Leverage without Liquidation Risk

Users can choose to leverage — borrowing and using that capital to buy more of the token. This increases their token holders, creating a form of self-reinforcing leverage.

Unlike traditional leveraged products, loops in Baseline do not carry forced liquidation risk. Users are only limited by system parameters and the available floor liquidity.

Example

To illustrate impact of leverage, suppose Jim uses 1 ETH to buy YES

  • Buying spot: Jim buys 737 YES for 1 ETH (at ~0.001357 eth per token)
  • Leverage borrow: Jim buys 737 YES and then proceeds to repeatedly borrow and buy more YES with it. Because YES trades at low premiums, 1 ETH translates to 6,780 YES. Notice that instead of 737 YES, the user now holds 9.2x more YES than if they simply bought.
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Key Takeaway: Baseline turns token liquidity into a productive asset.

  • Borrowing allows users to unlock liquidity without selling, preserving their position and exposure.
  • Leveraging lets users compound their exposure by using borrowed liquidity to buy more — increasing demand and floor value.

Together, these mechanics create a positive-sum system where tokens grow in utility and value, and users have more ways to participate without relying on external DeFi tools.

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