Multiply bTokens

Baseline allows you to create leveraged positions on bTokens without liquidation risk. By borrowing against the Baseline Value (BLV) floor and using those funds to buy more bTokens, you can amplify your exposure to price movements.

Why multiply?

• Amplify price exposure : Use borrowed funds to buy more bTokens, amplifying your price exposure to directional moves
• Earn trading fees : Multiplying automatically entitles you to a pro-rata amount of trading fees captured by the token. Since multiplying increases your total bToken position, you earn more fees relative to basic staking or borrowing.
• No liquidation risk : The BLV floor guarantees your collateral is always worth at least your debt which means your leveraged position cannot be liquidated.

Baseline multiply is an advanced trading strategy that requires careful consideration of the risks involved. In particular:

• Price Exposure: Larger positions mean bigger gains AND bigger losses
• Slippage: Leveraging buys (and sells) from the Baseline Pool which means it will be subjct to price impact and slippage.
• Market Timing: Buying high with leverage amplifies losses if price drops
• Locked Collateral: Your bTokens are locked until you deleverage

How leverage works

Baseline leverage uses a "multiply" mechanism repeatedly borrowing against your bTokens and using the borrowed funds to buy more bTokens:

1. Deposit bTokens : Your bTokens become collateral
2. Select target leverage : Select the target leverage you want to achieve
3. Borrow against BLV : The Baseline protocol borrows against your floor value
4. Buy more bTokens : Borrowed funds purchase additional bTokens
5. Add to collateral : New bTokens increase your position
6. Repeat : Repeat the process to multiply your exposure to the target leverage

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 and want to multiply your exposure:

Let's consider some scenarios:

1. Market price increases to 2 ETH per token. Your 166.67 bTokens are now worth 333.34 ETH. After repaying your 100 ETH debt, you have 233.34 ETH equity (compared to 200 ETH if you hadn't leveraged). Gain: +55.6% vs +33.3% without leverage.
2. Market price decreases to BLV (1 ETH per token). Your 166.67 bTokens are now worth 166.67 ETH. After repaying your 100 ETH debt, you have 66.67 ETH equity (compared to 100 ETH if you hadn't leveraged). Loss: -55.6% vs -33.3% without leverage.

Key differences: borrowing vs leverage

Both features are borrowing against BLV: the difference is what happens with the borrowed funds.

Next Steps

• Stake : Earn fees on your position
• Borrow : Access capital without leverage