquidity in the Pan the AMM moves rates higher up the curve so that loans are made at higher interest rates to borrowers. The new higher interest rates create higher average rates for loans in the pan – which in turn creates higher returns for the pan’s liquidity providers. This encourages more liquidity to enter the protocol, ie. depositing more USDC in exchange for bHOME, which in turn brings the interest rates back down.

To summarize the balancing effect:

• If there is excess liquidity (lots of USDC), the interest rate lowers to incentivize borrowing.

• If there is low liquidity (small amounts of USDC), the interest rate increases to incentivize returns for liquidity providers.

The AMM uses the following function to calculate the rate for a given loan:

• Utilization is the current percentage of the Pan that is lent out. (ie. if the pan has lent out 7.5M out of 10M USDC total, the utilization is 75)

• Base is the minimum interest rate (currently set at 2.0)

• k refers to how quickly rates increase as utilization increases and sets the slope of the demand curve (currently set to 150)

The chart above demonstrates the rate function of the AMM. At 0% utilization (ie. 0% of Pan is lent out), the loan interest rate is at 2%. This rate will stay relatively flat through low utilization levels. At 80% utilization, the interest rate is 4% (close to market rates for 30 year mortgages). At 90% utilization, the rate goes up to 6.5%. Anything above 90% utilization causes an exponential increase in interest rates to entice new liquidity to enter the protocol in order to decrease the pan utilization rate. Ideal utilization rates are below the 80-90% threshold so that bHOME holders have enough liquidity to easily move in and out of positions.

What’s great about the Bacon AMM?

AMMs are one of the most efficient and innovative ways to create equilibrium between supply and demand. They are a crucial piece of infrastructure in the journey from our old mortgage system into the new system we are building.

Some of the biggest advantages of using an AMM in Bacon include:

• Decentralization

  • Liquidity is owned by the community rather than one entity such in traditional mortgage markets where access is gated to a small number of qualified investors

• Non-Custodial

  • Investors now have sovereign control over investing in mortgages

• Security

  • You can invest directly into the Bacon Protocol Pans rather than have your mortgage sold off to various institutions

• Accessibility

  • Anyone with a wallet can invest in mortgages with Bacon Protocol

• Liquidity

  • Liquid tokens are now available in the mortgage industry

The Bacon protocol’s AMM model continues to bridge the gap between TradFi and DeFi and is a key innovation in offering competitive interest rates for home mortgages while opening access to any investor with a crypto wallet. We hope you try it out for yourself and see how great it really is.

About Bacon Protocol

Bacon Protocol is a decentralized platform for purchasing mortgages. We give consumers access to the same financial products banks, governments, and institutions use to preserve and grow wealth. Using a novel, asset-backed stablecoin, we help homeowners by giving them faster, more flexible, and more competitive loans while adding a new building block to DeFi and bridging the gap between the physical and Web3 worlds.

10,000,000 $BACON tokens will be distributed to liquidity providers across Uniswap’s BACON-USDC pool and Sushiswap BACON-ETH pool over the next 12 months.

In this post, we will walk you through the process of creating a liquidity position on Sushiswap.  Learn how to deposit into the Sushiswap BACON-ETH pool in order to earn extra $BACON tokens proportional to your percentage ownership of the pool. For example, if you own 1% of the liquidity pool, you’ll be distributed 1% of the weekly tokens allocated to that pool.

Before we begin you’ll need the following:

• A wallet to connect to the Sushiswap application

• $ETH for gas fees to create the LP

• $BACON and $ETH to use in the LP

• A side of real Bacon 🥓as a tasty reward

1. Head to the Sushiswap Analytics page for BACON-ETH

https://analytics.sushi.com/tokens/0xa54d2EBfD977ad836203c85F18db2F0a0cF88854

This will help ensure that you are entering the proper Sushi Swap pool that is part of the LP rewards program

2. Click on “Add Liquidity”

This will take you to the Sushi dApp and allow you to create your LP

3. Confirm the Pair is Correct and Enter the Amount to add to the Pool

The position will be ~50/50 between ETH and BACON

4. Click “Approve BACON” to allow Sushi to create the LP

5. Click on “Add Liquidity”

Once approved you can add the liquidity directly into the pool

6. Click on “Confirm Supply”

This will give you details on the amount of BACON and ETH deposited into the pool and confirm your share of the pool. This will tell you the percentage of total fees your position will accrue.

7. Click “Confirm” for the Transaction in Your Chosen Wallet

8. After submitting your transaction head over to the “Pool” section under “Liquidity"

9. Open up your Pool details

10. Check on your Position

This screen shows that your LP is active and is accumulating rewards. This is also where you can add more tokens to your LP or remove them.

Just like that you’ve helped make some Sushi (LPs) out of your BACON! Now you will be able to passively accrue more BACON tokens based on the amount of fees the pool gains based on trading volume. The more trades that happen between BACON-ETH, the more total BACON you get.

Now where's that plate of Bacon?

To stay up-to-date with Bacon Protocol, our LP rewards programs, or anything else we have cookin’ follow us on Twitter and join us on Discord!

About Bacon Protocol

Bacon Protocol is a decentralized platform for purchasing mortgages. We give consumers access to the same financial products banks, governments, and institutions use to preserve and grow wealth. Using a novel, asset-backed stablecoin, we help homeowners by giving them faster, more flexible, and more competitive loans while adding a new building block to DeFi and bridging the gap between the physical and Web3 worlds.

In this post we will walk you through the process of creating a liquidity position on Uniswap; You’ll learn how to deposit into the Uniswap liquidity pool in order to earn extra $BACON proportional to the percentage of your ownership stake of the pool. For example, if you own 1% of the liquidity pool, you’ll be distributed 1% of the weekly tokens given to the pool.

Before beginning the process you’ll need:

• A wallet to connect to the Uniswap application

• $ETH for gas fees

• $BACON and $USDC to create the LP

• A big plate of bacon to reward yourself when the job is complete 🥓

1. Go to the Uniswap Analytics page for USDC-BACON

https://info.uniswap.org/#/pools/0xd703b8674502ad604dff201e467dfae123b61706

This will help ensure that you are entering the pool that is a part of the LP Rewards Program.

2. Click on “Add Liquidity”

This will take you back to the Uniswap dApp where you can create your LP position.

3. Confirm the Pair is Correct and set Liquidity Range

This will allow you to increase the efficiency of your position by only allowing your liquidity to be used over a specified price range. Feel free to adjust the range as you see fit.

4. Enter the Amount That You Want to Input Into the Pool

The position is ~50/50 between both assets (ex. $100 worth of ETH and $100 worth of USDC).

NOTE: This pool is susceptible to Impermanent Loss (IL). This could cause a loss of funds that becomes permanent when the position is withdrawn. Learn more about IL and the risks involved.

5. Approve USDC and BACON

This allows Uniswap to access the USDC and BACON in your wallet to create your liquidity position.

6. Click on Preview

7. Add your LP to the pool

Clicking add will add your position to the pool.

8. Confirm the Transaction with your Wallet

Gas fees are variable depending on the volume on-chain. You can see an estimate of the gas costs here .

9. Once the Transaction has been Approved Click Close

10. Click on Your New Pool Position

After the transaction has been submitted you can click on your liquidity position to get the full information on your pool.

11. Pool Overview

This is the overview of your LP. This will give you information on the pool and the amount of fees you're collecting on trades between USDC-BACON.

Voilà! You’ve now cooked up a beautiful LP on Uniswap V3, providing liquidity over a specific price range to maximize your capital efficiency.

Not only have you been able to passively accrue trading fees from the pool, but you’ve also helped solidify the $BACON ecosystem while receiving a sweet NFT representing your LP in your wallet!

Now the last step is to chow down on that plate of bacon as a reward for a job well done.  👏🥓

To stay up-to-date with Bacon Protocol, our LP rewards programs, or anything else we have cookin’ follow us on Twitter and join us on Discord!

About Bacon Protocol

Bacon Protocol is a decentralized platform for purchasing mortgages. We give consumers access to the same financial products banks, governments, and institutions use to preserve and grow wealth. Using a novel, asset-backed stablecoin, we help homeowners by giving them faster, more flexible, and more competitive loans while adding a new building block to DeFi and bridging the gap between the physical and Web3 worlds.

On February 2, 2022, Bacon Protocol launched our Liquidity Provider (LP) Rewards Program on Uniswap and Sushiswap. Both pools are live and currently distributing BACON rewards and fees to pool liquidity providers. 

Official Pool: Uniswap USDC-BACON Pool.

Official Pool: Sushiswap ETH-BACON Pool.

Bacon Protocol continues to innovate in the mortgage industry - offering users the opportunity to invest in mortgage income while building out the infrastructure needed to democratize access to this investment vehicle. We are doing this by expanding access to our governance token $BACON across multiple platforms and ensuring that sufficient liquidity is available to users.

We are very excited to get cookin’ and incentivize a deeper liquidity pool!

$BACON LP Rewards Program

Our LP Rewards Program will be conducted with the following metrics:

• Timeframe: The BACON LP Rewards Program began on February 2nd, 2022, and will end on February 1st, 2023.

• Rewards: A total of 10,000,000 $BACON is reserved for LP rewards to be distributed over the course of 12 months. 192,308 $BACON will be distributed each week throughout  the year. 

• Distribution Metrics: Rewards will be distributed to users at every block, based on the value staked relative to the total value in the respective pool (USDC-BACON or BACON-ETH).

• Rewards Split: The distribution of the ~192K weekly $BACON will be split proportionally between Uniswap and SushiSwap based on relative trading volume. For example, during the week of 3/21-3/27; 155,203 of the weekly 192,308 ($39,344.78) in BACON rewards (~80%) will be given to the SushiSwap pool offering 430.76% APY. The remaining 37,104 ($9406.11) in BACON rewards (~20%) will be distributed to the Uniswap pool offering 260.51% APY.

• Rewards Claims: LPs may claim their rewards at any time.

Getting Started

To become a Liquidity Provider in Bacon Protocol’s LP Rewards Program you can go to the following links:

Uniswap USDC-BACON Pool. 

Sushiswap ETH-BACON Pool.

Note: By contributing liquidity, all liquidity providers are subject to the risk of Divergence Loss (also known as Impermanent Loss). As always, all prospective LPs should evaluate risk before contributing liquidity on any platform.

To stay up-to-date with Bacon Protocol, our LP rewards programs, or anything else we have cookin’ follow us on Twitter and join us on Discord!

About Bacon Protocol

** **Bacon Protocol is a decentralized platform for purchasing mortgages. We give consumers access to the same financial products banks, governments, and institutions use to preserve and grow wealth. Using a novel, asset-backed stablecoin, we help homeowners by giving them faster, more flexible, and more competitive loans while adding a new building block to DeFi and bridging the gap between the physical and Web3 worlds.

The Bacon Protocol is changing the mortgage landscape as we know it by bringing the benefits of Web3 infrastructure to the traditional mortgage market. We are democratizing mortgages in two major ways. 

First, Bacon helps its users get the same safety and benefits from mortgages on US homes that traditionally have been reserved for banks and governments. Until now.

Second, Bacon is creating a new, more capital efficient system for setting interest rates and term lengths on mortgages. We do this by acquiring mortgages from a network of loan originators and adding them to the Pan. This allows the protocol to accrue interest from the mortgage payments, most of which gets passed on to users who hold bHOME tokens.

Using innovative crypto native tools like Automated Market Makers (AMMs) to help decide which interest rates borrowers will pay, we can provide competitive rates, faster and more efficiently along with the ability to refinance at the click of a button. All of this is a process that has traditionally required real world settlement and approval from outside third parties. We are currently building out a system to properly incentivize and protect the loan origination process so that once the assets are on-chain they can be used safely and efficiently. 

Let's dive into Loan Originators and how they fit into the Bacon protocol. 👇

What is a Loan Originator?

Loan originators are regulated and licensed organizations and individuals that provide the service of looking at investor specifications and seeing if those specifications are a fit for a loan to a particular customer. Originators are licensed and regulated by the states they operate in and are able to create mortgage contracts and record liens in the state the home is located in. In the Bacon Protocol, Originators are voted in by governance to service and originate loans within the Bacon ecosystem.

Our Secret Sauce: Bacon’s Loan Origination Process

When a homeowner decides to use Bacon Protocol to take out a mortgage, Bacon Protocol activates an in-network originator. This originator goes through a checklist (more on that below) in order to mint an Egg on the Ethereum blockchain. The Bacon Protocol does not take part in the origination process, only stepping in at the end of the cycle to coordinate these originator-approved mortgages on the blockchain. 

Eggs are ERC-721 NFTs that represent a lien on a specific house for a specific dollar amount. The originator then sends the homeowner this Egg. Once homeowners receive their Egg from the originator, they are able to stake it in the Bacon Protocol. Currently this is handled in one transaction so the borrow only sees cash come into their fiat account and the originator is the intermediary that gives the borrower fiat USD while taking on $USDC from the pan. 

Prior to minting an Egg, an Originator must:

1. Show that the house is worth enough to cover the value of the Egg. 

2. Check that the person they are minting the Egg for is the rightful owner of the house. 

3. Sign a Deed of Trust agreement with the owner to create a lien. 

4. Record the lien on the public record with the county the house is in.

Over the life of the Egg, Originators are also responsible for ensuring that the owner maintains the quality of the home. The Deed of Trust requires that the owner maintain the house such that in the case of foreclosure and it needs to be sold to pay off the lien, that it is in proper condition to be valuable enough to do so.** **

This linking of real-world assets and digital ownership represents one of the most challenging and thought-provoking opportunities of Web3. While the blockchain marches forward, the protocol places trust in the Originators to create, maintain and (if necessary) enforce the lien. We’re proud to have created a system that minimizes  risk by keeping  real-world integrations such as Eggs gated in scope.

Incentivizing Originators

We’ve also employed game theory incentives to minimize assumption of trust with real world actors. Originators are already highly incentivized in the real world to maintain trust in the origination process. If state or federal agencies discovered that an Originator had broken this trust in the process they would have their licenses revoked, receive hefty fines and lose their ability to conduct business in that state. Those same protections are still extended to loans originated by Bacon Protocol. 

Originators are also incentivized by fees they earn for the two functions they provide in the Bacon Protocol: minting Eggs and servicing loans.

Traditionally, originators earn a majority of their revenue up front at origination of the loan, just a fraction of what investors earn by purchasing the loan and receiving payments from the borrower over time. Conversely, in Bacon Protocol, most of the revenue accumulates over time from interest payments (and a small amount up front). This creates an incentive for the originator to make sure the Egg is valuable long-term and not pass off bad Eggs to the Pan, aligning interests. 

When an Egg is used to take out a loan from a pan, the Originator is given bHOME worth 0.5% of the amount of the loan. When the Originator services a loan and sends a payment to the Pan, they are again given 0.5% percentage points of the interest. These fees are sent directly to the originator. The Bacon Protocol also receives 0.5% of bHOME for the total amount of the loan and 0.5% of the interest payments, which are sent directly to the Bacon Protocol treasury.

This chart breaks down the rates and fees of the origination process for a $100,000 loan:

Originators are thus incentivized in the real world to maintain the trust of the origination process by 1) the risk of state or federal agencies revoking their licenses and losing the ability to conduct business in that state and 2) earning fees for minting Eggs and servicing loans.

That’s Bringing Home the Bacon

As we build a decentralized platform for purchasing mortgages, we’re staying cognizant of the great responsibility we hold to properly incentivize good actors in the best interest of the protocol. We hope this deep dive into our process and loan origination structure helped you understand the protocol and maybe even helped you decide to join the community. 

Want to learn more about BaconCoin and how we’re changing the industry for good? Follow us on Twitter and join us on Discord!

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