> For the complete documentation index, see [llms.txt](https://prospect-labs.gitbook.io/prospect/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://prospect-labs.gitbook.io/prospect/usdchamp/token-design.md).

# Token Design

Prospect is partnered with [Baseline](https://www.baseline.markets/#Features) an automated tokenomics engine for ERC20 tokens that utilizes a dynamic supply model and market making strategy that provides ERC20 tokens persistent on-chain liquidity and non-liquidatable leverage.

Prospect chose to partner with [Baseline](https://www.baseline.markets/#Features) for three key reasons:

1. [**Compounding**](/prospect/usdchamp/token-design/compounding.md): [Baseline](https://www.baseline.markets/#Features)'s market making strategy naturally grows the value of $CHAMP over time through a series of liquidity operations, which makes it suitable for transactions as it appreciates over time.
2. [**Leverage**](/prospect/usdchamp/token-design/leverage.md): [Baseline](https://www.baseline.markets/#Features) has a built-in decentralized lending facility that enables $CHAMP token holders to borrow assets by using their $CHAMP tokens as collateral. Given the [Baseline](https://www.baseline.markets/#Features) token architecture guarantees an intrinsic value for each $CHAMP token, the protocol allows holders to borrow at a high LTB (loan-to-backing) value, for a small fee and with no risk of liquidation.
3. [**Market Making**](/prospect/usdchamp/token-design/market-making.md): [Baseline](https://www.baseline.markets/#Features) market making operations are trustless and deterministic, anyone is able to trigger liquidity rebalances and the underlying liquidity structure changes in a predetermined pattern. This reduces potential information asymmetry gained around liquidity rebalances, thus maintaining a fair, predictable and transparent market.

More on each feature in the following subsections.


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