Advanced Blockchain’s thesis behind Bribe Protocol’s investment and incubation
Advanced Blockchain’s portfolio company and venture incubation, Bribe Protocol, has recently accomplished several milestones. The Bribe protocol has recently closed their Seed Series financing round, raising $4M USD from prominent investors including Paradigm Shift Capital, Dragonfly Capital, Spartan, and GravityX Capital. Bribe has raised an additional $1.52M USD from community investors through their fair token launch as a liquidity bootstrapping pool (LBP) event that ended last Friday, January 28, 2022. This venture has been incubated by us in collaboration with Composable Labs from its earliest stages and represents the success of Advanced Blockchain's incubation strategy and execution.
What is Bribe Protocol?
Bribe Protocol is a decentralized governance (dGov) voter incentive protocol that pays token holders to govern. Token holders (voters) can deposit their governance tokens into Bribe pools with proposals of their choice. Bidders are then able to bid, in an auction-style process, for access to the aggregate governance power staked in these pools. In essence, voters are paid to participate in governance, and incentivized stakeholders are able to access voting power to help protect the efficacy of the protocols. Bribe places an economic value on different protocol proposals and effectively creates markets for dGov proposals.
This process of coordinating voters into powerful coalitions up for auction allows anyone to benefit from governance marketplaces. It also enables all token holders, even those with a less significant number of tokens, to benefit financially from their votes. This novel feature allows the holders of several utility tokens to get an unprecedented direct financial return from their tokens that is not derived from trading or speculation.
Why does this matter in the ecosystem?
Decentralized government systems suffer similar challenges to traditional ones. One of the most prominent is voter apathy. DAO token models usually give token holders voting power through a “one token = one vote” model. While democratic in theory, the reality is different; the vast majority of token holders do not participate in DAO governance. Our theory for this widespread apathy is that individual token holders do not feel they can make an impact on these decisions when compared to whales. There is then not a sufficient incentive for voter participation.
Bribe protocol solves this challenge by enabling governance tokens to hold a financial utility. This ensures they will be used to vote, and in the process allows competition in governance against whales in an ecosystem, enabling a more democratic voting approach in the space. Through the Bribe protocol, governance takes on a market-based approach, where dGovs are forced to compete for proposals through the support of large collections of users pooling funds.
Why we allocated resources towards Bribe
Our ventures team decided to invest resources into Bribe for four main reasons:
- dGov is exploding and represents a huge untapped opportunity
- The Curve (CRV) wars, and Bribe’s position within them
- A strong founding team
- Advanced Blockchain’s Incubation Approach
1. The growth of dGov
We strive to make investments in huge but under-explored investment themes with high adoption potential in the crypto industry. While there are no black and white total addressable market (TAM) statistics to validate the scope of the opportunity, we predict that there are hundreds of billions USD worth of “governance” tokens that are currently unutilized, and cannot generate further financial gain for their owners. Building a robust dGov will extract further value from this untapped use case of utility tokens, and will most likely increase the ownership base as a result. In addition, Q4 21’ alone saw the total value locked (TVL) in DAO’s explode by 90% to just over $15B. We anticipate this growth to continue linearly over the coming 12-24 months and expect Bribe to support the entire community by enabling projects to properly incentivize their token holders.
2. CRV Wars
Recent developments in the curve wars have shown major interest in rewarding governance token holders with financial incentives in return for their voting power. Additional projects aside from Convex, such as Redacted, have spawned adding another layer of proxies attempting to capitalise on the opportunity. This acts as an additional validation point for our investment thesis. However, Bribe differentiates itself further, as the competitors add more layers to the field which makes it less transparent and more complex.
Bribe Protocol serves as a transparent generalised auction platform for leasing out any governance tokens, not just those involved in the CRV wars, all on one layer. This creates a win-win for all participants:
- Governance token holders benefit from keeping ownership and at the same time generate yield for loaning out their voting power.
- DAOs holding multiple governance tokens increase their earnings.
- Invested parties gain the voting power they need
- The core protocol increases its voter participation.
With this context in mind, we feel Bribe is solving a problem that is timely, salient for the industry, and for which there are few viable solutions on the market today.
3. A strong founding team
We have been impressed with 0xCondorcet’s ability to execute complex, multisystemic tasks towards building companies. We were familiar with his work prior to Bribe, and interested in working with him.
In addition, he had specific expertise that was useful in Bribe’s domain, with a degree in comparative politics from one of the top three universities in the United States, and an advanced level of knowledge we saw immediately come to bear in his work. Additionally, the group of advisors and investors on the Bribe cap table who are reputable, validated by us as adding value, and supportive of the project.
4. Advanced Blockchain’s Role in Incubating Bribe
In our eyes, there is significant risk mitigation inherent in investing into a company which we’ve helped build from the beginning. Our prior successes in incubating companies such as Composable Finance gives us the comfort that Bribe has all the tools, resources, and mentorship required to successfully go-to-market.
In conclusion, we feel confident that Bribe is going to be a great addition to our roster of incubated companies and portfolio projects. We are working with Bribe to create synergies within our ecosystem, as their solution can benefit other portfolio projects, that will lead to mutually beneficial opportunities. With a great team and strong supporters executing a worthy mission to solve inefficiencies in a huge and emerging theme like dGov, we could not be more excited to realize Bribe’s vision.
If you are keen on learning more about our other portfolio projects, feel free to explore the Incubations and Holding sections on our website.