BLT - An Anology

Bacon, Lettuce and Tomato: The Future of Financial Education and Marketing is Analogous

What is BLT?

BLT stands for BMX Liquidity Token. This token functions as a receipt to claim a share of the underlying assets within the liquidity pool. However, the token itself is not a liquidity pool, it’s a composable asset, which is transferrable and represents claimable value on the underlying assets (e.g. cbBTC, wETH, USDC, etc.) within the liquidity pool. Distinguishing between the liquidity pool itself and the token representing claim on the underlying assets within the liquidity pool is important to understanding how BMX improves capital efficiency for liquidity providers beyond traditional general liquidity pools. So what's up with the sandwiches?

Education and marketing are incredibly important to scale. Who doesn’t love a BLT? There are numerous analogous marketing opportunities to draw from between a liquidity pool and a bacon-lettuce-tomato (BLT) sandwich, and analogous references will function as educational supports toward improved understanding of the concepts and mechanics behind BMX.

For example, a BLT sandwich is similar to a liquidity pool in composition, as various assets are combined to form the sandwich. The same is true for a liquidity pool on BMX; it is formed by combining various bluechip assets like wETH, cbBTC and USDC. Each individual asset can be measured by weight, which we express as a percentage of the total liquidity pool composition. Sounds a bit complicated to explain to someone less-or-unfamiliar with DeFi or liquidity pools in general, right? The same can be applied to a BLT sandwich. Here is an example of the power of analogous marketing: Imagine your favorite BLT sandwich on a plate in front of you. The bacon is still sizzling. The lettuce is crisp. The tomato is juicy. Wait! Before you eat it, let's weigh it. Place your BLT sandwich on a scale and imagine it weighed 1-pound. Next let’s separate all of the ingredients and weigh them separately. The Bacon weighed 0.30 pounds; we can say that Bacon makes up 30% of the total weight of the BLT sandwich. Lettuce weighed 0.10 pounds and makes up 10% of the BLT. Tomato weighed 0.10 pounds and makes up 10% of the BLT. Bread weighs 0.50 pounds and makes up 50% of the BLT. Together, all of the ingredients equal the total weight of the sandwich. The same measurements can be applied to assets in BMX’s liquidity pool. Assume the total weight of the BMX liquidity pool is 1. Each asset has its own weight within the pool: wETH weighs 0.40 or 40% of the BMX liquidity pool. cbBTC weighs 0.10 or 10% of the BLT. USDC weighs 0.50 or 50% of the BLT. Alright, I’m following…but why should we know this? It is important to understand the weight of each asset within the liquidity pool to draw inferences on levels of risk exposure. The same is true for a BLT sandwich. If your BLT weighed 1-pound and your bacon weighed 0.75 or 75% of the entire weight of the sandwich, that BLT sandwich is overexposed to unhealthy fats and likely presents an increased risk of heart attack compared to a more well-balanced BLT sandwich. But, not always. While the amount of an ingredient can increase or decrease your risk, so too can the quality of your ingredients.

For example, in comparing the two BLT sandwiches above, if the heavier allocation of bacon (0.75-pounds) is high quality and lean while the BLT sandwich with less bacon (0.25-pound) is poor quality and extremely fatty, the risk exposure could be significantly higher in the latter due to the poor quality and fattiness despite there being less bacon overall. The same line of questioning can be applied to assets within a liquidity pool. For example, having 50% of the liquidity pool as stablecoins could seem imbalanced, however, it is generally intentional, to reduce risk of volatility in the liquidity pool token (BLT) and provide traders adequate liquidity for short-positions. However, stablecoins are not always stable nor are they always of high quality! To assess quality within assets, a few factors to consider are the asset’s issuer, total value locked, total token holders, percent of tokens held by any one wallet, bridge reliances, backing, etc. Asset weight and asset quality are only two factors of many to consider when analyzing a liquidity pool and continued discussion around these topics is needed in the market.

Why is this important?

BMX believes analogous marketing will support users’ knowledge and understanding of how decentralized perpetual trading platforms function and the dynamics of liquidity assets. Information is power and helping spread and share information in easily digestible formats is the focus. BMX looks forward to onboarding the next generation of DeFi users and in supporting migration of CEX users to on-chain. Are you hungry yet? What’s on the menu? Two items: BLT or wrapped-BLT.

BLT Mechanics

The BMX Liquidity Token (BLT) consists of an index of assets used for swaps and leveraged trading on BMX Classic. BLT can be created, or minted, using any index asset, and redeemed, or burnt, to receive any index asset. The price of minting or redeeming BLT is determined by dividing the total value of assets in the index — including unrealized profits and losses from open trading positions — by the total supply of BLT.

BLT Price = Net Asset Value of Pool / Total BLT Supply

BLT acts as the counterparty to all trades on BMX Classic. This means that when traders lose, BLT gains, and when traders win, it comes out of the BLT pool.

Unlike legacy GLP-style tokens, BLT does not receive emissions or escrowed rewards. Instead, BLT receives accrued fees directly from platform fee generation, allocated according to BIP-12 (opens in a new tab):

• 70% of platform fees from BMX Classic are allocated to BLT and routed as wETH.
• When BLT is deposited into the vault (wBLT), these fees are automatically harvested and processed into additional BLT.

Minting and Redeeming

To mint BLT, users deposit any supported asset via the Mint tab in the Deli Shop. The minting fee depends on the current balance of assets in the index:

• Lower fees are applied to assets that the pool has less of (relative to target weight).
• Higher fees are applied to assets that are overweight in the pool.

To redeem, users simply select Redeem BLT, choose the asset to withdraw, and receive it at the current redemption rate after any applicable fee.

This system encourages liquidity providers to help maintain a balanced pool and contributes to overall capital efficiency for traders.

Rebalancing

Fees for minting, redeeming, and swapping depend on how the action affects the weight of assets in the pool. Each asset has a target weight, and actions that improve balance are incentivized with lower fees.

For example:

• If the pool has a large percentage of USDC and a small percentage of wETH, depositing more USDC may incur a high fee, while depositing wETH may receive a lower fee or rebate.
• Swapping or redeeming into underweight assets is incentivized through fee reductions.

This dynamic fee model allows the protocol to maintain healthy liquidity distribution and protects BLT holders from unwanted volatility or imbalance.

Additionally, BLT’s composition adapts to trader positioning:

• If many traders are shorting ETH, the pool will overweight stablecoins to minimize risk.
• If many traders are long, the pool will naturally hold more volatile assets — increasing potential upside if those traders are liquidated.

These mechanics allow BLT to maintain synthetic market exposure while preserving pool integrity.

Risks

There are inherent risks associated with minting and holding BLT:

• Counterparty Risk: BLT is the counterparty to traders. If traders are profitable, BLT may decline in value.
• Smart Contract Risk: As with any DeFi protocol, interactions with smart contracts carry potential vulnerability.
• Asset Risk: Exposure to bridged tokens, stablecoins, or volatile assets may result in unexpected impermanent loss or reduced redemption value.

Wrapping your BLT (wBLT) for additional utility

What is a wrapped-BLT?

A wrapped-BLT is when you replace bread with a tortilla and wrap the bacon, lettuce, and tomato. It provides a different experience, generally less carbs and leaves you feeling lighter. Bread or tortilla, the choice is yours! At BMX, wrapped-BLT (wBLT) is a token received as a result of depositing BLT into BMX’s native Yearn-architected, automated fee-processing fee accruing vault. wBLT functions as a receipt token representing a claim on the underlying BLT within the vault.

How it works: BLT receives approximately 70% of protocol accrued fees streamed in wETH. When a user deposits BLT and receives wBLT, the vault manages these accrued fees for the user. The vault strategy harvests all accrued fees and converts proceeds into BLT tokens, then deposits them into the vault, increasing the total amount of BLT tokens within the vault in excess of user deposit amounts. wBLT is fully liquid, so users are able to withdraw their principal BLT and accrued fess received from the auto-fee-processing strategy at any time. By depositing into the vault, wBLT holders are able to automate fee-processing BLT-accrued fees removing the need to self-claim themselves. Automated fee-processing is merely one benefit and use case that BMX has defined for wBLT. The power of wBLT is understood when you consider all of the use cases, which BMX has been defining and building over the past years. Before diving into use cases, let’s quickly review the history of how BMX created wBLT.

wBLT as a Product

wBLT has many use-cases which are built on top of #1. Here are a few:

1. Automated fee-processing underlying BLT asset fees accrued removing need to manually claim
2. Can be collateralized to allow for borrowing of bluechip assets, while continuing to automate fee-processing of accrued fees, which has the ability to decrease collateral ratio over-time, functioning as a unique/hybrid type of self-repaying loan. wBLT collateralization is currently available on Morpho (opens in a new tab).
3. Paired as native BMX liquidity: wBLT-BMX continues to receive automated fee-processing wBLT accrued fees.
4. Can be paired as a liquidity asset with other-tokens, providing multiple benefits:

• Instead of pairing wETH-(native token), a protocol can deposit their wETH into wBLT, receive their portion of automated fee-processing accrued fees and pair wBLT with their native asset to provide native protocol liquidity. This allows the protocol and their liquidity providers to receive fees generated in the BMX ecosystem in addition to their native rewards.
• By pairing with wBLT, a protocol is effectively pairing with an index of bluechip assets (wETH, wBTC, USDC) reducing risk of single-asset price impact on their native token liquidity.
• When the value of wBLT increases this translates to positive price impact on the token it is paired with which is the same mechanism that allows wBLT to decrease collateral ratio overtime.
• Generates additional trading fees on the pair as wBLT can be arbed. Also, as it is arbed, mint and redeem fees may occur generating increased BMX protocol accrued fees, thus increasing automated fee-processing accrued fees for wBLT.

Legacy Inspiration: From wMLP to wBLT

Morphex (now BMX) on Fantom launched wMLP (same as wBLT) vault live on 05/01/23 which operated with over  $500k TVL. wMLP vault was designed by Morphex and developed in collaboration with a native Yearn Finance core contributor, who is now also a core contributor for BMX. Morphex on Fantom was the first protocol to collateralize GLP-equivalent liquidity via a vault token when it listed wMLP on a Fantom-native money market, which allowed users to borrow bluechip assets against wMLP with conservative loan-to-value ratios scaling from 20% to 60% over a few months. *Borrowing wMLP itself was intentionally disabled due to the inherent risk that would present.

Morphex launched wMLP-USDC as a liquidity-paired asset on Fantom-Velocimeter (FVM) as an experiment in utilizing the vault token as a liquidity paired asset.. The vault strategy continued to convert FTM accrued fees into MLP, which increased the amount of MLP each wMLP could claim. Additionally, users who paired their wMLP with an equivalent amount of USDC and provided wMLP-USDC on FVM Exchange, were able to receive additional wMLP-USDC accrued fees from FVM in addition to vault accrued fees.

Morphex on Fantom proved the concept that perpetual trading liquidity can be both collateralized and utilized as a liquidity-paired asset to increase capital efficiency. BMX builds on these innovations through additional improvements in protocol design and capital efficiency for accrued fee routing and tokenomics, to create and introduce capital-efficient perpetual trading liquidity as a product: wBLT!

Key innovations included:

• Vault-Automated Fee-Processing: All FTM accrued fees were looped back into the vault to increase MLP value per wMLP.
• Collateralization: Users could borrow bluechip assets using wMLP as collateral — a foundational design that inspired today’s wBLT collateral support on Morpho.
• DEX Pairing: Morphex also introduced wMLP-USDC as a liquidity pair, which generated both DEX accrued fees and vault fee accrual.

BMX expands on these mechanics by:

• Supporting automated fee-processing natively across chains.
• Introducing wrapped liquidity pairs (wBLT-BMX) for native protocol liquidity.
• Integrating with money markets like Morpho for efficient collateralization strategies.

This vault-first approach to liquidity management is at the heart of BMX’s vision for DeFi-native, composable financial primitives.

Disclaimer: wBLT is a transferable receipt token that provides access to an automated fee-processing contract; it does not represent equity or an entitlement to dividends.

wBLT – Where the Historical APR Really Comes From

Straight facts, no emissions. wBLT’s fee accrual is funded by cash‑flow, (i.e. money moving between coins throughout crypto) not token printing. Every dollar that hits the BMX ecosystem is carved up by smart‑contracts and a portion is routed straight into BLT, harvested as real assets (wETH), then auto‑fee-processed back into more BLT inside the vault. The result is a permanently rising BLT‑per‑wBLT ratio that shows up as the two-to-three digit historical fee APR you see in the UI.

Accrued Fee Split per Product (all accrued fees ultimately flow to Base)

The Four Accrued Fee Streams You’re Tapping

1. Trading Fees (swap, margin, liquidation, mint/redeem)

   Collected in wETH the moment a trade clears. The percentages above dictate how much of every fee cycle lands in BLT.

2. Aggregator Order Flow

   Custom routes on Kyber, Matcha (0x v2) and Odos silently convert external blue‑chip trades into BLT mints or wBLT buys. Every routed swap pays the same fees as the front‑end, but at aggregator scale.

3. Net Trader PnL

   BLT is the house. Trader losses accrue to the pool; wins come out of it. Over the last two months (and since Epoch or the beginning of the platform) traders have been net‑negative, directly boosting BLT NAV and hence wBLT.

4. Secondary accrued fees (opt‑in)

   Liquidity incentives (10–20 % above) accumulate when you deploy wBLT in the wBLT‑BMX pair; collateral accrues fees if you post wBLT on Morpho—your collateral accrues interest while the collateral keeps auto-fee-processing.

How Historical APR Is Calculated

Historical Fee APR = ( Σ harvested BLT from Streams 1‑3 ÷ Vault TVL ) × 365

Because the vault instantly restakes the BLT it mints, the APR (historical) you see is already auto‑fee-processed—no fuzzy “APY” marketing tricks.

Real‑World Snapshot (21 Apr 2025)

Source: https://bmx‑analytics‑v2.morphex.trade/Disclaimer (opens in a new tab): Past fee APR; future values may be higher or lower.

Why the Number Moves

• Volume sensitive – More trades → more fees → higher APR (historical).
• Asset‑mix sensitive – Under‑weight assets trigger higher mint/redeem fees that flow to BLT.
• Volatility sensitive – Liquidations and wider spreads during chaotic markets translate to fatter pool margins.

Risks & Mitigations

Bottom line: wBLT’s fee accrual is as real as it gets in DeFi—powered by actual protocol cash‑flow, sealed by an automated fee-processing vault, and amplified by external order‑flow integrations. No emissions, no sugar‑coating.