Pickle Finance Report


What is Basis Cash?

The Basis Cash protocol is designed to guarantee Basis Cash ($BAC) to be exchanged at a value of one US dollar, with an in-protocol stability mechanism (stabilizer) in charge of matching the supply of Basis Cash to their demand. It does this through redemption of Basis Bonds ($BAB).

The Basis Cash protocol aims to revive the vision of the original Basis project that was originally shut down in 2018 after facing regulatory constraints from US securities.

Basis Cash, Basis Bonds and Basis Shares

  1. Basis Cash ($BAC): they are designed to be used as a medium of exchange, aiming to maintain their peg to $DAI – MakerDAO’s Multi-Collateral token.
  2. Basis Bonds ($BAB): they are minted and redeemed to incentivize changes in BAC’s supply. Bonds are always on sale to $BAC holders who at any given time can exchange their $BAB for $BAC in the Basis Cash Treasury. Basis Bonds do not have expiration dates. Upon redemption, they are able to convert 1 BAB to 1 BAC, earning them a premium if they purchase the bond below 1 BAC. All $BAB holders are able to convert their bonds to $BAC as long as the Treasury has a positive $BAC balance.
  3. Basis Shares ($BAS): Basis Shares holders receive inflationary rewards from the growth of the BAC network. In a way, they represent the value of the Basis Cash network. Increased demand for $BAC results in new $BAC to be minted and distributed to Basis Share holders, provided that the Treasury is sufficiently full and there is no demand for $BAB redemptions. Holders of BAS can claim a pro-rata share of $BAC accumulated to the Boardroom contract.

Cash Pools: Treasury and Boardroom

The Basis Cash Treasury

The Treasury facilitates bond-to-cash redemptions when the oracle price of $BAC is above 1 DAI, provided that the Treasury has a positive balance of $BAC. The Treasury will disallow redemptions when $BAC is below 1 DAI to reduce downward pressure on $BAC price. The Treasury has a limit of 1000 Basis Cash, above which excess amounts of $BAC is directed to the Boardroom.

The Boardroom

The Boardroom allows Basis Share holders to claim excess $BAC minted by the protocol. Basis Shares holders can stake their $BAS to the Boardroom contract where they can then claim a pro-rata share of $BAC assigned to the Boardroom. Additionally, $BAS holders can choose to lock their $BAS in the boardroom for more returns (up to 8x for 4 years).

The Bondroom

Bond holders can stake $BAB in the Bondroom for $BAS rewards. As outlined by the BIP-11, 5% of BAS emissions have been allocated for this project. Similarly, $BAB holders can choose to lock their $BAS in the bondroom for more returns (up to 8x for 4 years).

Basis Cash Highlights:

The Basis protocol has a dynamic monetary policy built-in, and as a result, might be thought of as putting some of the core features of a central bank on the blockchain. The protocol consists of its stablecoin $BAC, Basis Bonds and Basis Shareshe stablecoin $BAC is maintained by an algorithm that depends on the stabilization mechanism. The stabilization mechanism is triggered whenever the price of $BAC is observed to be above or below (1+ε) DAI, where ε is a parameter that defines the range of price stability for $BAC.

It also has a Community Development Fund (CDF) for the development of the ecosystem where the Basis Cash community can transparently vote for new proposals. Funds from the CDF will come from a portion of seigniorage rewards through the Boardroom.

Basis Cash v2

One of the major development in the Basis protocol was the migration of Basis Cash V1 to Basis Cash V2. The main reason cited for the migration is to dynamically change BAS v2 emissions and allocations based on market conditions. BAS v1 emissions are hard-coded in the smart contracts and cannot be changed. Basis Cash is also trying to migrate from Uniswap to Stableswap, a curve.fi model alleged to be optimized for minimal slippage for stablecoins. Basis Cash is working with Pickle Finance to create a new $BAC vault, an integral component in BASv2.


Why is Basis Cash valuable?

Basis Cash does not use a rebasing or collateralization model to peg its stablecoin. Instead, the protocol is designed to expand and contract supply similar to the way central banks trade fiscal debt to stabilize purchasing power. Therefore, it is not subjected to any form of collateral risks.


Objective 1: Create a decentralized stablecoin with an algorithmic central bank that is immune from collateral and regulatory risks

Objective 2: Ensuring fair distribution of tokens to be censorship-resistant and complete transparency in its governance


  • A failed peg may not incentivize people to purchase $BAB to maintain the $1 peg. This lack of confidence in the peg leads to a vicious cycle that will disallow $BAC from maintaining its $DAI peg. This is currently what is being observed in $BAC price.

Potential Solution

  • Basis must prove to token holders that they are able to maintain the peg either through stronger incentives or a more robust ecosystem to regain the confidence of investors.

Token High-Level Summary

Token Summary

$BAS is a native token to the Basis protocol. Basis Shares loosely represent the value of the Basis Cash network. It can be used to receive seigniorage rewards from the protocol and for voting in community proposals.


  • Cross-chain blockchain support for Automatic Market Maker (AMM) swap applications including Value DeFi. Currently, Basis Cash is trying to integrate with Binance Smart Chain and Pancake Swap.
  • Basis Lending – A platform that enables users to perform leverage yield farming. This can be utilized in conjunction with the new $BAC vault. A new token, “Basic Lending Token” will be introduced and issued to incentivize and govern Basis Lending. The Basis team has announced that detailed tokenomics will be released post-launch after a minimum organic TVL target has been achieved. A portion of Basis Lending profits will also be sent to its CDF, providing another source of value accrual for $BAS. Currently, Basis Lending is available on the Polygon Network.

Market Design

Design of the environment in which the tokens and users exist in

1. Thickness of Market

Stablecoin Market Capitalization

source: coingecko.com

In terms of market capitalization for stablecoins, $BAC is nowhere near its competitors (as of 21 May 2021), behind stablecoins such as $USDT, $USDC, $BUSD and $DAI respectively. The first 3 stablecoins are generally similar in that they are a form of fiat-collateralized stablecoin and have a centralized backing while the latter is not.

  • Tether ($USDT) remains the most adopted stablecoin in circulation. For the case of $USDT, Tether Limited claims to backs $1 worth of Tether for every $1 of USD, although there have been some controversies regarding this claim.
  • USD Coin or $USDC is issued by regulated financial institutions, backed by fully reserved assets, redeemable on a 1:1 basis for US dollars, and governed by Centre, a membership-based consortium that sets technical, policy and financial standards for stablecoins.
  • Binance USD (BUSD) is similarly a 1:1 USD-backed stable coin issued by Binance (in partnership with Paxos), approved and regulated by the New York State Department of Financial Services (NYDFS).
  • $DAI uses an over-collateralized mechanism to maintain a $1 peg of $DAI to USD. Unlike the 3 aforementioned stablecoins, $DAI is a form of crypto-collateralized pegged stablecoin and is also decentralized as well.

Basis Cash Adoption

source: Dune Analytics

The number of active $BAC holders surpass 1,000 this year.

2. Safety and Ease of Use

Basis Cash has been audited by Certik in 6th November 2020. According to Certik’s audit report, it found 4 critical issues and 10 informational issues.

Basis V2 smart contracts have yet to be audited, though there have been updates that the Basis team is working with Quantstamp to get the contracts audited.

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Mechanism Design

Rules of the game that people have to follow


1. Decision Making

For the development of the ecosystem, the Basis Cash community transparently operates the Community Development Fund (CDF) through votes. This is governed by $BAS holders and a monthly summary of expenses will be posted on the usage of the CDF fund.

2. Resolution mechanisms

Basis Bonds

At any point in time, Basis Bonds can be bought from the protocol in exchange for Basis Cash. Depending on the Basis Cash oracle price of DAI, bonds are sold off at an equivalent price of $BAC. The purchased $BAB can then be converted to $BAC given that the Treasury has a positive cash balance of $BAC.


When $BAC trades below DAI, this will encourage profit takers to purchase $BAB with $BAC. This decreases the supply of $BAC. While $BAB can still be purchased even when $BAC trades above DAI, the purchaser will realise a loss when it redeems $BAB at the Treasury. This is because all Bonds can only be redeemed for 1 BAC. Thus, bond purchases are only expected to occur when 1 BAC trades below 1 DAI.


When the price of $BAC is trading above $DAI, $BAB holders will start to redeem their share of $BAB for $BAC given that the Treasury has a positive balance of $BAC. If the price of $BAC is observed to be higher than (1+ε) DAI, the system mints new $BAC and is then deposited to the Treasury to meet the additional demand for bond-to-cash redemption. The amount of new $BAC minted is given by the formula:

*[totalSupply (oraclePrice-1)]

Therefore, the issued Basis Cash is routed to the Treasury so that Bond holders can exercise redemptions. If the Treasury has a balance above 1000 Basis Cash instead, the freshly minted $BAC is given to the Boardroom contract, where Basis Share holders can have a claim on the newly issued $BAC.

Pickle Finance Vault Augmentation

On top of utilizing Basis Bonds, Basis Cash is currently working with Pickle Finance to launch a $BAC vault, where funds are derived from $BAC deposits. As of launch, the peg is below the price of $DAI. Thus, new emissions are redirected to the new $BAC vault, incentivizing market participants to remove liquidity from the BAC-DAI pool and deposit $BAC in the Vault. Basis Cash expects that a thinner BAC-DAI liquidity pool in conjunction with other measures to stimulate $BAC demand is expected to facilitate $BAC’s return to peg.

When BAC < $1: The vault will receive dynamic BAS emissions that will increase as the peg moves further away from $DAI, and decrease as $BAC approaches $1. The vault will also buy $BAC by using its allocated BAS rewards. After the implementation of Basis Lending, the $BAC is then used as collateral to borrow DAI and BAS, in which a percentage of BAS borrowed is staked to earn BAS reward. The remaining will be paired with DAI and add liquidity to the BAS-DAI LP. This is intended to incentivize further $BAC deposits without selling of $BAC or BAS.

When BAC > $1: The vault will sell $BAC deposits for DAI and provide liquidity to the StableSwap BAC-DAI pool. It will then use the BAC-DAI LP as collateral to borrow more $DAI and leverage by adding more liquidity to the BAC-DAI pool.

Non-Finance Incentive

1. Voting Protocol

Basis Share holders are entitled to vote for proposals in the Basis Cash community. Each $BAS token entitles the user to 1 SBAS for voting.

In order for a proposal to be passed successfully, the amount of “yes” votes given by the community must exceed at least 50%.

2. Allocation mechanism

Basis Cash adopts a fair and open distribution of the token supply of $BAC and $BAS. Both Basis Cash and Basis Shares does not have any pre-allocations to neither the founding team, nor any external investors. Shares are instead distributed to community members that perform actions beneficial to the network.

According to the Basis Cash team, this is advantageous to the protocol’s long-term success, rewarding those with a stake in the network, instead of investors / speculators targeting short-term profits. Moreover, distributing $BAS rewards provides a strong financial incentive for network bootstrapping, boosting adoption via network effects.

Market Structure

Community information

Stabilization Mechanism

Every 24 hours, the time-weighted average of the BAC-DAI exchange rate is read from the Uniswap v2 contract. This is fed into the Basis Cash protocol and referenced by its stability mechanism. The stabilization mechanism is triggered whenever the price of $BAC is observed to be above / below (1+ε) DAI, where ε is a parameter that defines the range of price stability for the $BAC. At launch, ε is set to be 0.05. In this example, if the price of $BAC deviates 5% from the BAC-DAI exchange rate in Uniswap, the mechanism is triggered.

Token Design

Rules of the game that tokens have to follow

Token Policy

1. Monetary Policy

Money Supply for Basis Shares

The protocol starts with a Basis Share supply of zero, the entire supply minted purely via community distribution.

It was proposed that a total of 750,000 Basis Shares are distributed to those that provide liquidity to the BAC-DAI Uniswap v2 pair, where users can deposit $BAC and $DAI to the distribution contract and earn BAS tokens. Distribution starts with 6250 BAS distributed every day, and the amount of daily seigniorage is reduced to 75% every 30 days (e.g. 4687.5 BAS daily distribution starting from the 31st day).


Further distribution of Basis Shares are given to liquidity providers of the BAS-DAI Uniswap v2 pair. A total of 250,000 Basis Shares are distributed over a period of 1 year, and an equal amount of tokens are distributed per day.


Proposals in the Basis Cash community has continually opt to alter $BAS emission schedule. This was in concern to $BAS emissions being too front-loaded, flooding the market with $BAS before the ecosystem develops. The current emissions schedule emits 93% of supply in the first year and drops sharply thereafter. An alternative schedule that includes tail end emissions (inflation) is proposed. The BIP-13, its latest implementation, is outlined as follows:

source: snapshot.org/#/basiscash.eth

2. Token Valuation

Basis Shares Token

The valuation of $BAS will come from accruals of the seigniorage rewards in the Boardroom as demand for $BAC grows.

Financial Incentives

1. Platform Activities

The Boardroom

The Boardroom allows Basis Share holders to claim excess $BAC minted by the protocol. Basis Shares holders can stake their $BAS to the Boardroom contract where they can then claim a pro-rata share of $BAC assigned to the Boardroom.

The Bondroom

Bond holders can stake $BAB in the Bondroom for $BAS rewards. As outlined by the BIP-11, 5% of BAS emissions have been allocated for this project.

2. Financial Returns

Yield Farming

Liquidity providers can stake and provide liquidity to BAC-DAI and BAS-DAI pairs via platforms such as Value DeFi or DODO to earn $BAS tokens. Users can then deposit the LP tokens into Pickle’s Vault.

Vault Deposits

Depositors can earn rewards by depositing $BAC in the Pickle Finance Vault. Farmed $BAS from the Vault will also be distributed to depositors in addition to a percentage of BAS emissions. $BAC sales are conducted as follows: If $BAC is trading at $1.01, 1% of Vault deposits will be sold every hour. If $BAC is trading at $1.02, 2% of Vault deposits will be sold every hour. And so on.

Boardroom / Seigniorage Rewards

Basis Share holders can stake their $BAS and receive seigniorage rewards through the Boardroom, according to a pro-rata share of $BAC assigned to the Boardroom. The price of $BAS will be correlated to the adoption of $BAC as increased demand for $BAC results in new $BAC to be minted and distributed to Basis Share holders. Additionally, $BAS holders can choose to lock their $BAS in the boardroom for more returns (up to 8x for 4 years).


The Bondroom allows $BAB holders to stake and earns 5% of BAS emissions when BAC is below its peg. $BAB holders can choose to lock their $BAB in the bondroom for more returns (up to 8x for 4 years).

Token Architecture

Useful for non ERC-20 tokens. And how financial products are structured.

Token distribution


Initial distribution of Basis Cash are done to those that deposit DAI (MCD), yCRV, USDT, SUSD, and USDC to the distribution contract. A total of 50,000 Basis Cash tokens are distributed to depositors, with 10,000 Cash tokens distributed per day. Tokens are assigned equally to each stablecoin pools, and the amount of stablecoin deposits are limited to 20,000 tokens per account.

source: medium.com


As of 27 May 2021, the circulating supply of $BAS is as follows:


Basis Share is still a relatively new and upcoming project in the space with developments that are constantly expanding its protocol. It aims to be unique by not relying on a collateralization model for stablecoins, which is common in other stablecoin projects. Although huge financial incentives are done to bootstrap its protocol, the stablecoin $BAC has yet to be able to achieve its $DAI peg, even after migration to its BACv2 protocol on 26th April 2021. This could be due to limited functionality in the Basis Cash ecosystem in itself and investors lacking the confidence that the peg can be restored.

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