# Basis Gate Whitepaper By [BasisGT](https://paragraph.com/@basisgt) · 2022-03-25 --- **What is Basis Gate?** Basis Gate $BGT is a $GT (GateToken) pegged algorithmic stablecoin ecosystem running on GateChain. The protocol's underlying mechanisms are designed in a way to ensure a peg of $BGT:$GT is achieved, and once achieved, it is maintained to establish $BGT as a mirrored, liquid asset to $GT. Protocol accomplishes this by introducing unique economic and game-theory centric dynamics into the market through its three tokens, namely $BGT, $BGS, and $BGB. Basis Gate is aiming to launch in April 2022 and is modeled/inspired by a highly successful project, Tomb Finance on the Fantom chain. **Why Basis Gate?** We are big fan of [Gate.io](http://Gate.io), and we are here to support the GateChain ecosystem. In the short term, until the peg of Basis Gate is achieved, Basis Gate is focusing on optimizing the protocol and creating wealth for our early investors through Farms and Boardroom. Once the peg is achieved, the system’s mechanisms will focus on stability and consistency so that $BGT can function as a mirrored, liquid asset to $GT. A percentage of proceeds from this process go to the community owned DAO fund which plans to establish GateChain’s fresh Incubator and Launchpad to bring new opportunities and growth to the entire GateChain ecosystem. For Basis Gate to have value, $GT needs, too, to have value - for this, we need a vibrant GateChain ecosystem with flourishing projects. Basis Gate’s design to be a DAO-based governance system will ensure that the whole community stays together, makes decisions together, and takes everyone along to the moon. **How does the protocol work?** Basis Gate protocol is based on a series of complex interactions, with the behavior of multiple stakeholders deciding the pricing dynamics of the multiple tokens of the ecosystem. • When $BGT price is over the peg (like it is expected it will be for the initial few weeks/months of the project), new $BGT are minted to drive the price down. These new $BGT are allocated to $BGS holders in the Boardroom, thus staking $BGS in the Boardroom makes the most logical sense during this period. • When $BGT price is at the peg, $BGT holders can use the $BGT -$GT LP to increase their yield. At this point, new $BGT will stop getting minted, and each investor's $BGS will drive voting rights to have a say in the governance of the platform through DAO. • When $BGT price drops below the peg, investor's strategy should lean towards buying $BGB using $BGT. The $BGT used to buy $BGB will be burned, which reduces supply of $BGT and brings its price back to peg, at which point investors can sell $BGB to earn profit. **What are the three tokens of Basis Gate?** Basis Gate multi-token protocol consists of the following three tokens and each plays a critical role in establishing this protocol: 1.Basis Gate Token ($BGT) - The $BGT token is designed for use as a medium of exchange. The built-in stability mechanism in the protocol aims to maintain $BGT’s peg of 1 $BGT = 1 $GT; 2.Basis Gate Shares ($BGS) - $BGS token holders have both governance voting and ownership rights of the protocol. Once DAO is established, they will play a crucial role in the governance of Basis Gate. $BGS can be staked in the Boardroom to earn a part of minted $BGT as rewards; 3.Basis Gate Bonds ($BGB) - $BGB’s main job is to help incentivize and reward users for ensuring peg during an epoch contraction period. **What is the point of Basis Gate?** In the short term, until the peg is achieved, Basis Gate is focusing on optimizing the protocol and creating wealth for our early investors through Farms and Boardroom. Once the peg is achieved, the system’s mechanisms will focus on stability and consistency so that $BGT can function as a mirrored, liquid asset to $GT, improving the overall liquidity on GateChain. A percentage of proceeds from this process go to the community owned DAO fund which plans to keep the protocol sustainable and healthy for the future. **Tokens** Basis Gate multi-token protocol consists of the following three tokens, and each plays a critical role in establishing this protocol: **_Basis Gate Token ($BGT)_** The $BGT token is designed for use as a medium of exchange. The built-in stability mechanism in the protocol aims to maintain $BGT’s peg of 1 $BGT = 1 $GT. Note that $BGT actively pegs via the algorithm, it does not mean it will be valued at 1 $BGT: 1 $GT at all times as it is not collateralized. $BGT is not to be confused for a crypto or fiat-backed stablecoin. $BGT can be farmed in Farms or exchanged for $BGB when under peg. **_Basis Gate Shares ($BGS)_** $BGS token holders have ownership rights of the protocol. Once DAO is established, they will play a crucial role in the governance of Basis Gate. $BGS can be staked in the Boardroom to earn a part of minted $BGT as rewards. $BGS has a maximum total supply of 10,100,000,000 tokens distributed as follows: 1.DAO Allocation : 1,000,000,000 $BGS vested linearly over 12 months 2.Team Allocation : 2,000,000,000 $BGS vested linearly over 12 months 3.Rewards: 7,000,000,000 $BGS are allocated for incentivizing Liquidity Providers in two shares pools for 12 months 4.Initial mint: 100,000,000 $BGS minted for IDO, which will be used as initial liquidity in DEX. $BGS can be farmed in Farms or staked in Boardroom. **_Basis Gate Bonds ($BGB)_** $BGB’s main job is to help incentivize and reward users for ensuring peg during an epoch contraction period, when TWAP (time-weighted average price) of $BGT is below users could buy $BGB using $BGT. **Farms** Basis Gate users could get hold of $BGT using $BGT - $GT LP & $BGS - $GT LPs at [https://www.basisgt.com](https://www.basisgt.com) **Farms provide investors an easy way to accumulate $BGS — the limited supply governance token of Basis Gate.** Our Farms will continue rewarding $BGS in Farms until the max supply of $BGS allocated to rewards (700,000,000) is reached, at which point emissions stop. This is going to be the case when the $BGS Farms start i.e. March 3th 2024, when emissions stop and no new $BGS are created. There are two Farms user can participate in to earn $BGS before 24th January 2023: 1.Deposit $BGT – $GT LP to earn $BGS 2.Deposit $BGS - $GT LP to earn $BGS We will build our inhouse auto compounder to turn APR into APY, maximizing the yield for Basis Gate community. This auto compounder will be open to other liquidity pools, Farms, and vaults available on GateChain in the near future. **Boardroom** Stake your $BGS to earn $BGT at [https://www.basisgt.com](https://www.basisgt.com) **Boardroom is the $BGT mint strategy of Basis Gate which distributes $BGT to all stakers when itis above peg.** As long as peg is >1.01, the Boardroom prints $BGT every epoch based on the predetermined emissions rate based on the current supply. These rewards are distributed to everyone who has staked their $BGS in the boardroom. Staking $BGS will give you $BGT rewards when the price of $BGT is above the peg (1$BGT: 1$GT), but not when it is at or under the peg. _Any interaction with the Boardroom will reset both timers. That's 3 epochs (18 hours) to withdraw your $BGT rewards, and 6 epochs to unstake your $BGS (36 hours)._ • Epoch duration: 6 hours • Deposits / Withdrawal of $BGS into/from the Boardroom will lock $BGS for 6 epochs and $BGT rewards for 3 epochs. • $BGT rewards claim will lock staked $BGS for 6 epochs and the next $BGT rewards can only be claimed 3 epochs later • Distribution of $BGT during Expansion 70% as Reward for Boardroom $BGS Stakers 10% goes to DAO fund 20% goes to team fund • Epoch Expansion: Current expansion cap is based on $BGT supply, and if there are bonds to be redeemed, 65% of minted $BGT goes to treasury until it is sufficiently full to meet bond redemption. If there is no debt it will follow max capped expansion rate. **Bonds** Profit from $BGB helps get $BGT back to peg. Come to the rescue of Basis Gate and get it back to peg while making a healthy lucrative profit! $BGBs are sold by the protocol when the $BGT price is under peg of 1 $GT. Bonds can be purchased as “$BGT at a discount” since bonds can be redeemed back to higher $BGT price once it reaches peg. All $BGT used to buy $BGBs is burned to help reduce supply. $BGB holders are incentivized to hold their token longer as the reward (in $BGT) increases quadratically with positive price movements. **What are $BGB?** $BGB are unique tokens that can be utilized to help stabilize $BGT price around the peg (1 $BGT= 1$GT) by reducing circulating supply of $BGT if the TWAP (time-weighted-average-price) goes below peg (1 $BGT = 1 $GT). **When can I buy $BGB?** $BGB can be purchased only during contraction periods, when TWAP of $BGT is below 1. For every new epoch during contraction periods, $BGB are issued in the amount of 3% of current $BGT circulating supply, with a max debt amount of 45%. This means that if bonds reach 45% of circulating supply of $BGT, no more bonds will be issued. To encourage redemption of $BGB for $BGT when $BGT TWAP > 1.1 and incentivize users to redeem at a higher price, $BGB redemption will be more profitable with a higher $BGT TWAP value, of which $BGB to $BGT ratio will be 1:R, where R can be calculated in the formula as shown below: R = 1 + \[($BGT (TWAP price)–1)\]\*coeff Where coeff = 0.7 Note: $BGB TWAP (time-weighted average price) is based on $BGT price TWAP from the previous epoch as it ends. This means that $BGT TWAP is real-time and $BGB TWAP is not. You can buy $BGB if any are available (TWAP < 1). Anyone can buy as many $BGBs as they want as long as they have enough $BGT to pay for them. There is a limited amount (3% of $BGT current circulating supply) of available $BGBs per epoch during contraction periods, being sold on a first come first serve basis. First and most important reason is $BGB help maintain the peg, but will not be the only measure used to keep the protocol on track. We also have a DAO fund which will step in and buy $BGT to get it back to peg. $BGB don't have an expiration date, so you can view them as an investment on the protocol, because in the long-term you benefit from holding bonds. **Incentives for holding $BGB** The idea is to reward $BGB buyers for helping the protocol, while also protecting the protocol from being manipulated from big players. So after you buy $BGB using $BGT, you get 2 possible ways to get your $BGT back: 1.Sell back your $BGB for $BGT while peg is between 1 - 1.1 (1 $BGT = 1 $GT) with no redemption bonus. This to prevent instant dump after peg is recovered; 2.Sell back your $BGB for $BGT while peg is above 1.1 (1 $BGT= 1 $GT) with a bonus redemption rate. The longer you hold, the more both the protocol and you benefit from $BGB. **Example:** When $BGT = 0.8 $GT, burn 1 $BGT to get 1 $BGB ($BGB price = 0.8 $GT) When $BGT = 1.15 $GT, redeem 1 $BGB to get 1.105 $BGT ($BGB price = 1.27 $GT) _So, which one is better?_ If I buy $BGT at 0.8 $GT, and hold it until 1.15 $GT and then sell, I'm getting +0.35 $GT per $BGT. But, if I buy $BGT at 0.8 $GT, burn it for $BGB, and redeem it at 1.15 $GT, I'm getting 1.105 $BGT\* 1.15 ($BGT current price) = 1.271 (+0.47 $GT) per $BGB redeemed. _But what if getting back to peg is taking too long?_ We are going to adjust our use cases, to have different behaviors during contraction and expansion periods to benefit $GT and $BGB holders when needed. _When can I swap $BGB for a bonus?_ $BGB TWAP (time-weighted average price) is based on $BGT price TWAP from the previous epoch as it ends. This means that $BGT TWAP is real-time and $BGB TWAP is not. In other words, you can redeem $BGB for a bonus when the previous epoch's TWAP > 1.1. **Basis Gate Strategy** **Belief** As an algorithmic stablecoin maintaining its peg via seigniorage, Basis Gate needs the community to believe in the team, plan, and most importantly each other. How do you establish a system of cooperation amongst strangers with vastly different preferences, who are separated by time and geography, who have never met, and likely never will? If you pause to consider this question carefully, you will realize it is a problem humanity has faced since time immemorial. If there is one thing humanity is good at, it is solving problems and solving the problem of cooperation has powered human prosperity and facilitated our civilization's ingenuity like no other creature in the universe. _So how have we learned to cooperate?_ By finally living in a system where the only way to grow yourselves is by supporting and growing the whole community. All you need to have is belief in the system for GateChain & Basis Gate. **Know your own investment style** To formulate a strategy, the holder must understand how the protocol works. Different strategies make sense for different people based on their risk tolerance, their short & long term financial goals, and how actively or passively they want to manage their investment. Based on your profile & style, you can choose your investment strategy: **Passive - Invest & forget** Buy $BGS, stake them in the Boardroom, and sit back and relax. Your staked $BGS will keep on getting you a share of all new $BGT that are minted until $BGT reaches peg. Get all benefits of governance and ownership rights in DAO & Launchpad with $BGS. Once a week, or however frequently you like, take the earned $BGT and sell part for profit and restake the rest. Another option in "invest & forget" strategy is to use Basis Gate's upcoming Autocompounder, where you can easily make $BGT - $GT LP or $BGS - $GT LP pair (or both) and leave it in a vault, which will grow your amount of LP automatically selling the rewards and buying LP tokens. Hassle-free. **Active - Check in regularly** Buy $BGT and make it LP with $GT. Deposit LP tokens into $BGT - $GT Farm to collect $BGS reward. Stake $BGS reward in Boardroom to get $BGT. Sell some part of the $BGT for profit and restake the rest. Repeat regularly. **YOLO - Full-time active trader** A full degen never stops. Buy low, sell high _\-- sounds easy?_ Many have failed. You can actively try timing the market and finding best combination of options when and what to stake/restake, buy and sell. Usually requires being glued to the screen as well as following overall market trends. This is for experienced traders only and not recommended if you do not know what you are doing. Remember that you can change strategies as and when you wish, and distribute your holdings between Boardroom, Farm, and Autocompounders as you wish. Join our community and discuss there to learn how to further use “advanced” strategies. All the strategies are enhanced when you use the earned profits not just to sell and forget, but to restake back into the Basis Gate ecosystem. This is called the Guardian Restaking strategy. **Guardian Restaking strategy** The Guardian Restaking strategy as described below is best to keep the protocol working well in the long run and to keep everyone profiting at the same time. Most people either go with $BGS Boardroom staking, or LP Autocompounder, or a mix of both, as their first investment. The question thus becomes _– what to do with the rewards earned?_ _The first thing to understand is:_ As long as TWAP of $BGT is above 1.01 of $GT the system expands, printing more $BGT for $BGS Stakers • Only those who have staked $BGS in the Boardroom will receive part of this expansion. Hence, it is important to always stake $BGS or you will not receive $BGT rewards. • The higher the price of $BGT the bigger/faster the expansion. Expansion will stop if $BGT price falls too low. Hence, it is better to use your rewards to sell for $GT and stake together with $BGT in Farm or Autocompounder. • Increased Boardroom rewards will increase the value of $BGS, thus making this a guardian of profitability & stability. If too many people sell off their $BGT, the price of $BGT will go down, the rewards in the Boardroom diminish and will eventually stop generating new rewards. By restaking, everyone benefits as collective. Thus, an ideal reinvesment strategy that benefits the project would be to restake your earnings into liquidity pools that create buying pressure for $BGT on our Autocompounder. **How much rewards to stake & how much to keep?** _IF $BGT PEG/TWAP > 6_ **Keep in $BGS - $GT LP or $BGS to avoid IL** • Use 30-35% of profits to put into $BGS- $GT LP Autocompounder to grow your $BGS. • Use 20% profits to put into $BGT - $GT LP Autocompounder to add stability to the ecosystem while avoiding IL. • Use 40% profits to purchase $BGS and put into the Boardroom to earn more $BGT. • Every few days, sell earned $BGT in the following way: o Sell 10% of $BGT and pair with 10% more $BGT to put into $BGT - $GT LP in Autocompounder. o Use 75% to purchase either $BGS - $GT LP Autocompounder or $BGS for Boardroom staking. o Sell 5-10% for $GT or stablecoin for profit taking or future usage. _IF $BGT PEG/TWAP >1.1 & <6_ **Add to $BGT - $GT LP for high profits while minimizing IL** • Use 20-25% profits to put into $BGS - $GT LP in Autocompounder. • Use 40% or profits to put into $BGT- $GT LP Autocompounder to earn high rewards while avoiding IL and adding stability to the ecosystem. • Use 30% of profits to purchase $BGS and put into Boardroom to earn more $BGT. • Every few days, sell earned $BGT: o Sell 20% $BGT and pair with 20% more $BGT to put into $BGT - $GT LP Autocompounder o Use 75% to purchase either $BGS - $GT LP Autocompounder or $BGS for Boardroom staking to grow your $BGS. o Sell 5-10% for $GT or stablecoin for profit taking and future usage. _IF $BGT PEG/TWAP <1.01_ Best move becomes to purchase $BGB to ensure the ecosystem gets back to peg & to earn healthy profits. --- *Originally published on [BasisGT](https://paragraph.com/@basisgt/basis-gate-whitepaper)*