How to solve the Liquidity problem of BGT?

What BGT Market is doing is to effectively price the implicit value of BGT in the market.

Writing: Sleeping Wild in the Rain

Today, I’m here to quickly introduce a very interesting product on Berachain, @bgtmarket.

This is also a series I want to do: Berachain Ecology Tour. The first article is Puffpaw, and this is the second one.

It all starts with the $BGT in the three-token model (BGT, BERA, HONEY) of Xiong Lian.

$BGT is the governance Token of Bear Chain, which is non-transferable + non-tradable, and users can only obtain it through LP and other methods. Users can convert BGT to BERA at a 1:1 ratio, but cannot reverse the operation.

The speed at which LPs of the same scale obtain BGT depends on the verification Node, and the governance weight of the verification Node depends on the proportion of BGT delegated to them to the total BGT Circulating Supply.

In short, the validating Node has the power to determine which project’s LP pool the BGT generated with the Block will flow to, and users can delegate BGT to the validating Node that best meets their own interests and demands.

This is also why we say that the normal state of Bear Chain is the collaboration and game theory among projects, validation Nodes, and users.

But there is also a problem here, there may be a mismatch between the ‘value brought by users’ delegation of BGT’ and the ‘value that the project party is willing to pay for unit Liquidity’, which means that the original Consensus Mechanism cannot provide accurate judgment for the demand side and the supply side of BGT in a sufficient, effective, and real-time manner.

The original intention of the BGT Market is to solve this problem - by launching a dedicated BGT market, it provides an accurate judgment of the supply and demand value of BGT in real time for demanders and suppliers, and prices it through real-time market transactions.

In fact, what BGT Market is doing is “effectively pricing the implicit value of BGT in the market” (the surface value of 1 BGT = 1 BERA).

P.S. The implied value of BGT depends on the bribery that the project party is willing to pay for Liquidity. At a deeper level, the implied value of BGT is actually the external manifestation of the Bear Chain ecosystem.

BGT Market is a BGT Decentralization auction market. The market auction BGT in the form of Dutch auction, and the initial auction price of BGT will drop rapidly, and the drop rate will drop over time. Buyers can buy and gain control of BGT when the price drops to their psychological expected price.

Here, you may wonder how BGT Market auctions BGT when BGT cannot be transferred or traded?

I think you can understand it this way: all BGT on the BGT Market is placed in one wallet. Buyers can see their purchased BGT on the front end of the BGT Market (but the BGT is not actually in the buyer’s wallet), and operate according to their own needs, such as “delegating BGT to a verification Node”, “canceling delegation”, “Claim BGT delegation rewards”, “selling BGT”, “converting to BERA”, and other operations. Each operation is automatically executed by the BGT Market Smart Contract. In fact, BGT has not been transferred or traded, but users have control over it.

In addition to the benefits mentioned above, I personally think that BGT Market can also help new users of Bear Chain to quickly understand the implicit value of BGT in the current time Node, so that they can formulate future strategies - if the implicit value of BGT is high, they will be more inclined to delegate BGT to Node to obtain long-term value output; if the implicit value of BGT is lower than expected, they will be more inclined to exchange BGT for BERA, and then mine and sell.

Looking at it from another perspective, buyers can directly sell BGT through the BGT Market, which indirectly drops the tendency of Bear Chain users to convert BGT to BERA, reducing the selling pressure on BERA.

Above is my introduction to the BGT Market and the reason for introducing it.

Finally, one last point to mention is that the solution proposed by BGT Market for BGT Liquidity has also inspired a large number of BGT holders, which is to distribute and direct the flow of BGT through the establishment of a frontend.