Redacted Cartel

Yield Aggregator

Redacted Cartel is a liquidity management protocol that focuses on acquiring governance tokens (and voting power) across many DeFi protocols. It derives value from its ability to provide meta-governance services to other projects.

Risk Rating
Average
Protocol Code Quality
Protocol Maturity
Protocol Design
Summary
What we like
Redacted's recent transition to V2 tokenomics enhances the protocol's viability given a fixed token supply and more sustainable business model that is based on real yield rather than dilutive token emissions.
What we like less
The protocol is still dependent on its treasury reserve assets, or protocol-controlled value (PCV). Loss of confidence in the underlying assets can have a negative impact on the protocol itself.
What it means for you
Offers you one of the only real yield opportunities in DeFi that pays rewards in ETH generated from its treasury assets and several product lines.

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Information
Exploit/Hacks
None
Info
  • Website
  • Token: BTRFLY
  • Tags: Yield Aggregator
Key Metrics
  • TVL: $3.8M (Rank #172)
  • TVL Ranking by Yield Aggregator: #0
  • Blockchain: Ethereum
  • Chain TVL
    • Ethereum: $3.81M
Risk Assessment
Average
Protocol Code Quality
  • Code reviewed by at least one experienced auditor (Omniscia)
  • Anonymous team reduces transparency
  • No documented protocol hacks since launch
Protocol Maturity
  • Latest protocol version launched in 2022; maturity over one year minimizes technical risk as smart contracts are well battle-tested
  • Bottom 80% by total value locked increases risk
  • Multisig wallet controls protocol upgrades
  • Multisig consists of less than 4 signers, which makes the protocol more susceptible to centralization risks
  • No timelock exists or no information documented, which mean a malicious actor could approve upgrades without any delay
  • Low voting power concentration reduces risk
Protocol Design
  • No death spiral concerns
  • This protocol is susceptible to risks related to yield optimizers which deploy custom strategies to automatically manage user funds
  • Redacted Cartel users stake their BTRLY tokens to earn a portion of protocol fees over time. This protocol pays yield through fees earned via its bribe marketplace (Hidden Hand) and Pirex liquid wrapper, as well as through issuing more BTRFLY tokens (inflation). Redacted also manages treasury assets it acquired through Olympus` bonding mechanism to earn additional yield with the value of the token tied to its Net Treasury holdings
Things to know about Redacted Cartel

How Redacted Cartel works

Redacted launched with the goal of being a liquidity aggregator built on top of the Curve and Convex ecosystems. This was accomplished by leveraging Olympus' bonding mechanism to bootstrap its treasury with relevant governance tokens. The "rebase" tokenomics allowed users of the protocol to bond desired assets (i.e. CRV and CVX) to the treasury in exchange for discounted BTRFLY tokens, which were then staked to receive rebase rewards. Since then, Redacted expanded its reach to the Frax, Balancer and Tokemak ecosystems, among others, as well as acquired the Votemak bribe marketplace. However, concerns about the impact of dilution on token holders ultimately led Redacted to shift to a new, revenue-sharing model. In the V2 tokenomics, the protocol eliminated the bonding model and introduced revenue-locked BTRFLY (rlBTRFLY) which locks BTRFLY for periods of 16 weeks at a time to receive revenue earned from Redacted's treasury and products.

How Redacted Cartel makes money

Redacted currently generates revenue from its two main products: Hidden Hand and Pirex. Hidden Hand is a marketplace for governance incentives, or "bribes". Protocols looking to influence pool reward emissions will leverage the Hidden Hand marketplace to bribe users holding the relevant governance tokens to vote in their favor. Hidden Hand takes a 4% fee on all incoming bribes with 35% distributed to the Redacted treasury and 15% to the DAO reserve. The second income stream, Pirex, is a liquid wrapper created by Redacted that allows for auto-compounding and tokenization of future yield events. The first Pirex product, pxCVX, is a liquid wrapped version of vlCVX (vote-locked CVX) with the goal of increasing liquidity, yield and utility for CVX holders. Each pxCVX is backed 1:1 with vlCVX. Pirex charges a number of fees on pxCVX including a bribe, pounder and unlock fees, with 42.5% distributed to the Redacted treasury and 15% to the DAO reserve.

How you make money on Redacted Cartel

Passive holders of certain governance tokens can earn additional yield on top of their holdings from the Hidden Hand bribes marketplace. Users wishing to earn a portion of protocol revenue can lock their BTRFLY token in exchange for rlBTRLY to earn 50% of Hidden Hand revenue and 42.5% of Pirex revenue. CVX holders can deposit into Pirex to earn Convex bribes while remaining liquid. Yield from the treasury is also distributed to rlBTRFLY holders, increasing from 15% to 42.5% as the treasury size increases.

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