Integration Guide: DeFi Protocols

This guide outlines the process for integrating BGT Market into your DeFi protocol. For a comprehensive understanding of BGT Market and how it works, refer to previous sections of this document or request for an introductory call.

What is BGT Market

BGT Market is the auction market for spot $BGT on Berachain.

By leveraging the price disparity between $BGT's native redemption rate and the auction market value, BGT Market enables DeFi protocols to unlock higher yields and create more efficient capital flywheels.

  • Native redemption: $BGT can be redeemed at a 1:1 ratio for $BERA

  • BGT Market: On average, $BGT is sold at a price of 1.78* $BERA

*Average price taken over 30 days from BGT Market on bArtio as of December 3, 2024

If your DeFi protocol incorporates $BGT farming as an essential yield component, BGT Market offers a compelling opportunity to enhance yield generation.

Example: Simple auto-compounder integration

  1. Standard flow

    • Users deposit LP tokens into a reward vault

    • $BGT rewards earned are redeemed 1:1 for $BERA via $BGT token contract

    • Resultant $BERA is reinvested to compound the LP position

  2. With BGT Market

    • Instead of redemption, earned $BGT is auctioned

    • Additional $BERA surplus acquired via auction boosts compounding, significantly enhancing yields and efficiency

Integration Process

Non-transferable $BGT: $BGT must be claimed directly into BGT Market (BGTM) contract. Once claimed into your contract, $BGT cannot be auctioned.

Step 1: Call setOperator function

  • ABI: Available here

  • Parameters

    • [bArtio] BGTM contract address: 0x8894D7EE78251cD234A5DDC93a163B467505E3AD

Step 2: Call deposit function to claim $BGT to BGTM contract

Step 3: Call contribute function to deposit $BGT to the auction lot

  • ABI: Available here

  • To ensure your $BGT balance is deposited to the auction lot, use getBalance function to check your balance (ABI here)

  • The minimum contribution amount to an auction lot is 0.05 $BGT

If the deposited amount exceeds the maximum lot size (currently set at 100 $BGT), multiple auctions will initiate automatically.

Step 4: Utilize $BERA from auction

Once an auction has successfully concluded, the settled $BERA is automatically credited to your smart contract. The $BERA can then be used as per your protocol's existing product flow.

Key Considerations

  1. Auction Duration Redeeming $BGT to $BERA directly via the $BGT token contract is instant. However, with BGT Market, the auction completion time may vary based on volume. That said, we do not foresee the total turnaround duration from deposit to completed auction to exceed 8 hours.

    • Time to fill auction lot: An auction will only commence when the auction lot is completely filled; if your $BGT deposit does not fill the auction lot, time is needed for other contributors to fill the auction lot.

    • Time for auction purchase: We are using a dutch auction format, which initiates with a high initial offering price and gradually decreases. This means that the duration for an auction to complete is a variable.

    • Staggered auction lots: If your deposit exceeds 100 $BGT, it may be split across multiple auction lots. This means that the duration for all the auction lots to complete is a variable.

  2. Price Volatility Redeeming $BGT to $BERA directly via the $BGT token contract gives you a predictable and certain conversion rate since it's always at a 1:1 ratio. However, with BGT Market, the auction settlement price may vary based on fluctuation in demand.

    • Fluctuations in price premium on Berachain Mainnet: We observed drastic volatility in the settlement price on bArtio testnet. However, we expect the price volatility to be significantly lower on mainnet.

    • Price falling below parity: Due to the design of our dutch auction mechanism, it is possible for the settlement price to fall below parity, which means 100 $BGT can technically be sold for less than 100 $BERA. However, on mainnet, we do not expect this to happen often.

  3. Protocol Fees Upon the purchase of a lot, the settlement price will be settled among the seller(s) within the same transaction, after accounting 3.3% protocol fee.

For further details or technical support, contact our team via Telegram.

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