🪙BaseFeeLMA Token

Core to the concept of Modular Synthetic Blockspace, which simplifies the process of gas hedging, providing a strategic tool to mitigate the impact of gas price fluctuations is the creation of a synthetic asset — the baseFee token.

It allows for more flexible and real-time management of gas fees. Users will be able to mint baseFee tokens, which are a Collateralized Debt Position (CDP) mechanism inspired by the Liquidity’s CDP design. This design integrates aspects that facilitate arbitrage and employs an Automated Market Maker (AMM) with dynamic fees to attract liquidity. At the same time, the CDP encourages market convergence with the actual gas price by allowing participants to act on arbitrage opportunities themselves. It eliminates the need for an external validator, enhancing the market’s efficiency and responsiveness to price signals.

BaseFee Token Explained

In the Hedgehog Protocol, the BaseFee token is a derivative minted using the Collateralized Debt Position (CDP) model. Its value is derived from the on-chain logarithmic moving average of gas prices, updated every 50 blocks through our trusted oracle. This way, the BaseFee derivative market will still allow for several trading opportunities, be it for hedging or speculation purposes, mitigating volatility and potential manipulation attacks.

baseFee and moving averages. BaseFeeLMA will use a 50 block logarithmic moving average to reduce volatility.

Once minted, holders of BaseFee can leverage it in several ways:

• Speculate on gas prices

• Hedge against gas during high fluctuation

• It can be staked to earn as a Stability Pool depositor

BaseFeeLMA is an ERC-20 token (minted on Hedgehog Protocol)

Symbol: BaseFee Blockchain: L2 TBA