Baseline Value (BLV)

Every Baseline token comes with a Baseline Value (BLV): a minimum redemption price that is backed by pool reserves. The BLV is programmatically enforced by smart contracts, guaranteeing holders an exit regardless of market conditions. The BLV can never decrease but, through the token's market making operations, the BLV can increase over time.

Why BLV Matters

Traditional tokens offer no downside protection. When market sentiment shifts, liquidity dries up, holders race to exit, and prices crash. This creates several problems:

  • Rug pulls: Projects can drain liquidity at any time, leaving holders with worthless tokens and no way to sell.
  • Death spirals: Price drops trigger panic selling. Without a floor to backstop, negative market reflexivity accelerates panic selling.
  • Short lifespan: When the only guarantee is a price of zero, tokens become unsuitable as collateral or for long-term holding.

BLV transforms tokens from speculative instruments into assets with programmatic guarantees.

How BLV Works

Every Baseline token splits reserves in the liquidity pool into backing reserves and buffer reserves:

ypool=ybacking+ybuffery_{pool} = y_{backing} + y_{buffer}
  • Backing reserves guarantee every circulating token can be redeemed at the floor price
  • Buffer reserves enable price discovery above the floor

BLV is the guaranteed floor price that determines how backing reserves are allocated:

Pblv=ybackingcP_{blv} = \frac{y_{backing}}{c}

The Baseline Market Maker (BMM) enforces this as the minimum price for all trades. As trading happens, BMM directs excess reserves to increasing the BLV.

Benefits of BLV

  • Downside Protection: BLV guarantees a sell price, reducing the risk of catastrophic losses and making tokens safer to hold.
  • Market Integrity: Because BLV is onchain and cannot be manipulated or removed, Baseline eliminates common risks like liquidity rug pulls.
  • Capital coordination: As more users trade, stake, or loop, the BLV increases, reinforcing a shared incentive to grow the token's instrinsic value.
  • DeFi Utility: BLV is collateral. Token holders can borrow against their BLV, or multiply their exposure without liquidation risk.
OverviewMarket Maker (BMM)