# why perp backed

Memecoin launchpads have a discoverability problem: every token starts at the same flat curve, with no off-chain price reference. A buyer's only directional thesis is "more people will buy this."

basefun adds a second axis. Pair every coin with a real leveraged perp on an underlying asset and the token now has **intrinsic price exposure**. A buyer of `$ETHPUMP` (a 5× long ETH coin) is implicitly long ETH — even before they think about meme momentum.

## Concrete example

You launch `$BTC500` as a 5× long BTC token at the floor MC of \~$3.8k.

* BTC rallies 4% over the next hour.
* The Avantis perp behind the LT gains roughly 20% (4% × 5×) — the LT's NAV jumps.
* Your token's bonding-curve price tracks NAV automatically.
* The token MC goes up even without a single trade on the curve.

That's the headline. The trade-off (see [Risks](broken://pages/661afc6d42d3c96dde46d5cd29a44b6969e458d1)) is that the inverse is true too: BTC drops 16% and the 5× perp gets liquidated, taking the curve to zero.

## What "real perp" means

When the bonding curve receives USDC, it doesn't sit there. The curve calls `LT.mint()`, which:

1. Pulls the USDC into the **keeper EOA**.
2. The keeper opens (or increases) an aggregated Avantis trade for the matching `(pair, leverage, direction)` triplet.
3. The LT's NAV is computed live from Avantis's `getTradePnL` view — collateral + unrealized PnL.

When somebody sells, `LT.redeem()` does the reverse: burns LT shares, the keeper closes a slice of the position, and USDC flows back to the seller.

This is fundamentally different from a synthetic launchpad where prices come from an internal oracle the team controls. basefun has no oracle. The price comes from Avantis, period.

## What "shared LT" means

Every basefun token with the same **(pairIndex, leverage, direction)** triplet shares a single underlying LT.

That means: if two creators both launch a "5× long BTC" token, the LT for `(pairIndex=BTC, leverage=5, buyLong=true)` is reused. Both curves hold LT shares of the same aggregated perp.

Practical effect: gas efficiency, deeper aggregated perp size at Avantis (better fills), and zero risk of fragmenting liquidity across N near-identical positions.

## What this enables

* **Directional memes** ("this is just a 5× ETH long with a dog logo").
* **Hedge plays** for traders who want exposure without managing the Avantis position themselves.
* **Curve graduation** that actually means something — the post-grad Uni V2 token has $9.7k of LP backed by real (continuing) PnL exposure.

Move on to [Launching a token](broken://pages/063fb3c0bc7b6aff20ab183327f11c7817d179c8) to see how to ship one.


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