Base Protocol — The Next Generation of Rebasing

Overview

Rebasing is a powerful innovation. However, most rebase projects haven’t utilized this innovation for its highest potential. Rather, these projects have simply facilitated DeFi money games that don’t create fundamental value. The purpose of this article is to make one thing clear — Base Protocol is not one of those projects.

BASE is a token whose price is pegged to the total market cap of all cryptos. This gives traders the ability to speculate on the entire crypto industry as though it were an index like the S&P 500 or NASDAQ.

This is a powerful use case — one which shouldn’t be obscured by the “degen” stigma associated with other rebase projects.

In this article, we’ll go over popular rebase projects in the market today, the pioneer of rebasing (AMPL), and how BASE creates the most compelling use case for rebasing.

Today’s Popular Rebase Projects

Here are some examples of popular rebase projects in the market today:

• Yam Finance (YAM), a memecoin focused on maximizing APYs based on a dollar peg.
• Based Money (BASED), a self-proclaimed “game of chicken” based on a dollar peg.
• Xplosive Ethereum (xETH), a token whose price is pegged to the price of Ethereum.

At the fundamental level, these projects are not creating new value. Pegging to the dollar is simply not an exciting use case, as there are already major competitors like USDT, USDC, DAI, and of course the dollar itself. And pegging to some other arbitrary asset (like Ethereum) creates almost no value, because if a trader wanted to hold Ethereum, they could always just buy Ethereum. Again, these projects are mostly money game-focused.

The only popular project which has attempted to create a fundamentally valuable use case is Ampleforth (AMPL). And even in the case of AMPL, we can identify certain weaknesses.

The First Use Case: Ampleforth

Ampleforth is the original inventor and pioneer of rebasing. AMPL is a digital asset whose price is pegged to United States CPI, which accounts for dollar inflation. In other words, AMPL’s goal is to become an inflation adjusted digital dollar. While this is a differentiated offering compared to other dollar peg stablecoins, it is fair to say that AMPL is forced to compete with these existing stablecoin assets.

In this respect, AMPL is creating a new spin on an existing asset class, but it is not creating a truly new asset class.

Another point worth mentioning is that AMPL’s goal of creating an inflation adjusted dollar is based on US CPI data, but the only source for this data today comes directly from a centralized US government. This is a problem because many crypto enthusiasts don’t want to trust governments in the first place.

Furthermore, the dollar peg use case is simply not one which is very interesting to the crypto audience — one of our common goals as crypto enthusiasts is to move away from fiat and the associated governments that influence it.

Still, we saw Ampleforth grow to incredible heights — up to a market cap nearing $700M in July. Ampleforth’s rise was largely related to the runaway profit opportunities created by the rebasing “money game.”

But once Ampleforth reached popular exposure and the money game slowed down, we saw a major bearish correction. This correction was a direct reflection on the crypto market’s true demand for another dollar peg token.

Before engaging with Ampleforth, traders should ask themselves the question: if AMPL can achieve its goal as a dollar peg, how useful/innovative would that really be in today’s landscape? And if it does achieve its peg, are users ready to use it over existing digital dollar competitors?

The Best Use Case: Base Protocol

As we’ve mentioned, most rebase projects so far have been meme or money game-focused. And when they have built on a true use case, as seen with AMPL, the use case itself contends with many competitors.

Base Protocol is not a meme. It is not money game-focused. And it creates a truly innovative and new asset class for which there are no existing competitors:

An exchange tradeable cryptocurrency industry index.

BASE acts as a one-stop trading instrument which allows holders to speculate on the entire crypto industry, rather than just one token or a select portfolio of multiple. BASE is 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.

The Base Protocol mission is simple — to make it easy for everyone to benefit from the performance of the entire cryptocurrency market in a secure, decentralized and future-proof way. In the same way that Bitcoin is the household name of cryptocurrencies, 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.

Other use cases for Base Protocol include BASE as a borrowable asset, safe haven, and price basis for trading cryptocurrencies. Learn more about these use cases on the Base Protocol website and whitepaper.

Conclusion

Don’t confuse BASE with the first generation of “degen” rebase projects that have emerged in DeFi. BASE is a truly innovative and necessary use case for rebasing, like Ampleforth, and one of the most valuable products to enter the DeFi space.

To be clear, the Base Protocol team credits Ampleforth as a pioneer and trailblazer in this space. But it was important for us to write this article to clear up the confusion we’ve seen about BASE as it is compared to other projects.

If you’d like to learn more about Base Protocol and how its rebasing works, go to baseprotocol.org. Here, you’ll find our whitepaper, litepaper, and other important documentation.