How to get started with Baldr

To start participating in a really quick manner you will need to grasp a few concepts and definitions to ensure you make informed decisions and be aligned with how will you interact with the protocol (and what “your goal” will be).

Important! You should keep in mind to always do your own research. This information is for general purpose and reference only. It is not complete, it is not exhaustive and is not absolute with the pass of time.

Give value to the treasury

Get USDC, and use those tokens to get BALDR. With BALDR, you will be able to stake it and also start bonding. The treasury will use this currency to back up the price of the BALDR that is given to you.

A person giving coins as a metaphor to give value to treasury

Set up an strategy

Think how will you participate: are you willing to do active monitoring and decision making? Or are you going to take it easy and wait to get value over time?

A flock of arrows used as a metaphor for strategies.

Staking is for you if you are looking for a passive and long term strategy. The increase of your stake of BALDR translates into a constantly falling cost basis converging zero. This means that even if the market price of BALDR goes below your initial purchase price, with enough time staking, the increase of your staked BALDR balance will eventually outpace the fall in price.

In the other hand, bonding is an active short term strategy: users bonding will have to monitor discounts to maximize profits. This is caused directly by the price mechanisms of the secondary bond market which affect directly the discounts of the price of bonds.

Keep market dynamics in mind

An increase in staking will generally be preceded by purchases from the market. That increases price, which allows the protocol to sell at a higher price and increases yield for stakers. This will cause to bring in more stakers to the protocol and continue the cycle.

Meanwhile, the rising price increases the bond discount and creates capacity for new bonds. These are preceded by new liquidity, which improves the protocol’s ability to carry out sales and increases available exit liquidity.

This positive price-liquidity feedback loop should serve to create sustainable to expansionary periods. However, they work both ways. Falling demand decreases staking rewards and bond capacity, causing demand to fall further. This is an unavoidable fact of system’s like this; even the most popular (i.e. Bitcoin) are no stranger to significant declines after periods of expansion.

A graph as a metaphor for patterns in market

But we can work to mitigate busts. This is where the protocol’s reserves step in and to catch the market when velocity turns too far to the downside. It does so through forward guidance (the fact that the protocol will buy lowers risk the lower we go, which can mean we don’t have to buy) and by buying perpetually below intrinsic value. The treasury ensures that, although bear markets and contractions can and will occur, the protocol can never die.

We welcome you all to this new journey that is only starting!

Stay tuned! ❤

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