Base Protocol

The Base Protocol (BASE) is a synthetic crypto asset that derives its price from the total market cap of all cryptocurrencies (cmc) at a ratio of 1 : 1 trillion. BASE exists to maintain a market rate that is stably pegged to its underlying asset – the crypto industry. BASE’s peg to cmc is held stable through an elastic supply protocol.

Crypto Index

The Base Protocol acts as a one-stop trading instrument which allows holders to speculate on all cryptocurrencies simultaneously, rather than just one or a select portfolio of multiple. It allows traders to agnostically invest in the entire crypto ecosystem. This is its primary function.
The Base Protocol can also be used as a tool for more nuanced trading situations:

Save Haven

BASE can be used as a transitory, “save haven” position between crypto transactions. Typically, one might trade into a “blue chip” crypto to reduce risk exposure, or trade into a stablecoin to remove risk exposure. Trading into BASE presents an alternative that maintains exposure to all cryptocurrencies rather than just one. This could be riskier than trading into a blue chip, but in some instances, may act as a hedge against some isolated / unforeseen events. For example, a rapid downfall in the blue chip, or the rapid emergence of a new project. 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 Reference

Another use case is for BASE to function as a price reference for all cryptocurrencies. 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 x 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.

Lending Instrument

BASE can also be used as a lending instrument to hedge on leveraged crypto trading. Traditionally, lending has been a challenge in crypto; if an individual borrows 1 BTC to buy a car, they could be on the hook for much more than they originally borrowed when it’s time to pay that 1 BTC back. This volatility presents a problem in borrowing crypto for general purposes, but can be useful if borrowing for crypto investing. Say a trader borrows 100 BASE to buy an altcoin, and that the altcoin plummets alongside a bearish trend in the crypto markets. When the trader goes to pay their 100 BASE back to the lender, he notices the value of that BASE also dropped – perfectly 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. And vice versa, if his altcoin went bullish, he would only absorb the gain in excess of overall market performance. In this way, BASE can be used as a strategic hedging instrument for crypto-focused portfolios trading on leverage. The ability to speculate on the entire crypto market with one synthetic instrument lends itself to use cases like these and many others. Those interested in exploring these use cases can build on the Base Protocol to create relevant, second layer products.