Borrow against bTokens

Baseline allows you to borrow against your bTokens at 0% interest and a small origination fee, using the Baseline Value (BLV) floor price as collateral.

Baseline Borrow gives you access to capital without needing to sell your position or risk liquidation. Borrowing against bTokens is ideal for users who want to free up liquidity for other purposes: like rotating capital into another token.

Why borrow?

  • Access capital without selling : Keep your bToken exposure
  • No liquidation risk : BLV guarantees your collateral value so there's no need for expiration or liquidation thresholds
  • 0% interest : No ongoing borrowing costs
  • Maintain exposure to future upside : If bToken price increases, you benefit
  • Earn trading fees : Borrowing automatically entitles you to a pro-rata amount of trading fees captured by the token
  • No oracles: No need to trust external price feeds oracles that may misreport.

How borrowing works

  1. bTokens have a Baseline Value (BLV) that is backed by reserves in the liquidity pool.
  2. You can borrow against the BLV value of your bTokens directly from the Baseline protocol
  3. When you borrow, you deposit your bTokens as collateral, and receive the borrowed amount in the reserve asset (e.g., ETH). The amount you receive is based on the BLV value:

borrowed=Pblv×bTokens\text{borrowed} = P_{blv} \times \text{bTokens}

  1. You can repay the reserve amount anytime and get back your bTokens. There is no expiration date, or liquidation threshold.

Example

Suppose that YES is a bToken trading at 1.5 ETH per token, and the BLV is 1 ETH per token. In this case, the premium is +50% (1.5 ETH / 1 ETH - 1). You own 100 bTokens that you want to borrow against. Then:

MetricValue
Your bTokens100
Market price per token1.5 ETH
BLV per token1 ETH
Market value of your bTokens150 ETH
Borrowed amount (total BLV value)100 ETH
Loan-to-Value (LTV)66.67% (100 ETH / 150 ETH)

Let's consider some scenarios:

  1. Market price increases to 2 ETH per token. You can repay the loan (100 ETH) to get back your bTokens, and sell for 200 ETH. Note that you still benefitted from the price increase, even though you borrowed against your bTokens.
  2. Market price decreases to BLV (1 ETH per token). You can repay the loan (100 ETH) to get back your bTokens, and sell for 100 ETH. Note that when the price converges to BLV, there is no incentive to repay since you'll get back exactly what you used to repay.

Next Steps

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