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 an ERC-4626 token received in response to depositing BLT into BMX’s native Yearn-architectured, auto-compounding reward vault. wBLT functions as a receipt token representing a claim on the underlying BLT within the vault.

How it works: BLT earns 60% of protocol revenue streamed in wETH as well as 15% of native token emissions streamed in oBMX (more on oBMX, later). When a user deposits BLT and receives wBLT, the vault manages these rewards for the user. The vault strategy harvests all rewards 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 earned rewards from the compounding strategy at any time. By depositing into the vault, wBLT holders are able to auto-compound BLT-rewards removing the need to self-claim and exercise oBMX themselves. Auto-compounding 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 Morphex has been defining and building over the past year. Before we begin defining them, let’s quickly review the history of how Morphex created wBLT.

History of Morphex’s Implementation of Native Yearn-Architectured Vaults

Morphex on Fantom launched wMLP (same as wBLT) vault live on 05/01/23 which continues to operate today without issue, currently with greater than $500k TVL. At time of writing, Morphex on Fantom remains the largest perpetual trading platform on Fantom by TVL size and margin trading volume. 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 by Morphex. Additionally, 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. wMLP-USDC continues to operate today without issue, currently with greater than $35k TVL. The vault strategy continues to convert FTM rewards into MLP, which increases the amount of MLP each wMLP can claim. Additionally, users who paired their wMLP with an equivalent amount of USDC and provided wMLP-USDC on FVM Exchange, have been able to earn additional wMLP-USDC rewards from FVM in addition to vault rewards.

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 by Morphex builds on these innovations through additional improvements in protocol design and capital efficiency for reward distribution and tokenomics, to create and introduce capital-efficient perpetual trading liquidity as a product: wBLT!

wBLT as a Product

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

  1. Auto-compounds underlying BLT asset rewards removing need to self-claim/exercise
  2. Can be collateralized to allow for borrowing of bluechip assets, while continuing to auto-compound earned rewards, which has the ability to decrease collateral ratio over-time, functioning as a unique/hybrid type of self-repaying loan.
  3. Paired as native BMX liquidity: wBLT-BMX continues to earn auto-compounding wBLT rewards (which represent 60% protocol revenue and 15% native oBMX emissions) in addition to: 30% protocol revenue streamed direct to LP gauge on Base-Velocimeter as wETH, 60% native oBMX emissions, 60% of option-revenue (more on this later), and 100% of oBVM (option-Base-Velocimeter) directed to wBLT-BMX gauge from veBVM voters.
  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 BMX, obtain wBLT, earn their share of auto-compounding rewards and pair wBLT with their native asset to provide native protocol liquidity. This allows the protocol and their liquidity providers to earn their share of 60% BMX protocol revenue and 15% oBMX emissions as BLT, 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 revenue on the pair as wBLT can be arbed. Also, as it is arbed, mint and redeem fees may occur generating increased BMX protocol revenue, thus increasing auto-compounding rewards for wBLT.
Last updated on January 31, 2024