Based Finance is not your typical algorithmic stablecoin project.
$BASED: Serves as a medium of exchange and is intended to remain pegged to 1 FTM token in the long run, thanks to the stability mechanisms built into the protocol.
$BSHARE: Represents the value of the BASED protocol and reflects the level of trust that shareholders have in its ability to maintain $BASED close to its peg. When the protocol undergoes epoch expansions, it creates new $BASED tokens and distributes them proportionally to all $BSHARE holders who have staked their tokens in the Acropolis (the boardroom). Emissions for $BSHARE have ended back in July 2022, so there will be no more $BSHARE tokens released to the market as the 50,000 emission mark has been hit!
$BBONDs are used to encourage changes in $BASED supply during an epoch contraction period. If the TWAP of BASED falls below 1 FTM, BBONDs are created and can be purchased using BASED at the current price. By exchanging BASED tokens for BBONDs, the former are burned, decreasing their circulation and helping to increase the price of BASED back up to 1 FTM. In the future, BBONDs can be redeemed for BASED tokens when the price of BASED is above its peg, with additional incentives for holding onto them for longer periods above the peg. This puts inflationary pressure on BASED when its price is above its peg, which helps to bring it back down to 1 FTM. The epoch duration for these processes is 6 hours.
When depositing or withdrawing BSHARE into/from the Acropolis, the tokens will be locked for 4 epochs, and BASED rewards will be locked for 2 epochs. Staked BSHARE will be locked for 4 epochs when claiming BASED rewards, and the next BASED rewards can only be claimed 2 epochs later.
A Based Change
The Based Labs team understands that algorithmic stablecoins are typically not sustainable because their core mechanisms and reliance on volatility are not sufficient to ensure long-term stability for investors. After experiencing the ups and downs of market conditions, the Based Labs team realized early on that it is necessary to support the protocol with diverse revenue streams to strategically allocate and strengthen its longevity. We’ve learned valuable lessons from this experience and started a redemption arc by optimizing the mechanics and introducing new use cases. To prevent premature printing, $BASED was re-pegged to $FTM, which was a crucial step in allowing for:
● Exposure to a larger community: By pegging to FTM, Based Finance will be exposed to the entire Fantom community.
● Shrinking supply and capturing investors: Repegging to FTM will allow Based Finance to continue shrinking the BASED supply, making it a scarce asset.
● Outperforming the original protocol tokenomics: Based Finance will be the only Tomb fork that has turned around the unnatural inflation of token supply that is at the core of the protocol.
● Gradual accumulation of ecosystem tokens: Based Finance community members will be able to accumulate ecosystem tokens gradually without fearing the peg approaching too fast, resulting in unnatural pumps and dumps when close to peg.
● Concentrated liquidity: Liquidity on BASED – FTM will get concentrated, as the treasury can eliminate unnecessary TOMB – FTM pair.
● Increased trading volume growth: The DEX will have trading volume growth, as all swaps of ecosystem tokens will be absorbed within the Based DEX. Thus providing a stable liquidity base.
● Optimized routes and lower fees: DEX aggregators like Firebird will have more optimized routes and calculations, resulting in lower fees for users and more volumes for farmers.
With these aforementioned changes, constant burns, sell taxes, and the cessation of emissions for $BSHARE; Based Finance is looking towards a bright future. There are many reasons to be optimistic, including the fact that the circulating $BASED supply has decreased from 36M to under 18M at the time of writing, and burns continue to occur each epoch, continuously decreasing the circulating supply.