How to solve the Liquidity problem of BGT?

Writing: Sleeping Wild in the Rain

Today, I would like to quickly introduce you to a very interesting product on Berachain, @bgtmarket.

This is also a series I want to do: Berachain ecological tour, the first one is Puffpaw, this is the second one.

It all starts with the three Token models (BGT, BERA, HONEY) in Bear Chain, with $BGT.

$BGT is the governance token of BearChain, and its characteristics are non-transferable and non-tradable. Users can only obtain it through LP and other methods. Users can convert BGT 1:1 to BERA, but cannot reverse the operation.

The speed at which LPs of the same scale obtain BGT depends on the validating Nodes, and the governance power of validating Nodes depends on the proportion of BGT entrusted to them by users 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 cooperation and game between projects, verification Nodes, and users.

However, there is also an issue involved here that the “value brought by users entrusting BGT” may not match the “value that the project party is willing to pay for unit Liquidity”, which means the original Consensus Mechanism may not be able to provide accurate, effective, and real-time judgments for the demand and supply sides of BGT.

The original intention of 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 for the demand side and the supply side, and prices it through real-time market transactions.

In fact, what BGT Market is doing is to effectively price 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 per unit on the surface. At a deeper level, the implied value of BGT is actually the external manifestation of the bear chain ecology.

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

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

I think you can understand it like this: all BGT on the BGT Market are placed in one wallet. Buyers can see their purchased BGT on the front end of the BGT Market (but BGT is not actually in the buyer’s wallet), and they can perform operations according to their needs, such as ‘delegate BGT to a validation Node’, ‘cancel delegation’, ‘claim BGT delegation rewards’, ‘sell BGT’, ‘convert to BERA’, and so on. Each operation is automatically executed by the BGT Market Smart Contract. In fact, there is no transfer and transaction of BGT, 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 BearChain quickly understand the implied value of BGT in the current Node, so that they can formulate future strategies. If the implied value of BGT is high, they will be more inclined to delegate BGT to Node to obtain long-term value output; if the implied value of BGT is lower than expected, they will be more inclined to exchange BGT for BERA and mine, withdraw, and sell.

Looking at it from another angle, buyers can directly sell BGT through the BGT Market, indirectly reducing the tendency of bear chain users to convert BGT to BERA, thus reducing the selling pressure on BERA.

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

Finally, it is worth mentioning that the solution provided by BGT Market to BGT Liquidity has also inspired a large number of BGT holders, that is, to distribute and flow BGT through establishing a frontend approach.