Baseline Value (BLV)

Every Baseline token has a floor price: a minimum price that is always backed by pool reserves. This floor is called the Baseline Value, or BLV. BLV acts as the guaranteed exit price, regardless of market conditions. Any holder can sell at BLV at any time, even if there are no active buyers.

Why BLV Matters

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

  • Rug pulls: Projects can drain liquidity at any time, leaving holders with worthless tokens
  • Trust erosion: After a few bad experiences, users become skeptical of all new tokens
  • Value extraction: Without guaranteed backing, any value built up through trading can disappear to the first seller
  • Trend to zero: Tokens can go to zero, making them unsuitable as collateral or for long-term holding

BLV solves this by guaranteeing that backing reserves always exist to redeem every circulating token at the floor price. The floor can only increase over time as fees accumulate.

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Key Insight: BLV transforms tokens from speculative instruments into assets with intrinsic value. The floor price is programmatically guaranteed by smart contracts and is backed by real reserves.

How BLV Works

Every Baseline token maintains a token-owned liquidity balance sheet, which is used to track the reserves in the liquidity pool. These reserves are split into backing reserves and buffer reserves.

y=ybacking+ybuffery = y_{backing} + y_{buffer}

BLV is defined as backing reserves divided by circulating supply:

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

Every Baseline token starts with a defined BLV when created. The Baseline Market Maker (BMM) enforces this as the minimum price for all trades. Every buy and sell executes at BLV or above. 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 on-chain and cannot be manipulated or removed, Baseline eliminates common risks like liquidity rug pulls.
  • Aligned Incentives: 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 use leverage without liquidation risk.
Token-Owned LiquidityMarket Maker (BMM)