PancakeBunny Recovery Plan
Thank you, Bunny Fam, for sticking with us through the post-attack stabilization period. It is thanks to your support and trust in Team Bunny that we have been able to implement measures to triage the protocol while we develop next steps to drive the recovery of value and set the stage for the next phase of growth. Two steps that must be implemented immediately are the FRE (Floating Rate Emissions) mechanism and the resumption of the Bunny Distribution rewards for the Bunny Pools (more on these below). We know that the Community has been urgently waiting for next steps, and we thank you for your patience and for giving Team Bunny the time to design solutions to a significantly complex problem.
(Be forewarned — this article will be a somewhat extensive read, so please feel free to grab some snacks and a drink and put up your feet! Individual components of the plan will be addressed in greater detail in the coming days on a regular cadence.)
1. Recovery Through Aggressive Innovation & Delivery of New Value
In the current market cycle, PancakeBunny has been under considerable market pressure which has made stabilization after the attack more complex than it would have been in the prior bull cycle. Team Bunny has been hard at work accelerating its design and product roadmap so that it will be able to bring all of the main elements online in the next month (instead of through the end of the year as was our initial expectation in more favorable climes). To this end, Team Bunny has tripled development capacity in the past month, and with the onboarding of additional engineers nearly complete, we are ready to present to the community, at a high level and subject to the standard caveats for any development process in a live environment, a complete plan for the recovery of the PancakeBunny Community through the aggressive delivery of additional value.
2. A Brief Analysis of the Status Quo
The coincidence of the attack and the subsequent downturn in the market has made the stabilization of the protocol difficult with the existing tools available in the PancakeBunny toolbox. To wit, the tokenomics of PancakeBunny were perfectly designed to maximize growth in TVL and market cap during the previous cycle of the market. The 30% Bunny Distribution was optimized to create an accelerating virtuous cycle during a period where TVL on BSC was growing and the price of BNB was increasing.
Prior to the attack, PancakeBunny was well-positioned to react to and even profit from a market downturn under normal circumstances. With only ~1.2M BUNNY in circulation at the time, PancakeBunny would have been able to continue to support market-leading APY’s through a gradual increase in BUNNY emissions rates, balanced against fluctuations in the price of BNB and CAKE. Unfortunately, the attack on BUNNY and the 7x increase in the Bunny Supply eliminated this option from Team Bunny’s toolbox. With roughly 9M BUNNY injected into the Bunny Supply as a result of the attack, increasing APY through an increase in emissions rates would have resulted in an even more sharply accelerating decline in BUNNY price. And as things stand today, the protocol would need to make a significant recovery first before it would begin generating buybacks and burns that would have a material impact on the extra 9M BUNNY that resulted from the attack. Which brings us to today.
3. Expanding the Ecosystem Through the Injection of New Value
After deep consideration of the problem, the implementation of incremental measures to triage the situation during the immediate post-attack period, and the careful observation of the subsequent movement of price, TVL, and user assets, Team Bunny has designed a path forward that will drive recovery and growth through the aggressive injection of new value into the ecosystem. To this end, Team Bunny has greatly scaled our engineering capacity, and has devised a product delivery roadmap that will inject significant value into the ecosystem in the next 2–6 weeks.
The orderly expansion of the ecosystem will consist of the following 4 components:
3.1. Polygon; New Chains
With our increased engineering capacity, Team Bunny will begin implementing forks of the PancakeBunny BSC protocol on new chains. Based on our analysis of trends on Polygon, we believe that Polygon is the optimal chain for our first fork. We see rates of TVL growth and patterns of increased usage that are structurally similar to the earliest days on BSC and that mimic the initial conditions for which the PancakeBunny protocol was optimized. Subsequent to the launch of our Polygon fork in approximately 2 weeks, Team Bunny will continue to launch new forks on up and coming blockchains that have significant and growing TVL in which Degens are migrating to maximize APY gains. Current chains under consideration include Klaytn and other chains.
Value Proposition/Key Success Factor: PancakeBunny was optimized to create an accelerating virtuous cycle on chains experiencing TVL growth and APY maximizing behavior. A Polygon fork of PancakeBunny will be able to deliver best-in-chain APYs and lock-in user value through the optimal operation of the Bunny Distribution mechanism in an environment where the underlying utility token is not burdened by the massive increase in Bunny Supply created by the attack. (Estimated Launch Window: 2 weeks.)
3.2. Qubit (QBT): A Revolutionary Lending Protocol for Ecosystem Security and L2 Optimization on BSC
During the weeks since the attack, Team Bunny has devoted considerable development capacity to the design and implementation of Qubit (formerly known as QFi), a revolutionary new lending protocol for BSC. The motivation to develop Qubit was simple. The dependency of Layer 2 (L2) yield protocols on Layer 1 (L1) lending and swap protocols is significant. Unfortunately, in the current DeFi environment, the degree of coordination and proactive engagement needed to ensure ecosystem security through communication and coordinated code review has been absent in practice, despite the best efforts of interested projects.
Consequently, while we will continue to pursue dialog with all of the projects in the BSC ecosystem, we have also been developing a lending protocol that will address the security and stability issues that result from the reliance on post-facto transparency of changes to and migrations in L1 code base. In other words, Qubit (QBT) will be optimized both as a protocol and as an operating service to maximize code security in a vertically integrated way by proactively engaging with dependent L2 protocols ahead of the implementation of changes at the Qubit level. At the same time, Qubit is designed without withdrawal fees to maximize the returns that can be designed by L2 strategies and retail users alike. Finally, the philosophical direction of Qubit stems from the conviction that L1 protocols must operate as commodities that serve the BSC community instead of indulging in rent-seeking behavior that results in the maintenance of security vulnerabilities that put the entire ecosystem at risk.
Currently, Team Bunny is targeting the Pre-Sale of QBT in approximately 3 weeks and the launch of Qubit in approximately 4 weeks, so please stay tuned for further details.
QBT Benefits for PancakeBunny and Retail/L2 Users: QBT’s initial and ongoing design is designed to maximize returns for PancakeBunny SAV vaults and participating L2 protocols by eliminating the withdrawal fees currently associated with lending activity on BSC. The elimination of these fees not only maximizes APRs/APYs for L2 projects, but will also maximize returns to retail users. Finally, Qubit will proactively engage with the L2 community to ensure that the ecosystem can conduct vertically integrated security reviews for any changes to the L1 protocol. Team Bunny believes that the twin benefits of fee reductions and proactive security engagement will be powerful incentives for adoption by the BSC Community.
3.3. Multiplexer Optimizations; New Fee-Based Services
The launch of Qubit was always contemplated as a step along the way towards maximizing Multiplexer returns. Once we have launched Qubit, our cross chain double farming solution (the Cross Chain Multiplexer) and our in chain leveraged farming solution (the BSC In Chain Multiplexer) will be able to generate significantly greater returns and with significantly greater security. Based on the usage metrics we have analysed during the Restricted Beta period, we expect our Multiplexer products to deliver returns of 75–100%. We will also be launching new fee-based services in the near future, such as Inverse/Leverage tokens to facilitate taking long and short positions on core BSC assets.
Multiplexer Benefits for PancakeBunny; Value Proposition: With the integration of Qubit, our Ethereum Cross Chain Multiplexer will generate significantly higher returns than those currently available on Ethereum thanks to the mechanism of Double Farming. Similarly, Qubit will significantly increase the returns of our In Chain Multiplexer by enabling Leveraged Farming on the BSC. Together, our suite of Multiplexer projects and new fee-based services will increase PancakeBunny TVL and contribute significant fees to the PancakeBunny ecosystem for optimal buyback of BUNNY and/or distribution to users as appropriate.
3.4. PancakeBunny Safe Swap (PBSS): A Revolutionary Swap Protocol for Ecosystem Security and L2 Optimization on BSC
To recapitulate the security themes of Item 3.2 above, Team Bunny has focused a considerable amount of attention on the problem of ecosystem security. The inability of the ecosystem today to coordinate 1) a vertically integrated review of code and 2) a prior assessment of problems that result from migrations and drastic changes in liquidity must be addressed. Indeed, Team Bunny believes that 1) L1 lending and swap services must be stable and must coordinate proactively with the ecosystem, and 2) they must continuously evolve their design to operate as a safe utility or commodity for the BSC Community, and not as a source of ongoing vulnerability.
Consequently, Team Bunny is preparing to launch PancakeBunny Safe Swap (PBSS) for a core set of strategic assets with the following objectives. 1) PBSS will operate as a commodity or BSC utility — it will not take any protocol fees from trades, and will pass the savings on to users as higher returns and cheaper swaps. 2) PBSS will engage proactively with L2 protocols to enable vertically integrated development and security reviews that avoid the ecosystem-wide dislocations such as those resulting from the recent migrations. Finally, 3) PBSS will not provide flash loans, which represent an ongoing source of instability and vulnerability in blockchain ecosystems across the world of DeFi.
Benefits for PancakeBunny and Retail & L2 Users: PBSS will drastically mitigate current sources of ecosystem vulnerability for L2 projects such as PancakeBunny. In addition to these incentives for L2 projects, PBSS will provide benefits in the form of reduced swap fees and higher returns by eliminating protocol fees from the equation. We expect that the launch of PBSS will not only increase the security of participating protocols, but also that it will increase ecosystem TVL. (Note: Subject to determinations of technical optimization and to react to changes in the ecosystem, certain products such as Qubit and PBSS may be integrated due to considerations of efficacy and security.)
4. Capturing the Full Value of Ecosystem Expansion — Introducing the Mound Token (MND)
To recapitulate — the story so far, after considerable analysis and review of the PancakeBunny ecosystem, Team Bunny has determined that significant new value must be injected into the ecosystem to maintain PancakeBunny’s value, increase TVL and support the price of BUNNY.
To do so, Team Bunny is committed to adding the following value drivers to the PancakeBunny ecosystem:
1) Polygon and new chain forks;
2) Qubit, for safe and commoditized lending-as-utility;
3) Multiplexer, Inverse/Leverage tokens — full suite of cross chain and in chain fee-based products;
4) PancakeBunny Safe Swap, for safe and commoditized swap-as-utility; and
5) Future project tokens and shares of fees.
However, Team Bunny believes that concomitant to the injection of significant value into the ecosystem must be the direct realization of significant value by the PancakeBunny Community. In order to capture and deliver this value directly to the PancakeBunny Community, the Team is proud to announce the creation of a new vehicle for this purpose, the MND (Mound) token. The MND token is designed to fully and directly capture and deliver the value generated by all of the above and all future projects of Team Bunny to the PancakeBunny Community.
4.1. The Mound Vault and the MND Token
The MND token operates in conjunction with the Mound (MND) Vault both as a governance token and as a marker of value. The Mound Vault is designed to aggregate the value of the rapid ecosystem expansion described above, including the assets created and the fees generated by the new initiatives. As such, the MND token represents a share of all of the assets and fees that accrue to the Mound Vault for all future products and services. Once the PancakeBunny ecosystem has stabilized, MND holders will be able to claim a pro rata portion of the accrued value. PancakeBunny will also support liquidity provision to create a secondary market for the MND token at an optimal time.
4.2. How the Mound Vault Accrues Value
At launch, Team Bunny will contribute the following to the Mound Vault:
1) all of the 1M BUNNY minted to the Team Wallet due to the attack, representing over $16M in value at today’s price;
2) a concomitant amount of “PolyBUNNY” (the utility token for the Polygon fork) and a similar proportion of the underlying token for new forks (final numbers subject to pricing considerations on the various chains);
3) 5% of the total market cap of QBT at the time of the launch of the Qubit service + the commitment of 5% of QBT mined per block in the first year of service (please be advised that this mechanism for the injection of QBT is intended to be indicative, so stay tuned for further details leading up to the pre-sale!); and
4) similar contributions of all future utility tokens for new services, such as PBSS.
In addition to the periodic “drop” of new assets into the Mound Vault with the launch of future tokens, the Mound Vault will also accrue additional value in increments over time by receiving a share of the ongoing distribution of fees/returns from all of the underlying projects (as applicable). This will happen in two ways. First, the Mound Vault will accrue incremental value through farming of the underlying assets, as appropriate. For example, this means that the Mound Vault will farm its BUNNY in the Bunny Pool and “PolyBUNNY” on the Polygon fork to receive an ongoing share of the protocol distributions over time. Second, the Mound Vault will accrue additional shares of fees, over and above simple farming distributions, directly from products such as our cross chain and in chain Multiplexer suite and our upcoming Inverse/Leverage tokens.
4.3. How to Receive MND; Launching the Mound Vault
To recapitulate, Team Bunny has designed the MND token to accrue value across the entire PancakeBunny ecosystem and to distribute that value directly to participating members of the PancakeBunny Community. Consequently, once the Mound Vault has been launched (for a limited time), all BUNNY holders will be able to swap their BUNNY to receive MND in order to participate in all of the future value generated by the evolving PancakeBunny ecosystem according to the following mechanism:
1) with the launch of the Mound Vault, Team Bunny will contribute 1M BUNNY and a concomitant share of “PolyBUNNY” to the Vault to back the initial value of MND, and in exchange Team Bunny will receive 15 MND for every 100 MND minted to the Community;
2) subsequent to the Team contribution, Community members will be able to swap BUNNY for MND (please be advised that further details of the swap mechanism will be announced soon, so stay tuned!);
3) all of the BUNNY swapped by the Community will be deposited in the Mound Vault in addition to the initial contribution of 1M BUNNY and the equivalent amount of “PolyBUNNY” by the Team;
4) after the pre-sale of QBT, and at the time of the launch of Qubit, Team Bunny will inject $2.5 million QBT into the Mound Vault and contribute an additional $2.5 million QBT over the first year of service; and
5) on an ongoing basis, Team Bunny will inject a concomitant share of all future utility tokens for new PancakeBunny forks (e.g. “PolyBUNNY”) and new projects (e.g. Qubit) as well as an optimal share of all protocol fees into the Mound Vault.
The Mound Vault will begin farming its various assets immediately, subject to any development requirements, to begin accruing incremental value right away. The Mound Vault will also begin to accrue incremental value as revenue streams from our Multiplexer products, our Inverse/Leverage tokens, etc. become materially significant and performance metrics have stabilized subsequent to a prudent Restricted Beta period.
Example: Mound Vault Balance Sheet
- Please note that this table is intended simply to provide an example of an indicative target, and that certain details (such as the mechanism of QBT distribution) may be subject to change
4.4. Ensuring that MND and the Mound Vault Backstop PancakeBunny Recovery
Team Bunny has devised MND (and the functioning of the Mound Vault) as the most direct vehicle to distribute the value of the rapid expansion of the PancakeBunny ecosystem to the PancakeBunny Community. It is also a necessary and efficient mechanism to connect the value of rapid ecosystem expansion to the recovery of PancakeBunny. With the unexpected black swan event that crashed the price of BUNNY and increased the Bunny Supply by 7x, the tools that were built into the PancakeBunny protocol to increase APY during a market downturn were eliminated. As a consequence, and in order to fulfill the purpose of MND, it is important for folks to understand the operation of the MND token and the Mound Vault separately.
The Mound Vault will receive the assets and accrue the value described above in a manner similar to the operation of the pBUNNY Compensation Pool today. That is to say, the Mound Vault will operate as designed immediately from Day 1, meaning it will be fully functional and will receive assets and distributions from all of the underlying projects and products as described in the above schedule.
However, in order for the MND/Mound Vault mechanism to reestablish a virtuous cycle for the entire PancakeBunny ecosystem, it is necessary to lock up the value accrued in the Mound Vault for a period of time. That is to say, although the amount of value that accrues in the Mound Vault will be transparently visible to the entire PancakeSwap Community and will continuously increase according to the above plan, in order to support the value of BUNNY it is vital that accrued distributions remain locked up until the stabilization of the PancakeBunny ecosystem.
At the same time, Team Bunny is committed to providing the liquidity necessary for MND holders to be able to trade their MND before then. Please stay tuned for more precise guidance on the timing of these important threshold events as Team Bunny is currently finalizing its analysis of PancakeBunny metrics to ensure the shortest times for stabilization and ecosystem growth.
5. Immediate Action Items
The implementation of the PancakeBunny Recovery Plan described above centers on the execution of our product roadmap by our expanded development team in the coming weeks. However, there are two action items that must be implemented in the next few days to mitigate in the immediate term against the current drop in TVL and BUNNY price. These immediate action items are 1) implementation of the Floating Rate of Emissions (FRE) and 2) the resumption of the Bunny distribution for the Bunny pool.
5.1. Implementing the FRE
Given both the necessity to generate meaningful rewards yet also continually improve the current token dynamics, we are moving forward with the mechanism for a floating rate emission (FRE).The initial FRE is 36% — 30% Performance Fee, 6% BUNNY mint.
When the relative price of BUNNY goes below 1/15 of BNB (or an otherwise optimal threshold), the system will adjust to do the following:
- The system uses the 30% Performance Fee to buy BUNNY at the market price.
- An amount of BUNNY equal to 6% of the Claim is minted and sent to the user
On the other hand, when the BUNNY/BNB Ratio is over the above optimal BNB threshold, initiated claims will perform as originally designed, with the Performance Fee going to the Bunny Pool and the newly minted BUNNY delivered to the user.
The design of the FRE is helpful for both bear and bull markets. In a bear market, there will be more buybacks of BUNNY using Performance Fees than newly minted BUNNY. In a bull market, we can expect APYs in general to increase, so it’s possible for users to earn increased profit.
The FRE will be activated later this week. Please stay tuned for more information.
5.2. The Resumption of Bunny Distribution for the Bunny Pool
As the PancakeBunny TVL and the price of BUNNY have fallen precipitously over the past week, the application of the Bunny Distribution to accrue value to the pBUNNY Compensation Pool is no longer effective as originally designed. Please stay tuned for Team Bunny’s plan to refactor the compensation of pBUNNY holders to meet our original objectives as closely as possible, and to reapply the Bunny Distribution to the Bunny Pool in a way that will support the reestablishment of a virtuous cycle for PancakeBunny.
6. Concluding Remarks
For those of you who have made it to the end of this article, congratulations! Team Bunny is profoundly aware of the concern of every member of the PancakeBunny Community, and we want to assure you that we share every bit of your concern. Thank you for engaging with us as we present you with the results of our analysis and problem solving process. The way forward for PancakeBunny relies on your steadfast support and partnership as well as Team Bunny’s steadfast commitment to deliver innovation to expand the offering of PancakeBunny services and inject real, durable value into the PancakeBunny ecosystem.
Through the operation of the Mound Vault, the MND token is the most direct way to ensure that the PancakeBunny Community will participate in the value creation that Team Bunny promises to deliver. We remain grateful, as always, for your exceeding engagement and patience as we continue to build and innovate and find new and better ways to increase value for the PancakeBunny Community. And, as always Bunny Fam, Keep Calm and HOP ON!