Root is an Ethereum-native permissionless wrapper that implements the ERC-20 token Standard to create fungibility and composability for Beanstalk Silo Deposits.
Beanstalk’s credit based stability model is a potential solution to the stablecoin carrying cost problem plaguing DeFi. Whereas other stablecoin protocols rely on collateral to issue stablecoins, which creates centralization and carrying costs, Beanstalk uses infinitely scalable decentralized credit to create a permissionless stablecoin, Bean, that has carrying costs competitive with off-chain fiat.
While Bean is an ERC-20 Standard token, in order to receive Beanstalk-native passive interest, Beans must be Deposited in the Silo, directly or wrapped in whitelisted LP tokens. However, Silo Deposits have two qualities that make them non-fungible: the Stalk and Seeds per Bean Denominated Value (BDV) of each Deposit. The non-fungibility of Silo Deposits appears necessary to Beanstalk’s peg maintenance mechanism, but comes at the cost of composability.
Composability is one of the core value propositions of blockchains. In order to facilitate composability, there are a variety of Ethereum token Standards that are widely adopted by various DeFi protocols. The ERC-20 Standard is the benchmark fungible token standard of the Ethereum network. Root is an Ethereum-native permissionless wrapper that implements the ERC-20 token Standard to create fungibility and composability for Beanstalk Silo Deposits.
Root is dependent on Beanstalk, and therefore inherits all of the risks associated with Beanstalk. The security of Beanstalk is assumed. For an exhaustive list, consult the Beanstalk whitepaper and Beanstalk DAO Disclosures.
A robust decentralized governance mechanism must balance the principles of decentralization with resistance to attempted protocol changes, both malicious and ignorant, and the ability to quickly adapt to changing information. Root’s Stalk ownership gives Root a vote in Beanstalk governance.
In theory, Root should balance ensuring sufficient time for all Root owners to consider a Root Improvement Proposal (RIP) and cast their votes or exit the system, with the abilities to (1) be quickly upgraded in cases of emergency and (2) participate in Beanstalk governance.
In practice, the owner of Root has the exclusive and unilateral ability to commit RIPs, and vote in Beanstalk governance, at any time. The owner of each implementation of Root enforces a governance mechanism.
Root is governed by Root DAO. Roost DAO governs upgrades to 0x77700005BEA4DE0A78b956517f099260C2CA9a26, the use of Stalk in Beanstalk governance and the treatment of non-Beanstalk-native yield earned by 0x77700005BEA4DE0A78b956517f099260C2CA9a26. Any account that owns Roots can participate in Root DAO governance.
RIPs are proposed on the Root DAO Snapshot page. Root owners can vote on RIPs on the Snapshot page.
