Fixed Term Liquidity Loans
Tokens today present their holders with a dilemma: realizing any gains typically requires selling, sacrificing exposure to future upside in exchange for liquidity. Although some tokens can be used as collateral on lending platforms, the process is restrictive, unreliable, and heavily reliant on external liquidity to determine borrowing capacity.
Coupled with the naturally attention-driven markets and inefficient liquidity structures in crypto today, the opportunity cost problem of holding tokens can result in extreme volatility as traders rotate in and out of different assets. Baseline directly addresses this issue by offering simple fixed-term, fixed-interest loans against bToken collateral, giving users a new way to realize the value of their assets without sacrificing upside exposure by borrowing.
In Baseline, bTokens can be deposited to withdraw their underlying BLV liquidity for an upfront fee. All collected fees are directed to the Afterburner, ensuring that any value generated from borrowing activity accrues directly to bToken holders.
Loan Fees & Terms
Baseline's loan fees are paid upfront and pro-rated to a fixed yearly interest rate based on the duration of the loan. Users can configure the duration of the loan in increments of days, providing users full flexibility over loan terms and allowing them to pay only for what they need. Users are limited to one active loan per bToken, but can add collateral to existing positions to increase their borrow position.
In $YES, the fixed-term fee is 9.9% per year, so a 30-day loan would be charged 9.9%*(30/365) = ~.84% of the loan amount.
Loans can be repaid early or extended, though early repayments don't result in fee refunds. Thus, it's advisable to open shorter-duration loans and extend as needed rather than initially opting for longer terms. When adding to a loan position the expiry of the loan will be the same as the existing loan, and any new extensions will apply to the entire aggregate loan.
Baseline loans are immune to market-driven liquidations, but they are automatically defaulted upon expiration. This is vital for system efficiency, as Baseline's BLV accounting allocates liquidity for every circulating token. Defaulting expired loans prevents the accumulation of "dead supply" from lost tokens or inaccessible wallets, enabling liquidity to more effectively support the remaining bTokens.
Because bTokens are burned upon expiration, loans that expire result in the borrowers losing the premium value of their bToken collateral. As a result, it's important to manage loan terms carefully to avoid defaulting.
Boosting
Baseline's unique lending model allowing users to borrow more liquidity without additional collateral when the
BLV grows. This is possible because the user’s deposited collateral has increased in value due to the BLV increase:
since the lending facility calculates how much can be borrowed based on the BLV of the deposited collateral,
the borrowing capacity will have increased with every bump().
For example, if a user initially deposits 1000 bTokens with a $1.00 BLV, they can borrow $1000. If the BLV increases to $1.02, the borrowing capacity rises to $1020, offering an additional $20 of borrowable capital. Boosting is automatically applied during loan extensions or with the addition of collateral. Boosts incur the same fees and terms as any other loan in the Credit Facility.