Overview
Redacted Cartel began as an OlympusDAO fork in late 2021, riding the (3,3) bonding wave that briefly captivated DeFi. Like most OHM forks, the bonding model was unsustainable, and BTRFLY's price collapsed alongside the broader OHM fork implosion. However, unlike the vast majority of OHM forks that simply died, Redacted pivoted.
The team recognized that their accumulated treasury of ve-tokens (veCRV, vlCVX, veBAL) had strategic value. Rather than passively holding governance tokens, Redacted built infrastructure to monetize governance power. This led to two products that now define the protocol:
Hidden Hand — a bribe marketplace where protocols pay to incentivize governance votes in their favor. Projects deposit bribes, and voters (veToken holders, vlCVX holders, etc.) claim rewards for directing their votes. Hidden Hand has become the dominant bribe marketplace for multiple protocols including Aura, Balancer, Frax, and Bunni.
Pirex — liquid wrappers for locked tokens, similar to Convex's cvxCRV. Pirex allows users to deposit CVX and receive pxCVX, maintaining liquidity on what would otherwise be a locked position. Auto-compounding and vote delegation are built into the wrapper.
The pivot from OHM fork to governance infrastructure is one of DeFi's better reinvention stories.
Smart Contracts
Redacted's smart contract ecosystem spans multiple products:
- Hidden Hand: Bribe deposit contracts, distribution mechanisms, and integration contracts for each supported protocol's governance system. The marketplace must correctly interface with diverse governance implementations (Aura's vlAURA, Balancer's veBAL, Frax's veFXS, etc.).
- Pirex: Liquid wrapper contracts that manage locked token positions, auto-compounding, and secondary market liquidity. The pxCVX system requires integration with Convex's locking mechanics.
- Treasury: Protocol-owned ve-token positions that generate governance revenue.
The complexity comes from the breadth of integrations rather than any single component's sophistication. Each Hidden Hand market requires correct integration with a specific protocol's governance system, and bugs in any integration could result in incorrect bribe distribution or lost funds.
Security
Redacted's contracts have been audited, and the protocol has not suffered a major exploit. The OHM fork origins carry some stigma, but the current product suite is architecturally separate from the original bonding mechanism.
Hidden Hand's security is critical because it handles bribe funds from multiple protocols. The marketplace's correctness depends on accurate integration with each supported protocol's governance system — a miscalculation in vote verification or bribe distribution could result in funds being misdirected.
Pirex's liquid wrappers carry the permanent lock risk common to all ve-token wrapping protocols. Users who deposit CVX into Pirex cannot withdraw — they receive pxCVX that depends on secondary market liquidity for exit. The peg between pxCVX and CVX can deviate during market stress.
Yield Generation
Redacted generates yield through multiple channels:
- Hidden Hand fees: The marketplace takes a percentage of all bribes distributed, generating protocol revenue proportional to governance market activity
- Treasury ve-token yields: Protocol-owned veCRV, vlCVX, and veBAL positions earn voting incentives and protocol fees
- Pirex auto-compounding: pxCVX holders earn compounded CVX staking rewards plus bribe income
Hidden Hand's yield generation model is particularly sustainable because it captures fees from governance activity that exists independently of Redacted — protocols will bribe for governance votes regardless of Redacted's involvement, but Hidden Hand provides the most efficient marketplace for this activity.
The yield sustainability depends on the continued relevance of ve-tokenomics governance. As long as protocols use vote-escrow models and participants need bribe marketplaces, Hidden Hand generates revenue. This is structurally more sustainable than yield from token emissions.
Adoption
Hidden Hand has achieved genuine product-market fit in the DeFi governance space. The marketplace handles millions in bribes across multiple protocols per epoch. Key integrations include:
- Aura/Balancer gauge votes
- Frax gauge votes
- Bunni/Uniswap V3 liquidity direction
- Various other ve-tokenomics protocols
The bribe marketplace has become infrastructure — protocols budget for Hidden Hand bribes as a standard cost of governance participation. This recurring demand provides more stable adoption than speculative DeFi products.
Pirex adoption is more modest, competing with Convex's native staking and other CVX liquid wrappers. The product is functional but hasn't achieved dominant market share in the CVX wrapping space.
Tokenomics
BTRFLY underwent a v2 token migration to address the OHM fork-era inflation. The v2 token has a cleaner structure with revenue sharing from Hidden Hand fees and treasury yields distributed to rlBTRFLY (revenue-locked BTRFLY) stakers.
The revenue-sharing model directly ties BTRFLY value to protocol revenue — primarily Hidden Hand fees and treasury governance yields. This is more fundamentally grounded than most DeFi tokens, though the absolute revenue amounts must justify the token's market cap.
BTRFLY's OHM fork history creates lingering stigma that depresses market perception despite the protocol's genuine pivot to productive infrastructure. The token carries reputational debt from its origins that takes time to fully overcome.
Risk Factors
- OHM fork stigma: Origins as an OHM fork create trust deficit despite successful pivot
- Ve-tokenomics dependency: Revenue model depends on continued dominance of vote-escrow governance
- Hidden Hand integration risk: Bugs in governance integrations could misdirect bribe funds
- Pirex peg risk: pxCVX can trade at discount to CVX, impacting depositors
- Governance market size: Total addressable market for bribe marketplaces has a ceiling
- Competition: Votium and other bribe platforms compete for governance marketplace share
Conclusion
Redacted Cartel is one of DeFi's more impressive pivot stories. The evolution from unsustainable OHM fork to legitimate governance infrastructure provider — particularly through Hidden Hand — demonstrates genuine product development capability. Hidden Hand has achieved real product-market fit, and the revenue model is more sustainable than most DeFi yield sources.
The 5.6 score reflects a protocol that has found a genuine niche with sustainable revenue, tempered by its OHM fork origins, the limited size of the governance marketplace, and competition from alternative bribe platforms. Redacted is well-positioned within the ve-tokenomics ecosystem but carries concentration risk if that governance model falls out of favor.