What is BLX? Utility & Features
WHAT IS BLX?
BLX is the native token of the OptionBlitz protocol.
BLX has four main utilities:
1 — Governance
2 — Reduced Trading Fees
3 — Higher Payouts on Trading
4 — Staking boost of up to 50%
BLX holders have the governance right of the DAO. The DAO applies the “Off-chain discussion, On-chain governance” method. Since the governance is on the chain, every proposal is essentially an executable smart contract.
The DAO governance includes:
- Managing the specific usage of the treasury asset;
- Managing risk management parameters of the protocol such as insurance fund conditions.
- Upgrading the DAO and OptionBlitz protocol smart contracts. To upgrade any protocol smart contracts, Optionblitz admin has veto power. This means that the DAO would have to fork the code in the event that OptionBlitz admin rejected an upgrade proposal. This is to protect against malicious attacks.
The OptionBlitz governance proposal needs to be initiated by BLX holders, and the initiator’s BLX voting power has to be no less than 1% of the issued total. The voting quorum has to be no less than 5% of the issued total. The proposal initiator is set to vote yes.
A BLX holder can delegate the voting power to another holder.
The BLX token will offer its holders advantages in the forms of:
- Increased payout from providing liquidity to the platform
- Reduced trading fees
All BLX holders who choose to pay the platform fees in BLX will enjoy a 25% fee reduction for any trade on the platform.
In order to obtain the other two perks, platform users will need to either stake or burn the BLX token. Both of those options can provide a pay-out boost of up to 50%, with the burning requirements being a lot lower.
The general idea behind this mechanism is that when BLX price is low it would be more efficient (in the long run) to burn tokens (thus permanently reducing the token supply and boosting the price). When BLX price is high it would be more efficient to stake tokens, as the user would eventually get those tokens back
In both staking and burning, the general logic is: the amount of BLX tokens required to Optionblitztain the pay-out boost would be proportional to the current BLX price and the liquidity which the user has provided to the platform.
Liquidity Provider Profit Distribution Model:
This table describes the revenue share opportunities for different investment categories. All liquidity providers require USDC but they can choose how long to lock funds inside the staking protocol. They can configure ‘no lock duration’ which means they can withdraw their funds on-demand. The maximum lock duration has a multiplier effect on the returns and this is capped at 52 weeks duration with a +50% pay-out boost.
Bonding the BLX token to your stake will also multiply your returns with a maximum +50% pay-out boost offered.
The pay-out increase from staking is dependent on four factors:
- The number of tokens staked (S)
- The staking multiplier (M)
- based on stake duration The amount of liquidity provided on the platform (L)
- The current BLX price (P)
Then we can define the Payout Increase (I) as:
We can than further define the duration multiplier as a function of the duration for which the tokens are staked in weeks (D):
M has a minimum value of 1 and a maximum value of 5, when the LP tokens are staked for 52 weeks (or about 1 year). Staking for a longer duration does not provide a higher multiplier.
Here is a simple framework to think about the above:
- If you stake without duration, you need to stake an amount equivalent to half of the liquidity which you have provided to get the maximum pay-out increase.
- If you stake with maximum duration you need to stake an amount equivalent to 1/10th of the liquidity which you have provided to get the maximum pay-out increase.
We will further illustrate this with two examples, under the following assumptions:
- Liquidity provided 10 000 USDC
- Base pay-out rate 40% revenue share
- Current BLX price 0.5 USD
If a user wants to get the maximum pay-out rate (40% + 40%*50% = 60%) then they need to do one of the following:
- Stake 10 000 * 50% / 0.5 = 10 000 BLX without duration
- Stake 10 000 * 50% / 0.5 / 5 = 2 000 BLX with maximum duration
- Stake an amount between the two above, while adjusting the duration
The pay-out increase is capped at 50%.
Below is a chart to further the intuition on the subject:
The amount of pay-out increase which 2000 staked BLX can provide, under the assumptions of 10 000 USDC liquidity provided to the protocol. 0.5 USDC BLX price, based on the staking duration (in weeks):
Staking with duration has an additional benefit that the BLX price is snapshotted at the time the stake is made.
This means that if a user stakes 2000 BLX (the example above) with max duration, then even if the price of BLX falls below 0.5, he would still be eligible for the original pay-out increase regardless of the fall in the token price.
If a user stakes without duration, then his pay-out increase will vary as the price changes.
Once the stake duration ends the user can opt to:
- Either to stake the tokens again
- or to Withdraw the LP tokens and pay 5% withdraw fee
Now you know what the BLX Token is and how you can maximise its utility, Click Here to learn about Burning BLX and BuyBack & LP