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For Token Traders

TL;DR

LOOP and LRTs are Baseline tokens with guaranteed floor prices, on-chain market making, and built-in leverage. The protocol's trading cycle creates recurring price catalysts (Afterburner spikes and steady BLV growth) that you can read and position around.

What You Get

Two tradeable token layers with different risk profiles and a shared floor mechanic.

LOOP is the reserve token backing every collection strategy. You get diversified exposure: every LRT auction deposits proceeds into LOOP reserves, so its BLV (Baseline Value, the guaranteed floor price) rises from all collection activity. Slower appreciation, broader base.

LRTs (Loophole Run Tokens) are collection-specific. Each LRT gets its own Afterburner, a leveraged buy-and-burn mechanism that fires after every auction, driving sharp price spikes and continuous supply deflation. More volatile, concentrated exposure to a single collection's cycle.

Both are Baseline tokens (bTokens), which means: a guaranteed floor price (BLV) that can only increase, 0% interest borrowing against that floor, leveraged positions without liquidation, and swap fees distributed to stakers.

How It Works

Reading the BMM

Both LOOP and LRTs trade through Baseline's autonomous market maker (BMM). Consult Baseline documentation for full mechanics.

The key metric for traders is premium: the percentage gap between a token's market price and its BLV floor. High premium means more room to fall before hitting the floor. Low premium means asymmetric risk-reward: limited downside, full upside.

BLV growth cycle

As trading generates fees and reserves accumulate, the BMM continuously raises the BLV in small, automatic increments. BLV can never decrease. Each increase is permanent and observable on-chain, a one-way ratchet in your downside protection.

For LOOP specifically, BLV also grows from direct reserve deposits after each LRT auction (the Split phase). This means LOOP's floor rises from two sources: normal BMM activity and protocol revenue from every collection.

For LRTs, the Afterburner fires after each auction, a leveraged buy-and-burn that reduces supply and creates a demand spike. The timing within each auction cycle is predictable (it follows the sale), but the magnitude of its price impact depends on current liquidity depth and token price premium.

What moves LOOP

  • BLV growth from swap fees and reserve accumulation
  • Direct reserve deposits from every LRT auction's Split phase
  • New collection launches adding more volume sources
  • All LRT trading activity generates swap fees, with the 2% Open Bid allocation fueling further NFT acquisitions and auction cycles

What moves LRTs

  • Afterburner fires after each auction: leveraged buy-and-burn spike
  • Supply permanently contracts with every burn
  • Rising LOOP floor lifts every LRT floor through the pair
  • Collection-specific sentiment and external NFT floor price shifts
  • Vault depth (queued NFTs awaiting auction) determines auction frequency, which determines Afterburner frequency

Leveraged borrows

Baseline's lending facility lets you borrow your tokens' BLV value at 0% interest (with an origination fee), then buy more tokens with the proceeds. Repeat, and you've built a leveraged borrow position.

The critical tradeoff: you're trading your floor guarantee for amplified premium exposure. If the token falls to BLV, your entire premium is gone. A leveraged borrow position can lose 100% of its premium value even though the underlying token still has a floor. Each iteration yields diminishing borrowing power as the gap between market price and BLV narrows. Leveraged borrowing is most capital-efficient near BLV (where premium is thin and each dollar buys more leverage) and least efficient at high premium.

Every leveraged borrow iteration generates swap volume and fees for the protocol.

Staking for fee income

Stakers earn a share of swap fees from every swap. This is the passive alternative to active trading: you earn from volume generated by everyone else's activity, including leveraged borrows.
Higher trading volume means higher staking yield. No lockup required.

Leveraged borrows give you leveraged staking exposure

How to Participate

Reading the cycle

  • Premium level. Low premium means the floor is close: asymmetric entry with limited downside. High premium means momentum territory but more room to fall. $PUDGYRUN at 5% premium has a very different risk profile than the same token at 40%.
  • Vault depth (LRTs). A deep queue means regular upcoming auctions, which means regular Afterburner events. Shallow queue means less frequent catalysts.
  • Auction completion (LRTs). The Afterburner fires after each sale. The Split phase sends proceeds to both the Afterburner and LOOP reserves simultaneously, catalyzing both tokens with a single event.

Positioning

  • LOOP as the slower, compounding play. Diversified reserves from all collections. BLV grows from both BMM activity and direct protocol deposits. Lower volatility, steady floor appreciation. The base layer bet on ecosystem growth.
  • LRTs as the volatile, event-driven play. Afterburner spikes create swing opportunities. Track auction timing for entry and exit around burns. Supply deflation compounds over time, tightening the float.
  • Leveraged borrows to amplify. Borrow against your position before anticipated catalysts: Afterburner events, new collection launches. Most capital-efficient near BLV, where thin premium means each borrow iteration yields more leverage per dollar.
  • Staking for passive yield. Earn from all trading volume without directional exposure. Higher volume periods (new collection launches, active auction cycles) produce higher staking returns.

Risks

  • Leveraged borrow wipeout. Leveraged borrow positions can lose 100% of premium value if the token falls to BLV. Floor protection covers the underlying token, not your leveraged premium exposure.
  • Afterburner magnitude is unpredictable. Timing is predictable (post-auction), but the size of the spike depends on liquidity depth and premium at the moment it fires. Don't size positions around expected spike magnitude.
  • LRT liquidity. Newer or low-volume collections may have thin liquidity, making large entries or exits costly.
  • Single-collection exposure on LRTs. One collection underperforming doesn't drag LOOP, but it can crater that collection's LRT.
  • Premium compression. High premium can compress quickly during sell-offs, even while BLV holds firm.
  • BLV is denominated in the reserve asset, not USD. LOOP's floor is ETH-denominated. If ETH drops, your floor drops in dollar terms.
  • Smart contract and protocol risk. All positions depend on Baseline and Loophole contracts operating as designed.