An Unloved Defi Protocol That Could See Major Gains

By akohad Oct19,2022


The crypto bear market has been brutal. It’s hard to find any Defi protocol that has not suffered from a major sell or loss of Total Value Locked (TVL). In 2022, there were a number of protocols that forked from Tomb Finance. Most of these protocols have died or struggled through the bear market. Many investors (like myself) are sitting on substantial unrealised losses while others have exited the protocol for their own reasons.

As you may have figured out by now, I like to be thinking about the future rather than the past. I will be introducing a Tomb fork that has experienced significant loss of TVL and poor price performance. I personally believe this project has a plan that will allow it to make a strong recovery and provide incredible performance if you are patient and willing to take the risk.

Introducing Bomb Money

Many of you may not know Bomb Money all that well. It actually surprises me how little attention they get. Bomb Money was the first fork of Tomb Finance and is on the Binance Smart Chain. The native token BOMB is pegged to the price of BTCB at a ratio of 10,000 BOMB per BTCB. To achieve this, mechanisms are in place to incentivise providing liquidity between BOMB and BTCB. When BOMB falls below peg, burn mechanics are used to take BOMB out of circulation. When BOMB is over peg, holders of BSHARE tokens can stake them in the Boardroom and receive newly minted BOMB.

Like many Tomb forks, it was initially very successful. It was an innovative mechanic that gave a sustainably high APR for staking Bitcoin and would self correct during periods of falling prices (APRs are lower when the price of the share token falls and higher when they rise). Like all things DeFi, Tomb forks carry considerable risks that came to fruition during the bear market. Tomb forks are exposed to a mini death spiral where low returns lead people to panic and exit the protocol. It becomes a self fulfilling prophecy and the returns fell along with the price of the peg token. At the end of the day, the native token needs a perceived utility (like any other coin) or it will collapse.

BOMB fell significantly below peg along with most Tomb Forks during the major crypto sell off after the Terra Luna crash. TVL has since dropped to very low levels. The APR is still better than a bank account but many have exited the ecosystem looking for the next shiny object. Investors who paired their BOMB with BTCB are sitting on a large potential loss if they break the LP right now.

Something Is Changing

So why would I be discussing a Tomb fork with little interest that is way below peg? The answer is simple. Bomb is making a comeback. Look at the chart below. It has done a 12.5x from the low in September.

For those that know Tomb Forks, you will know there is also a share token. Bomb Money has BSHARE. Look at the chart for BSHARE.

BSHARE has done a 3.4x from the low. BSHARE is what allows you to receive more BOMB when it is over peg. It has been sitting at a low level because BOMB is so far below peg. At the time of writing, BOMB is only at 11.5% of the peg level even after the recent run. The BSHARE price is heavily influenced by what happens to BOMB because its instinsic value is based on the price of BOMB relative to BTCB.

Don’t FOMO In On Price Action

Before jumping in and waiting for the price of BOMB to do a 9x and BSHARE to move even more, please do your own research on this. I will briefly explain why this is happening and why I am still bullish. This does not mean that you should simply jump in on the basis of the article. Get to know what is happening and get to know the team. They are very active and the founder Aaron Shames is active on Telegram and Discord.

Bomb Chain Announced

The main reason that BOMB has recovered is that the team announced the launch of Bomb Chain. BOMB Chain will be launched to enable staking of blue chip cryptocurrencies on their own native blockchain. To transact, users will need BOMB to pay for gas fees. This creates a whole new potential use case for BOMB. The idea is to create a similar user experience to Celsius without the same risks while having complete transparency of your funds on a public blockchain.

BSHARE Emissions Will Stop Next Month

Like Tomb Finance, BSHARE emissions will end a year after launch. The end date is scheduled for 25 November. This will make BSHARE increasingly scarce. The only way to mint more BOMB is by staking BSHARE in the boardroom when BOMB is over peg. BOMB minted on Binance Smart Chain can then be transferred to Bomb Chain. If BOMB is needed to stake blue chip cryptocurrencies then there is strong chance that BOMB will trade over peg in the future.

The Bull Case — How I Expect This To Play Out

My bull case is for a further recovery in BOMB and to trade over peg again soon. This will give you a 9x return on BOMB itself and it could go even higher. When BOMB trades over peg you can place BSHARE in the Boardroom to earn more BOMB.

I expect Bomb Chain to increase demand for BOMB while also reducing supply as people pay gas fees on Bomb Chain. This should continue to put upward pressure on the price of BOMB. If BOMB continues to go up in price and holds above peg, BSHARE holders will continue to receive BOMB until the hard supply cap of 250 million BOMB tokens is reached (we are no where near that right now). BSHARE will be incredibly valuable and have no inflation while allowing you to earn a (potentially) appreciating asset.

What Could Go Wrong?

The success of BOMB and BSHARE will come down to the ability of the team to attract users to Bomb Chain. The focus of the team right now is a mobile app that will make it simple for beginners to stake popular cryptocurrencies on Bomb Chain. Beyond that, the team is looking for a potential option to open up the chain for developers to build dApps but that is not the current focus. The key point to understand is that this has not happened yet. The risk is that they fail to deliver on driving users to Bomb Chain.

Another issue to be aware of is that liquidity is extremely low right now. Investing large sums will move the price sharply and there are likely to be players taking profit along the way. I would suggest accumulating over time rather than going “all-in” at once. There will be extremely volatile price action in the short term.

How Should You Participate?

You might be tempted to ape in to BSHARE. I would suggest a less risky alternative. You can buy some BOMB and pair it with BTCB then place it on the farm. This will allow you to earn BSHARE. You may also purchase BSHARE directly off the market but I am personally accumulating small amounts while also farming the BOMB/BTCB LP. Additionally, you could pair your BSHARE with BNB to earn even more BSHARE. Impermanent loss might mean that you are better off just keeping the BSHARE in your wallet. If you are reading this after BSHARE emissions stop then your only choice is to buy BOMB and BSHARE directly.

Final Thoughts

This might be a moon shot play but there are plenty of other options to participate in the Bomb Money ecosystem. They also have Peg Hub which is a launch pad for 3 (soon to be 4) seignorage protocols. You can use the Peg Hub itself can allow you to stake blue chip cryptocurrencies or go into the seignorage protocols (BitBomb, CZPegs, and SnowPegs). Peg Hub will be gradually launching seignorage protocols on all EVM compatible chains to allow investors to be able to stake in a range of blue chip cryptocurrency assets.

Right now I am personally more focussed on BOMB and BSHARE but if you are closer to November 25 then you might be better off looking at the seignorage protocols on Peg Hub. These protocols also have extremely low TVL but there is an opportunity to see strong gains if you are willing to take the risk. I will definitely be looking to update just before the BSHARE emissions end. I will also write about Peg Hub and the seignorage protocols in other articles.

Fell free to leave any thoughts or questions in the comments and I will be more than happy to answer. I would love to know what you want to be hearing about.

Disclaimer: None of what is written in this article constitutes financial advice. Investing in cryptocurrencies, and in particular decentralised finance, is high risk. What I write is not a recommendation to invest in the projects I discuss. I am not aware of your personal circumstances. Only invest what you can afford to lose. Make sure to do your own research rather than relying solely on my content.


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By akohad

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