Today, I'd like to quickly introduce you to an interesting product on Berachain, @bgtmarket.
This is also a series I want to do: A tour of the Berachain ecosystem, the first one was Puffpaw, and this is the second one.
It all starts with the $BGT, which is the governance token of Berachain. Its feature is that it is non-transferable and non-tradable, and users can only obtain it through methods like providing liquidity.
Users can convert BGT 1:1 to BERA, but the reverse operation is not possible. The speed at which users obtain BGT through the same scale of LP depends on the validators, and the proportion of governance power of the validators depends on the proportion of the total circulating BGT that users have delegated to them.
In short, the validators have the power to decide where the BGT generated with each block goes, and users can delegate their BGT to the validators that best serve their interests.
This is why we say that the norm of Berachain is the cooperation and game between projects, validators, and users.
However, there is also a problem here, the "value of user delegation of BGT" and the "value that the project is willing to pay for per unit of liquidity" may be unequal, that is, the original consensus mechanism cannot accurately and effectively provide real-time judgment of the demand and supply of BGT.
The original intention of BGT Market is to solve this problem - by launching a dedicated BGT market, to provide accurate real-time market judgment of the supply and demand value of BGT for both the demand and supply sides, and to price it through real-time trading.
In fact, what BGT Market is doing is "effectively pricing the implied value of BGT" (the face value of 1 BGT = 1 BERA).
P.S. The implied value of BGT on the surface depends on the bribe that the project is willing to pay for per unit of liquidity. At a deeper level, the implied value of BGT is actually the external manifestation of the Berachain ecosystem.
BGT Market is a decentralized BGT auction market. This market uses a Dutch auction format to auction BGT, with the initial auction price of BGT dropping rapidly and the rate of decline slowing over time. Buyers can buy BGT when the price drops to their expected price and gain control of the BGT.
Here, you may wonder, since BGT is non-transferable and non-tradable, how does BGT Market auction BGT?
I think you can understand it this way: All the BGT on BGT Market are placed in a wallet. Buyers can see the BGT they have purchased on the front-end of BGT Market (but the BGT is not actually in the buyer's wallet), and can operate based on their own needs, such as "delegating BGT to validators", "canceling delegation", "claiming BGT delegation rewards", "selling BGT", "converting to BERA", etc. Each operation is automatically executed by the BGT Market smart contract. In fact, the BGT does not actually move or trade, but the user has control over it.
In addition to the benefits mentioned above, I personally think that BGT Market can also help new Berachain users quickly understand the implied value of BGT at the current time point, so that they can formulate their future strategies - if the implied value of BGT is high, they will be more inclined to delegate BGT to nodes 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 withdraw.
From another perspective, buyers can directly sell BGT through BGT Market, which also indirectly reduces the tendency of Berachain users to convert BGT to BERA, thereby reducing the selling pressure on BERA.
That's my introduction to BGT Market and why I'm introducing it.
Finally, let me give a small advertisement for my paid group, which currently has around 450 members. It is jointly operated by me and Mantou, with me mainly doing research and fundamentals, and Mantou mainly looking at the secondary market and on-chain memes. We both look at Alpha content. The price is 3SOL/year.
TG Channel (where I previously shared market views): https://t.me/SleepinRain
Reading List: https://docs.google.com/spreadsheets/d/1JSmI-YDvbdxXJ1Tud2sK8mly33zh1VmcH8i5wUgSYs0/edit?usp=sharing
Quality CT information flow: https://x.com/i/lists/1795371206344130752
