Using BALN to grow the Intrinsic Value of the DAO Fund

This thread is in meant for educational purposes to DAO members as the DAO becomes more active in managing the DAO Fund. Financial decisions made by the DAO can mean the difference between success and failure of the DAO. If properly managed, Balanced could become fully sustainable from its DAO Fund initiatives alone.

There are two objective truths that I’d like to highlight in this post

1.) BALN in the DAO Fund is infinite. At any time, the DAO could vote to mint more BALN to the DAO Fund.

2.) BALN in the DAO Fund provides no intrinsic value to circulating BALN. For all financial analysis, it should be considered $0 value. Other assets (sICX, bnUSD, etc.) do provide intrinsic value. It provides tangible backing for circulating BALN.

note - please see this definition of intrinsic value if you’re not familiar with the term

With that said, let’s walk through an example. For simplicity, the DAO Fund will hold 100 bnUSD in this example:

DAO Holdings pre-purchase

  • BALN = $0 (remember, we have infinite amount but has no intrinsic value in the fund)
  • bnUSD = $100
  • BTC = $0
  • Intrinsic Value of circulating supply = $100

Scenario 1: Buy $100 of BTC with 100 of bnUSD

DAO Holdings post-purchase

  • BALN = $0
  • bnUSD = $0
  • BTC = $100
  • Intrinsic Value of circulating supply = $100 (fluctuating with BTC price)

Scenario 2: Use $100 of BALN to acquire $100 of BTC

DAO Holdings post-purchase

  • BALN = $0
  • bnUSD = $100
  • BTC = $100
  • Intrinsic Value of circulating supply = $200 (fluctuating with BTC price)

As you can see from this illustrative example, total intrinsic value can be increased by utilizing BALN in the DAO Fund to acquire assets with intrinsic value. Of course, there is no such thing as free money. This causes dilution, so should not be overused.

Just to play a little devils advocate here and value the BALN in the daofund as burnt and calculating IV(Intrinsic value) benfit.
If we assume there would be a vote to pay out the daofund to all BALN holders.

Currently we have a supply of 24,745,582 BALN.
But the daofund holds 3,245,797 BALN which we ignore here
So we can use 21499785 as the holders the daofund would be split between.
The daofund has approximately $1.2M (with POL but without the value of BALN Tokens).

This works out to ~$0.056 per BALN token.

Now lets mint $100K of BALN to receive $90K of intrinsic valued asset

$100K is about 865K BALN tokens.

Now the daofund value is 1.29M and amount of holder are 21499785 + 865000 = 22364785

This works out to ~$0.0576 per BALN token.

We do know see a clear increase in the intrinsic value by selling BALN.

But in reality these newly acquired funds go to bBALN Holders.
We go from $0.213 IV per bBALN to $0.23 IV per bBALN (assuming none of the new BALN gets locked up).

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Something to think about…

A lot of us did buy Baln all the way down to support the price, I understand the positives and negatives of the POL.

OMM has not had good price action with the tremendous abundance of OMM tokens and with the addition of POL hasn’t improved its value.

BALN does have a much more limited supply than OMM with much better price correlation to ICX. What is the harm of burning the BALN in the DAO and working with our BNUSD?

Again, I’m not against the idea, is this something Curve does? Do they have limitless Curve DAO tokens?

I’m not for or against the idea and I know Benny said he would do this conservatively as it will hurt BALN value with dilution.


I’m not sure the Curve structure, but any project that gives control of smart contracts to a governance contract could likely do the same thing. I’m a bit confused on your suggestion to burn the BALN in the DAO Fund based on the facts I shared in this post. Anything I can help clarify?

BALN in the DAO Fund doesn’t really exist. It’s irrelevant how much is actually in there, because the DAO can mint/burn BALN as it pleases. We could mint 1 trillion tokens and put in the DAO Fund, or burn it all and reissue later. Whether it’s sitting in the DAO Fund or not is irrelevant. Hope this helps clarify, but lmk if you still have questions or see some issue in that logic.

^^ Just to point you to what I’m referencing.

And to comment on this part specifically, the posts above display that using bnUSD lowers the Intrinsic Value (“IV”) of bBALN, while using BALN increases it. Let me know if you’re confused by some part of the examples that myself or @Andell can clarify, or if you’ve caught a mistake in the logic.

As bBALN holders, it’s of course objectively true that we want to maximize the value that backs our tokens. Since bBALN could collectively vote to distribute the DAO Fund at any time, the DAO Fund IV growth directly increases the IV of the bBALN holdings. Like if you have x% of a pool of money (bBALN represents a share of the DAO Fund), you want that pool of money to grow, not shrink. Of course, you can make investments in development and other things, but the goal is always to increase its value.

^^ Math showing how it increases your value. I feel like something isn’t clicking here and happy to spend time helping explain. Also, always possible we’re missing some hole in the logic, so let me know if you find something wrong there.

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One thing to note here, POL gives direct returns to Balanced but not to OMM. When we have deeper liquidity in BTC/bnUSD pairs, it allows for more arbitrage volume. More arb volume increases our revenue. It’s a direct relationship that OMM doesn’t have.

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No, I know you guys are geniuses in math and economics. That’s why I invested.

I’m just saying OMM, which is our sister DEFI has token economics that seem hyper inflated to the same users.

Most likely OMM has around 150 to 200 users and Baln between 300 to 350 as people have multiple wallets.

OMM is inflating at such a high rate because of its ever extending su

I’m just saying our BALN inflation is low and getting lower, correlation to ICX is strong. So the conservative side of me would no like to increase BALN supply.

I know this is not related but…

It would be great to get BALN and OMM into more hands through at least one exchange listing in the next few years.

As far as intrinsic value, it’s hard to think of crypto this way. Baln could be worth .07 right now or .70. I get the fact of the underlying tokens in the DAO but DAOs can be worth a lot more than what would seem reasonable from the intrinsic value perspective. It’s all speculative, I only see it as a benefit to have any intrinsic value at all as most coins have none and no one cares as it’s speculative.

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Meaning it’s only a huge positive as BALN has intrinsic vale and the majority of coins have no intrinsic value. Sorry I’m typing on my phone, lol.

Also, im a fan of OMM, not trying to be negative about the project, only want success for it and Balanced.

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I get your point, but I don’t want to use the speculative nature of this market as a benchmark of how we manage the DAO haha. Traditional principles of earning income still apply. If our community stops caring about IV, we’re in serious trouble. Could lead to foolish, short-sighted decision making. Side-note, this is why bBALN governance instead of just BALN is so important, those with the longest-term outlook have the most power.

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Definitely agree! Have a Gr8 weekend:)

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fully agreed your point, benny idea do not consider early supporter buying baln all the way down. Defeat the purpose early supporter bought baln at usd 20.

Wow, buying at .2 is impressive, good for you. I bought it down much, much earlier, lol.

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But I’ve seen the opposite side with price growth the other direction so price doesn’t affect me I think Balanced is a great long term DAO but I never speculate on price as it’s a wild ride:)

Hey folks - feel free to continue chatting back and forth here but just as a heads up, going to clean this thread up at some point to keep its purpose as an educational post. Want to keep it to Q&A and people poking holes in the IV logic if they exist

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I think he does care about not increasing the supply drastically, something that was encouraging to me is the BALN in the DAO is essentially non existent, meaning we have to vote to use the BALN.

Also, please realize Benny is top notch and has navigated Balanced through some tough times marvelously in the past year and a half. So I have a very open mind to all of the ideas presented and trust we will all vote in the DAOs best long term interests.

I enjoy learning and being apart of it:)

My only point I wanted to make is we should limit supply when possible.

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same for me. limit the dilution give early supporter more share of ownership.