Introducing all-new $BFR staking and liquidity pool

Why introduce a new Value Accrual System?

Although the iBFR model was robust, the upgrade will allow us to better distribute protocol revenue, incentivize liquidity, and scale the trading ecosystem.

  • BLP token — a unique token for LPs who provide liquidity to Buffer’s stable asset liquidity pool.
  1. Escrowed BFR — Additional reward offered over and above yield generated via protocol revenue.
  1. Trade: BFR tokens can be used to trade options on the platform
  2. Voting: BFR holders will be able to vote on all the proposals and will be able to direct the course of product development
  • esBFR: — Can be claimed and vested or can be compounded to receive more rewards just like the BFR token
  • Multiplier points: Can be staked to boost the USDC APR (aka the real yield)

Escrowed BFR (esBFR)

esBFR is a non-transferable reward token emitted to BFR stakers and liquidity providers (BLP holders).

  1. Claim: esBFR will be transferred to your wallet, and then they can be vested linearly over six months to receive BFR tokens. During the vesting period, esBFR doesn’t accrue any rewards.

How can ESBFR be vested in BFR?

Through vesting, escrowed BFR (esBFR) tokens can be converted into BFR tokens, accessed on the Earn page.

Multiplier Points (MP)

Multiplier points reward long-term BFR stakers by boosting their APRs. The longer you keep your tokens staked, the higher the APR you can get — this mechanism also removes any requirement of introducing lock-up periods in the staking pool.

Liquidity Pool & BLP Token

Buffer V2 has a USDC-based liquidity pool which means anyone can mint BLP tokens by providing liquidity to the liquidity pool. The price for minting and redeeming tokens is calculated based on: (the total worth of assets in the pool, including profits and losses of all previous trades) / (BLP supply).

  • esBFR tokens: At a pre-determined emission rate

How does the USDC vault generate yield?

The USDC vault act as a counterparty to all the trades placed on the options trading platform. In return, 70% of the trading fee (In USDC) generated is distributed to BLP holders. Other than the trading fee, BLP holders can also earn from the PnL of the pool, whenever a trader makes a positive PnL, the pool loses, and whenever a trader makes a negative PnL, the pool makes a profit. The pool has a probabilistic edge that can generate a positive yield consistently over the long term. Additionally, esBFR rewards are also emitted to the liquidity providers That can be either claimed for vesting or compounded to earn additional USDC yield.

How does the liquidity pool manage risk?

Over and above having a probabilistic edge, we have added other features to manage long-tail risk for the liquidity providers.

  1. Max utilization of vault — Max vault utilization at a time is capped at 64% of the total available liqudity
  2. Max cap — Max liquidity that can be deposited in the pool is $1M (Will be increased gradually)
  3. Pause trading — In the case of highly volatile scenarios trading for a given pair/asset can be paused.

Finally, a message for you,

The upcoming months will be extremely thrilling, and we look forward to this new chapter in the platform’s journey. However, as Buffer continues to grow, the subject of value encapsulation will become incrementally complex and dynamic. As such, we will continue to share guides, tutorials, and informative Twitter threads that help you navigate the complex yet rewarding ecosystem.

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Buffer Finance

Buffer Finance

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Short-term and fast-paced gamified options trading platform.