The Key Points of BASE PROTOCOL You Should Know About
Greetings Medium community, today I want to introduce you to the Base Protocol, a kind of crypto asset index with synthetic asset and rebasing features. Now let’s start with the basics…
What is the BASE Protocol?
Base Protocol is the first tokenized crypto market cap tracker. BASE is created to track the total change of the entire market at once. You can assume that BASE is a new example of current market indices representing all crypto assets which has a market share. So, all the investors will have the right for investing in the entire cryptocurrency ecosystem with buying&holding the $BASE tokens.
The Base Protocol aims to be the main gateway between cryptocurrency markets and the ones who want to start investing in crypto assets. There is a big information need for beginners to understand how the cryptocurrency operations work, how to buy&sell, how to convert, etc… The Base team has seen such a need and tried to overcome all the current problems with converting all possible crypto assets into a single one, named $BASE.
The Base Protocol (BASE) is a synthetic crypto asset that derives its price from the total market cap (CMC) of all cryptocurrencies at a ratio of 1:1 trillion.
It’s not surprising that most of us have missed the launch of Ethereum, Litecoin, or ChainLink. They all made enormous ROIs for their investors and believers. But for the others? Actually, they must wait for a primary listing and buy from possibly open to the speculative market. Here, we understand the core aim of the BASE team, to let everyone participate in the market anytime easily.
Who’re Behind the BASE Protocol?
The first step of the BASE into the cryptocurrency ecosystem is in mid-September, 2020. On the same day of launch, 17th of September, 2020, the Base Protocol team has published a Medium article about the details of the team. They revealed the backgrounds of 4 main members of the core team. They’re Chris Peña, Nick Ravanbakhsh, Dylan Senter, and Based McGee, respectively.
All members of the core team are for with their 5-year and more experience in the crypto industry, so far. Three of them; Peña, Ravanbakhsh, and Senter have written the Litepaper of BASE Protocol. And we can easily understand that McGee is the head of the development team behind the Base Protocol.
The team is published their information on the same day of entering the crypto market because of preventing any accusation about them and not to give harm the project. This is one of the distinctive features that Base Protocol has! We mostly don’t know anything about the team members behind DeFi and DeFi related projects.
Please see them on the website to find out more or read the relevant Medium article to check their background plus previous works. Also, Mr. Ravanbakhsh has participated in a live Q&A organized by ChainLink. Please see the video below to learn more…
What are the Basics of $BASE?
$BASE is the native token of the Base Protocol. It is created on the ERC20 chain and has already integrated with ChainLink oracle to receive necessary market cap data. $BASE is a synthetical asset that is technically oriented to be pegged of 1$ for 1 trillion $worth total crypto market cap. In simpler words, if the total market cap of crypto assets is 1 trillion $, the price of the BASE token is 1$. If the market cap falls to 750 billion $, the price of BASe becomes 0.75$. On the other hand, if the sum of the crypto market cap reaches 1.25 trillion dollars, the price is set to be 1.25$.
The ChainLink oracle now comes to the front. This oracle works as the main information provider of Base Protocol. The team has created 11 different API sources to connect with ChainLink. These APIs will calculate the median value and send the last information to Base Protocol. Now, this is the total market cap you can see on the ‘Dashboard’ screen.
At the time of writing, the calculated total crypto market cap by ChainLink oracle is equal to 920 billion dollars or 0.92 trillion dollars. It means that the assumed price of the BASE token is 0.92$ but it is now trading at 0.93$. So, when the time resets we will see a rebase of about 1% in circulating supply. With increasing the supply, the main target is to make the actual BASE price equal to the assumed one.
Decided at launch by the core team, all rebase actions will happen at once in a single day. All rebase actions happen at 10.00 PM UTC. Until 10.00 PM UTC today, the circulating supply won’t change and will remain at 2,029,231.01. And if the rebase occurs with a 1% ratio, the next circulating supply will be expected to be 2,049,523 until Saturday night.
What Does Rebase Mean? How It Works?
$BASE token total supply is not set at launch. In addition to that, there will never be an exact token supply. The circulating supply of BASE will always fluctuate to reach ‘’the target price’’ which is pegged 1:1 trillion $ market cap.
The rebasing mechanism acts to either lower or higher the circulating supply. Every day at 10.00 PM UTC, the circulating supply of the BASE token will be re-determined. In other words, it will change according to market structure.
Now please assume today’s price of 0.93$ must be corrected as 0.92$. If nothing changes, nothing will happen! So we need changes to correct the actual price. The way to lower the token price is by increasing the circulating supply with a 1% positive rebase ratio or adding 20,292 more BASE tokens into circulation. After rebase, your wallet holding amount will not be affected. Even though the price reduces, you will have more tokens. So that none of the BASE holders will face portfolio loss.
As you can see from the picture above, if the actual and target prices are identical, it’s the state of equilibrium. There will be no rebasing at the equilibrium point. But if the equality disrupts and the prices are not identical anymore, it is referred to as the state of disruption. If we are in the disruption phase, there is a constant need for rebasing.
If an asset has changing supply feature, it means elastic supply. The total amount of circulating tokens will never be as same as the previous supply.
What are the Utilization Points of $BASE?
- Crypto Index: The Base Protocol acts as a one-stop trading instrument which allows holders to speculate on the entire crypto industry simultaneously, rather than just one token or a select portfolio of multiple. This should be valuable for outsiders interested in crypto investing who don’t know which assets they “should” buy. It will also be useful for institutional investors seeking to diversify crypto exposure to the entire industry, and general crypto traders looking to hedge or diversify their investments.
- Borrowable Asset: BASE can be used as a borrowable asset to hedge on leveraged crypto trading. Say a trader borrows 100 BASE to buy an altcoin, and that altcoin plummets alongside a bearish crypto market. When the trader pays their 100 BASE back to the lender, he notices the value of that BASE also dropped — correspondent to the crypto market. This means that when he pays the loan back, he only absorbs the loss he took that was in excess of the overall loss in the market. In this way, BASE can be used as a strategic hedging instrument for crypto-focused portfolios trading on leverage.
- Safe Haven: BASE can be used as a safe haven position between crypto transactions. Typically, one might trade into a “blue chip” crypto to reduce risk exposure. Trading into BASE mitigates the inherent risk of holding one coin, while absorbing the potential gains of several others. So far, the most popular safe haven crypto asset is Bitcoin, as it generally leads industry direction and is historically the least volatile. The ability to “hold” the entire crypto market should present a useful trading alternative.
- Price Basis: BASE can be useful as a base pair for any cryptocurrency. If a trader is speculating on an altcoin (x), he will often track price in terms of x/BTC rather than x/USD. This price reference illustrates how the altcoin performs relative to BTC rather than USD, which is the more important data for many crypto traders. If the trader instead uses x/BASE as their price reference, it would illustrate how x performs relative to the overall crypto market, rather than just BTC. The x/BASE price reference should present a valuable alternative to the popular x/BTC price reference.
How to Buy & Sell $BASE Token?
According to Etherscan data, the BASE token is listed on different exchanges with 8 different trading pairs. You can trade BASE in the following CEXs:
You can buy&sell BASE token on the following DEXs:
(Please make sure that the official ERC20 contract address belongs to BASE token is 0x07150e919b4de5fd6a63de1f9384828396f25fdc. Ensure that you’re on the right trading pair while trading on a DEX.)
The BASE Cascade
You are eligible to invest the entire cryptocurrency ecosystem in one step by holding $BASE in your personal wallet. But the advantages of BASE holding is not only limited to invest, only.
If you provide liquidity on one of the DEXs above, you have the right to claim rewards via the BASE Cascade mechanism. After providing liquidity, you are given the LP tokens. If you stake those LP tokens on the relevant page, you’ll be rewarded as much as 400% APY.
To reward the LPs, there will be extra rebases on each rebase happens. This is explained on the Base Protocol Whitepaper as follows:
The BASE Cascade rewards pool is perpetually funded by the network at rebases.
When there is a supply expansion, an extra 8% of that expansion is minted, these tokens are deposited into the Cascade rewards pool. For example, if there is a 10% expansion, 0.8% extra is minted and goes to the
Cascade.
When there is a supply contraction, 10% of the contraction doesn’t get destroyed, these tokens are deposited into the Cascade rewards pool. For example, if there is a 10% contraction, 1% is exempted and goes to the
Cascade.
The Final Conclusion
This article is created to spread the awareness of Base Protocol by utilizing the Whitepaper, the Litepaper, some Medium articles of Base Protocol, and many more. None of the words above contain any kind of investment advice! Please DYOR (Do Your Own Research) before investing.
