A Dumpling vs Wall St: Why we need synthetics.

5 min readFeb 3, 2021

You shrugged off a dumpling themed project as just another meme coin.

You didn’t like that we banned shillers or that we often told users that they weren’t experienced enough to use this product.

We wanted to make it hard because Bao isn’t about investors, it is about users. We wanted to find users who are ready to go on a journey that we feel is important in reclaiming our financial system.

I didn’t think we’d see Bao grow so much so fast. But, now that it has, it is important that we take time to really share the vision that we’ve talked about a lot in Discord.

Finance = Broken.

Traditional finance doesn’t work. Not for most people.

It works for wealthy suits. It’s great for them.

They own the data. They own the marketplace. And if things don’t go their way they change the rules of the game.

We all saw this with Robinhoods marketplace being shut down during the $GME issue.

Fix it?

Many people think the answer to fixing this system is simple. Just put it all on DeFi.

But in reality that doesn’t work by itself.

Many big, well funded crypto projects tried to replicate traditional finance on the blockchain. Remember Bloom ($BLT)? They tried to make a new type of credit scoring system, they raised $40M, had top VCs and advisors and in the end they failed.

The projects that have been successful in defi are ones that do things that are new. Things that don’t exist in old finance. Compound, Uniswap, Balancer. They all do things in a new way.

Why does this happen? Data.

Most people aren’t aware that financial data is what makes institutions so powerful and why you can’t do what they do. This is why synthetics will matter.


Most people do not understand synthetics.

They think that derivatives are only good for synthetic stocks. They just want to buy $APPL or $GME on the blockchain 24/7.

While that is a good part of synthetics, it is just replicating our existing market on the blockchain. What is far more powerful and exciting is that with synthetics we can do something new.

With synthetics you can turn any quantifiable discrete event into a financial feed that people can buy and sell.

You can create an asset based on the “Unemployment Rate in Hong Kong” or “Average Annual Rainfall in Seattle” or the “Number of iPhones Sold Annually”.

These synthetic assets allow you to buy long or short depending on if you think the number will go up or down, and this creates two powerful cases.

Synthetic Case 1:

First, you can now give anyone in the world performance rewards based on specific criteria. Imagine the Mayor of a city, they get their base salary but they also get a bonus package that basket of tokens representing the inverse unemployment rate, the city happiness score, and the inverse crime rate in their city. The better results they create for their city, the more their tokens are worth.

Synthetic Case 2:

Synthetics are powerful because you can boot strap liquidity in anything. Such as the “Average Annual Rainfall in Seattle

But why does that matter?If you can get liquidity in any discrete quantifiable event then what have you created? The world’s most accurate financial data system.

What is financial data used for?

Insurance, lending, hedge funds, risk mitigation, banking, yield, mortgages, credit scores etc

Insurance adjusters need to know how often it rains in a region to know how that impacts their models on home owners insurance.

Mortgages need to know how much it rains in a region because rainy areas get less people moving to them to buy houses, meaning houses are often worth less.

Incentivized synthetics allow you to start building an open financial data market. But once you have synthetics, you own the financial data stream to anything because you can incentivize liquidity to make it more accurate.

Those who own financial accuracy can then pick any finance business they want to start. Goodbye Moody’s, Meridian, Experian, Fannie Mae, and others.

Hello BaoBanks.

When you own the financial data stream you can start any defi business you want on top of it, or package and sell the data for others to build on. But you become a strong base foundation of the future of finance.

A long journey:

We obviously have a long way to go.

Bao is an infant project in its alpha stages and that comes with risk.

Right now users are accumulating Bao to take part in our governance process and for using in the future product. While we plan to launch our first basic synthetics this year, the vision of replacing traditional finance is something that takes all of us.

To get to a world where on chain open financial data replaces traditional finance systems will take many, many years, and we will all have our part to play.

There is no one person or community that will build Bao. It will be the coming together of many parts and pieces to get to where we want to go.

We’ll need oracles, K3PR job style protocols uploading task driven data, other protocols providing lending infrastructure, and a well thought out DAO to build and define the roadmap.

We are at the start of writing that story together. Bao may succeed or it may fail, but that is a story that we will all write together. My job is to lay out the goals of the story and find other authors who want to come along and help build it.

The first stages of the protocol have been built in a way that have penalties for short term holders, that look like they lack seriousness, have fees to scare away idle participants and warn about our risks everywhere. Because the goal unlike most crypto is not to find buyers and investors, it is to find users who are ready for this journey.

We want users who are sick and tired of traditional finance winning by changing the rules on the rest of us.

We want users who are ready for the long road ahead. A road that will have both ups and downs.

We want users who know the risks but are excited for the financial freedom that this can create.

And we want users who are in this to build with us.

We may be little dumplings but I think if we stick together, ignore the FUD, support one another and stay true to our vision, then we can give old wall street a good ass kicking. :)

{Thank you to the proof readers and those who helped contribute to the writing around my ideas!}