BLV: The Baseline Value

One of the most recognizable features of a Baseline Token is the distinctive yellow line on the chart, representing the bToken's Baseline Value (BLV): the guaranteed minimum price of a Baseline token.

The BLV is set by reserving enough liquidity in the pool to buy back the entire floating supply of the token. Put simply, the BLV is the price at which the last token could be sold if all holders exit.

This makes the BLV a directly redeemable value on the public market, unlike the "backing" commonly found in other protocols. Baseline uses protocol-owned liquidity managed by smart contracts within Uniswap V3 concentrated positions to guarantee a bToken's BLV. This means the BLV can never decrease when priced against the backed asset.

The BLV of a Baseline Token doesn't just remain stable; it actually increases over time. This growth occurs because, with each trade, a small liquidity surplus is accrued and added to the floor. As more bTokens are bought and sold, this surplus continues to grow, permanently raising the BLV.

This mechanism ensures that the BLV is not only a guaranteed minimum price but also a price that gradually increases over time. The more trading activity there is, the more liquidity accumulates, which in turn strengthens the BLV. This continuous upward adjustment of the BLV provides ongoing value to bToken holders, ensuring that their tokens are backed by an ever-growing reserve.

Why BLV Matters to Traders

From a trader's perspective, the increasing BLV is crucial for several reasons:

• Known Maximum Downside: When entering a trade, the BLV gives traders a clear understanding of the maximum potential loss. Since the BLV represents the guaranteed minimum price, traders know that the token's value won't fall below this level when priced against the reserve asset, providing a built-in safety net.
• Gradual Value Appreciation: As the BLV rises over time due to trading activity, the downside risk continues to decrease. This means that holding onto bTokens not only carries less risk but also becomes more valuable as the BLV increases, making it a more attractive long-term investment.
• Market Confidence: The upward trajectory of the BLV fosters confidence in the market. Traders can be more assured that their investments are backed by a growing reserve, reducing the fear of sudden, drastic losses and encouraging more participation in the market.

TLDR: the rising BLV provides traders with a known safety net, the potential for value appreciation, and greater confidence in the stability and reliability of their investment.

Why BLV Matters to Project Founders

For project founders launching a token, the increasing Baseline BLV offers several significant advantages:

• Lower Risk of Market Manipulation: With a guaranteed minimum price and increasing BLV, the token is less susceptible to market manipulation, such as pump-and-dump schemes. The value generated by trading activity stays within the system, and liquidity is guaranteed. This stability helps protect the project’s reputation and ensures that the token remains a reliable asset for traders and investors.
• Investor Confidence: A rising BLV builds trust among potential investors, as it shows that the token is backed by a growing reserve and has a built-in mechanism to prevent its value from dropping below a certain point. This can make the token more attractive to both retail and institutional investors, leading to greater initial adoption and ongoing participation.
• Long-Term Sustainability: The BLV ensures that the token’s value is supported by real liquidity, reducing the risk of severe market downturns. This stability helps foster a long-term vision for the project, allowing founders to focus on growth and innovation without the constant pressure of market volatility.
• Differentiation from Other Projects: In a crowded market, launching a token with a BLV sets the project apart from others that may rely on less transparent or less secure methods of backing their tokens. The BLV offers a unique selling point, making it easier to attract attention and differentiate the project from competitors.
• Aligned Incentives: As the BLV increases with trading activity, it aligns the interests of the project founders and the token holders. Both parties benefit from the token’s success, as increased trading leads to a stronger BLV and, in turn, a more valuable and stable token. This alignment can create a more engaged and loyal community around the project.

TLDR: Baseline's increasing BLV provides project founders with a powerful tool to attract investors, ensure long-term sustainability, differentiate their token in the market, align incentives with their community, and protect against market manipulation.