Base Protocol — Telegram QUIZ & AMA — October 22
On Thursday, October 22, we had the pleasure to welcome to our Telegram chat:
Nick Ravanbakhsh, Operations and
Dylan Senter, Business Development, of Base Protocol.
We asked him questions about the development of Base Protocol.
Some sentences have been slightly edited for readability but the meaning has been conserved.
Summary
Base Protocol (BASE) is the cryptocurrency that represents all cryptos.
BASE is a digital asset whose price is pegged to the total market cap of all cryptocurrencies.
Base Protocol uses Chainlink’s oracles to ensure the most reliable price discovery.
Liquidity providers for BASE will get rewards through the standard Uniswap transaction fees.
BASE is incubated by DuckDAO.
Introduction
Q — Alex Raffin from GAINS: What did you do before crypto, how did you get into crypto and did you have any other venture in crypto previous to being involved with Base Protocol?
A — Nick from Base Protocol: Before crypto, I was a student and an entrepreneur, running different tech startups. I also run a portfolio of Airbnbs on the side. Prior to Base Protocol, I co-founded the Signal Marketplace — a decentralized application that enables users to create ad campaigns on a marketplace where bounty hunters can promote ad content for rewards, administered via smart contract. Since then, I’ve consulted/advised on several different crypto projects!
A — Dylan from Base Protocol: I’m a lifelong entrepreneur who has been active in crypto since 2014, spoken on multiple panels at different crypto conferences, and consulted over 50 clients across ecommerce, blockchain, and technology projects. I currently run an e-commerce store with $1m in annual sales. I’m our business and marketing guru!
Product
Q — Alex Raffin from GAINS: What’s Base Protocol in a few simple sentences?
A — Nick from Base Protocol: BASE is a token that represents all cryptocurrencies. By holding BASE, you have exposure to the performance of the whole cryptocurrency industry — all in one token.
This is achieved by pegging the price of BASE to the total market cap of all cryptocurrencies:
If crypto market cap is $400B, BASE is $0.40.
If crypto market cap is $700B, BASE is $0.70.
By pegging BASE price to the total market cap of all cryptocurrencies, BASE acts as an index like the S&P 500 or NASDAQ — but for crypto.
There is currently no product on the market that does this.
BASE will be useful for institutional investors and traders to diversify and hedge their crypto portfolios. BASE will also help new and existing retail investors to take out the guesswork and get exposed to the growth of all current and future digital assets entering the market.
In the same way Bitcoin is the household name of cryptocurrencies, the Base Protocol aims to become the household name for general cryptocurrency investing. BASE’s vision is to become the primary channel of investment for new/existing cryptocurrency traders and institutional investors.
Q — Alex Raffin from GAINS: How do you define what the crypto market cap is? There are thousands of “shitcoins” that aren’t really liquid. Are you going to count those?
A — Nick from Base Protocol: We define the whole crypto market cap as it is defined by all of the popular price tracking sites like Coinmarketcap, Coingecko, etc.
And yes, this does include the market cap for the thousands of shitcoins. It is important to include all circulating tokens, because although there is some tiny amount of unnecessary “noise” there, it is important that we capture everything. Hidden in that noise is all of the quiet gems that people don’t want to miss out on.
By holding BASE, you guarantee that you won’t completely miss exposure on these projects.
Basically, we aggregate the market cap data of 11 different popular price tracking sites (like Coinmarketcap and Coingecko) through a Chainlink oracle. This is how Total Crypto Market Cap is defined for BASE!
A — Dylan from Base Protocol: For the Base Protocol to achieve its price peg, it requires one key data point: the total market cap of all cryptocurrencies (cmc). At launch, 11 off-chain cryptocurrency data APIs will be polled at regular intervals for market cap information by a quorum of Chainlink oracles operated by the Base Protocol team (soon to be operated by Chainlink). The Chainlink oracles calculate the median value of cmc across those 11 providers. The median is used rather than the average so as to better protect against extreme outlier values reported by any of these APIs, whether erroneously or maliciously.
For an inaccurate value to find its way on-chain, at least 6 of the 11 providers would have to be compromised or conspire together to defraud the network. At present, we consider this an acceptable mitigation against a highly unlikely scenario. Nevertheless, the more decentralized the Base Protocol’s oracle network is, the more resilient it will be against fraud and single point of failure risks; as such, the team plans to onboard third-party node operators in the future.
Regardless of how the data is sourced, there will be a small discrepancy between the cmc used for BASE and the data that appears on any individual cryptocurrency data aggregator. To allay concerns, users will be able to consult the BASE dashboard surfacing all of the underlying data used to calculate the median market cap, and by extension, expansions and contractions to the BASE token supply.
Q — Alex Raffin from GAINS: Do you then mint or freeze tokens to reduce or expand the supply and thus the demand, to correct where the price needs to be if it ever moves away from that target?
A — Nick from Base Protocol: Yes, basically! The rebase protocol mints or destroys tokens to adjust supply and thus demand, to influence price to peg to its target.
Q — Alex Raffin from GAINS: How often does this process happen?
A — Nick from Base Protocol: Currently, rebases can happen every 24 hours, currently scheduled for 8:00PM UTC. BASE holders govern parameters like this. The community can propose adjustments to these parameters (like rebasing every 12 or 4 hours), and if the community votes for a change, the protocol will be updated.
Q — Alex Raffin from GAINS: How do you destroy tokens that are in people’s wallets?
A — Nick from Base Protocol: We could give you a long and technical answer to that — but to put it simply, an ERC20 smart contract makes this possible!
Q — Alex Raffin from GAINS: Regarding the minting, how do people get these tokens? If there are lots of holders, it will cost a lot to send those on-chain?
A — Nick from Base Protocol: The smart contract basically tracks everyone’s percentage ownership of total supply. By tracking this, it is able to determine the proper amount of tokens to mint/destroy relative to all wallet addresses across the ecosystem.
A — Dylan from Base Protocol: Regarding the cost of the rebases, and high gas prices:
We’ve spoken with the Chainlink team about this issue, since it affects the entire DeFi ecosystem, and they’re serving a huge segment of this market who are also dealing with these conditions. As far as BASE is concerned, the only direct way that gas prices impact our protocol’s overall reliability is via the Chainlink integration. Chainlink makes many transactions each day for each price feed, including our own market cap feed. These updates need to be mined on-chain in a timely manner to ensure that the price feed is up to date and reliable. There is always a chance that these feeds will slow down if congestion skyrockets. This is just the nature of Ethereum. However, the Chainlink team has spent several quarters creating defenses against conditions like these and finding various ways of ensuring that their nodes will be able to reliably submit updates to all of their feeds, including our new market cap feed, regardless of conditions on the network. Our take on it is that Chainlink is the market leader (by a long shot) in producing feeds like these, and have proven themselves during a number of scenarios that have been challenging for other projects. We’re partnered with the best.
Other than the market cap feed updates, the BASE protocol relies on one other transaction, which is the daily rebase transaction. Because of the simplicity and inexpensiveness of this transaction, we can assure you that it will be mined in a timely manner relative to the rest of the activity on the network, no matter how congested it is. There are two lines of defense here:
- Most of the time, the cost of this transaction accrues to us, because we’ll be the ones executing it. And we will spare no expense in ensuring that it is executed in a timely manner during each rebase period.
- If the community sees that we haven’t spent enough in transaction fees to have the rebase transaction mined as quickly as they would like during congestion, they are also able to execute it themselves for an even higher gas price. It’s truly a decentralized system.
Q — Alex Raffin from GAINS: Is it done thanks to a special function? With the non-custodial nature of tokens, if you’re able to destroy some at will in people’s wallets, doesn’t that contradict this assumption?
A — Nick from Base Protocol: It gets really technical at this point. There is basically a “ghost token” which tracks percentage ownership of the network. Although the surface layer token is being “minted” or “destroyed”, that ghost token which tracks everyone’s percentage ownership of the network is unaffected. We can’t mint or destroy tokens at will. The conditions in the smart contract must be met for that to happen. And even then, the true token, the “ghost token” which tracks users’ percentage ownership in the network is unaffected.
Q — Alex Raffin from GAINS: Wouldn’t that be an annoying running expense source? Say you get 10,000 holders and the rebase is in the expanding direction, that means you’ll be sending 10,000 txns each day that happens? Is it airdropped to all token holders?
A — Dylan from Base Protocol: The rebase is actually only a single transaction thanks to the rebasing mechanism within the smart contract. This is a commonplace system used by other rebasing tokens as well. It is surprisingly not costly at all.
Q — Alex Raffin from GAINS: Are there other mechanisms with the token then that “just” being pegged to the whole crypto mcap?
A — Dylan from Base Protocol: Here is a breakdown of our planned Use cases:
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.
Collateral Asset: BASE can be used as a collateral asset to hedge on leveraged crypto trading. Say a trader borrows 100 BASE to buy an altcoin, and that altcoin plummets alongside a bearish trend in crypto markets. 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 price reference 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 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.
We can also dive further into the Cascade:
- You’ll be able to stake BASE straight through Uniswap, and get bonus rewards through the BASE Cascade. As long as you’re staking your Uniswap LP tokens in the BASE Cascade, you’ll get a share of the Cascade rewards pool.
- The BASE Cascade rewards pool is perpetually funded by the network at rebases. These funding issuances are called SPLASHES.
- When there is a supply expansion, an extra 8% of that expansion is minted. These tokens are splashed 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 splashed into the Cascade rewards pool. For example, if there is a 10% contraction, 1% is exempted and goes to the Cascade.
- This is how the Cascade sustains itself through the course of adoption. It encourages staking during “bullish periods” of supply expansion and further encourages staking during “bearish periods” of supply contraction.
Q — Alex Raffin from GAINS: Are you planning on creating BASE10 or BASE50 tokens that would track the mcap of the top 10 or 50 projects?
A — Dylan from Base Protocol:For now, we are focusing on BASE, to ensure that the premise of the idea is executed properly. As we have the core technology behind BASE ironed out to perfectly function, then we 100% plan to have further “fund” tokens in the future. That is the purpose behind the protocol, it is to create a network of fund based rebasing tokens.
Q — Twitter user @cryptoenr1que: What are the greatest benefits that BASE would offer to institutional investors and traders? What are your proposals for this type of user of your platform?
A — Nick from Base Protocol: Many of us have noticed that traditional institutional investors have been introducing cryptocurrency investments to their portfolios. These institutions typically invest at a high level with great diversification covering multiple industries.
For example, they will have some investments in real estate, energy sectors, tech, and recently, cryptocurrencies. Their cryptocurrency holdings are usually composed of just Bitcoin, or some handful mix of “blue chip” digital assets.
By holding BASE, these institutions will gain exposure to the entire cryptocurrency industry, an objectively more diversified investment! BASE has the potential to become the industry standard investment vehicle for cryptocurrency speculation.
Q — Twitter user @Nohope49320791: It can be difficult to fully understand how Base and other rebase projects work. What do you think are the most common misconceptions?
A — Nick from Base Protocol: The most common misconception is that BASE price is perfectly pegged to the total crypto market cap, so BASE can only grow as fast or slow as the total crypto market. This is our goal in the end, yes.
But early on, new adoption can disrupt this peg so BASE grows at a much faster rate than crypto market cap. This would be highly rewarding for the earliest adopters, just like with any new small cap project.
Once adoption slows down, BASE price will stabilize on the peg. This is when BASE performance will slow down and correlate more to the pace of the crypto market.
Q — Alex Raffin from GAINS: Is it possible that if the buy pressure is big enough, holders benefit from more than just the mcap appreciation, but also by holding more tokens thanks to the rebase mechanism?
A — Dylan from Base Protocol: This is definitely possible, and is what we see with other rebase tokens. To me, this is one of the most exciting side-features of rebasing in general.
As you stated, if price climbs and a positive rebase occurs, then users gain more tokens. If the market is still very bullish, then price usually doesn’t actually fall. This leads to double gains that other tokens simply can’t do.
You’ll see this happen in waves with AMPL, as they have had periods where token price has tripled in the span of just a few days. I call this the “snowball” effect
Q — Twitter user @KathDM3: How would you explain in a simple way what BASE protocol is and its mission to a person who does not have much knowledge about the blockchain?
A — Nick from Base Protocol: The Base Protocol mission is simple — to make it easy for everyone to benefit from the performance of the entire cryptocurrency market.
By holding one token, BASE, you get exposure to all cryptocurrencies. This is especially great for people who don’t have much knowledge about blockchain. Normally, the pitch to your grandma for any cryptocurrency is just too complicated. But in this case, its as simple as this:
“Hey Grandma, have you heard about all those cryptocurrency things? BASE is the way for you to invest in all of them.”
Q — Telegram user Sentung We: Will “Base” work as SP500? Is it the same “theory” when investing? Do you think it will have the same major fluctuations that will allow traders to make a profit?
A — Nick from Base Protocol: Yes, basically! BASE is an index that covers the performance of all cryptocurrencies. This allows traders to speculate on growth in the total crypto market cap.
If you’ve noticed over the past few days, the total crypto market cap has performed very well! As cryptocurrency enthusiasts, we hope to see this trend continue.
Q — Telegram user Alison Micheal: BASE is a synthetic crypto asset pegged to the total market cap of all cryptocurrencies at a ratio of 1:1 trillion. How is it possible to back the value of BASE? What keeps its price at the mentioned ratio?
A — Dylan from Base Protocol: The Formative Period vs. the Final State -
BASE will act as a crypto index once it has achieved a stable price peg to the crypto market cap. However, this price peg will not be stable in the beginning. That is because new adoption for BASE will cause bullish disruption on the price peg.
This is the “Formative Period” dynamic. In this formative period, as new users buy and adopt BASE, the growth rate for BASE will probably exceed the growth rate of crypto market cap. This means that for early adopters, BASE is more speculative than it is stable. During the formative period, holders are speculating more on BASE adoption than they are on the crypto market peg.
However, once BASE reaches an adequate threshold of visibility and adoption slows down, we can expect its market price to stabilize on the peg. Once this is achieved, holders will be able to use BASE to speculate on crypto market cap, and not so much on BASE itself. This is the “Final State”.
In the formative period, buying BASE is a bet on future adoption of BASE.
In the final state, buying BASE is a bet on future adoption of the crypto industry.
Q — Telegram user Sonia: What cryptocurrencies are included in the “Crypto Index” and how many are there? Can they change?
A — Nick from Base Protocol: All cryptocurrencies are included in this index. It technically can change as new tokens get added or removed from the popular price tracking sites like Coinmarketcap, Coingecko, etc.
Q — Telegram user Aleksandr: Which platform will you use to source the total marketcap of cryptocurrencies? If CoinMarketCap for example, how about tokens that are not listed there yet?
A — Nick from Base Protocol: We utilize a Chainlink oracle to aggregate total market cap data from 11 different sources. You can see how this works on the BASE Dashboard.
Q — Telegram user Carlos: There have been several projects of elastic supply protocol, but how does Base differ, and what makes it unique in relation to similar projects?
A — Dylan from Base Protocol: We’ve posted an article which addresses how $BASE is different from the stablecoin and “money game” rebase tokens we’ve seen so far in DeFi. Read it here.
Base Protocol utilizes rebasing to create a truly new asset which does not exist today.
Team
Q — Alex Raffin from GAINS: How many people are in the team? For how long have you been working on Base Protocol?
A — Nick from Base Protocol: There are four core members on the team, two on business and marketing and two on development. This is not counting other contributing members like our strategic partners, auditors, advisors, and branding designers.
Two more members of our team who are doing some work and weren’t able to make it today, here’s some info about them:
Chris, our head of development, has been programming professionally for almost 10 years and has been doing blockchain development since the Ethereum wave of 2017. He’s known for his YouTube channel Learn with Coffee (17k+ subscribers) where he teaches programming across different stacks through in-depth video tutorials. Chris is our head developer.
McGee, our second head of development; there is no higher level of Ethereum development expertise. He is a global elite. McGee likes to keep a low profile, so he’s opted to stay anonymous. But don’t worry — you can get to know him through his contributions on GitHub and you can reach him through Telegram and Discord.
We have been working on Base Protocol since August of this year!
Finance
Q — Alex Raffin from GAINS: Did you raise funds so far? If so, how did you handle them? Are you planning to do any future raises?
A — Dylan from Base Protocol: BASE is incubated by DuckDAO, and the DuckDAO community has filled the first phase of funding. Join the DuckDAO Telegram for more info.
There will also be a small community lottery round, where we select applicants at random for a chance to buy-in. Register for this round here.
As a note, there is still some allocation open for strategic partners who can add value for BASE. Reach out to us via DM if you think you can offer such value to the project.
Q — Alex Raffin from GAINS: Do you get a discount by buying in early? Is it like buying Bitcoin at 10k today?
A — Nick from Base Protocol: Yes. Early participants in the private presale rounds do get a discount! Here are the Token Economics here.
Partners
Q — Telegram user Sonia: Why did you choose DuckDao as your strategic partner? Which side of collaboration do you like best?
A — Nick from Base Protocol: DuckDAO has been an incredible partner in terms of community building and marketing. For example, check out this video of Ivan on Tech mentioning Base Protocol. This is just an introduction, but we’re hoping to get more coverage soon! Check it out here.
Q — Telegram user Ivan Letov: Why did BASE Protocol choose Chainlink as oracle and not Band or DIA? How does BASE Protocol plan to prevent oracles from providing false information?
A — Dylan from Base Protocol: Our engineering team has been watching Chainlink closely for months. In truth, we haven’t found another provider in the space that comes close to the level of decentralization, customer service, and blockchain agnosticism that Chainlink is capable of providing today. When it came time to start developing the architecture for our project, we were already sold on implementing a Chainlink oracle integration. Because of this long-held sentiment, our engineers had been consuming the Chainlink documentation and Youtube tutorials for some time. As a result, we were quickly able to set up a node of our own that is still aggregating market cap data from 11 different market cap APIs and relaying the data to our own FluxAggregator.sol smart contract to this day.
Business Development
Q — Alex Raffin from GAINS: What stage is the project/product at?
A — Nick from Base Protocol: In terms of development, the token contract is finished and is currently under audit by Halborn. BASE is fully functional at launch.
The BASE Cascade, which is the BASE liquidity staking rewards program, is almost done. We expect it to be ready in early November!
Q — Telegram user ❎ 𝐵𝑒𝓁𝑜𝓋: What incentives do you use for liquidity providers? What are the long-term benefits for a BASE token holder?
A — Nick from Base Protocol: Liquidity providers for BASE will get rewards through the standard Uniswap transaction fees.
And they can also get additional rewards through the BASE Cascade, which is a rewards pool that replenishes itself through Splashes at every rebase. As the project grows, so does the rewards pool! If you are a BASE liquidity provider, you should definitely participate in the BASE Cascade.
Thanks a lot Dylan and Nick for coming in today! It was a pleasure to learn more about BASE. Keep us updated. Where can we follow you? — Alex Raffin from GAINS
Thanks everyone for joining the AMA with us, we had a lot of fun, and hope it was helpful to all of you as well. Make sure to check us out at: Website, Presale Application, Telegram, Medium, Twitter and Discord. — Dylan Senter from Base Protocol
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