How Mercato Works

What is bxBTC

bxBTC is an ERC-4626 yield vault on Base mainnet. You deposit cbBTC (Coinbase-wrapped Bitcoin) and receive bxBTC shares in return. Those shares appreciate in value as the vault earns yield — no rebasing, no claim transactions, no lockup. When you redeem, you burn your shares and receive more cbBTC than you put in. The difference is your yield.

Mercato is permissionless software. There is no team making discretionary investment decisions. Strategies are defined in smart contracts and executed by AI agents operating within policy-enforced bounds. Every allocation is visible on Basescan. Anyone can verify everything at any time.

The share model

bxBTC follows the ERC-4626 tokenised vault standard. The share price — how much cbBTC one bxBTC buys — rises continuously as strategies earn interest.

When you deposit N cbBTC you receive N ÷ share_price bxBTC shares. When you redeem S bxBTC shares you receive S × share_price cbBTC. Your yield is the share price appreciation between those two points.

Yield sources

Phase 1 — live

The vault routes cbBTC to two lending markets on Base. Borrowers pay interest to these markets; depositors receive a share of that interest. Mercato is the routing layer — it does not create the yield, it allocates capital to where the yield is.

Morpho Blue — isolated lending markets. cbBTC depositors lend directly to borrowers. Rates are determined by supply and demand per market. No governance token dilution. Every market is isolated: one bad market cannot affect another.

Aave V3 — pooled lending with over $15B TVL since 2020. cbBTC earns the variable supply APY. Acts as the lower-volatility allocation within the vault.

Phase 2 — coming

Phase 2 adds a delta-neutral BTC basis trade via Hyperliquid (targets 6–9% blended APY), Babylon BTC restaking for PoS security rewards, and Pendle PT positions for yield stabilisation. Each new strategy must pass the PolicyValidator contract before any capital can be routed to it.

The math

Deposit

Yield accrual

Interest accrues every block as Morpho and Aave update their accounting.totalAssets() rises with each block. totalSupply() stays constant. Therefore share_price rises continuously — no claim needed.

Redemption

APY calculation

Fees

Mercato charges a 10% performance fee on yield earned above the high-water mark. There are no management fees, no deposit fees, and no withdrawal fees.

How the fee is collected

When harvest() is called (by the Strategy agent after each rebalance, or manually):

The high-water mark prevents double-charging: if the vault value drops and then recovers, the fee is only collected on the net new yield above the previous high. Principal is never taxed — only returns above the watermark.

Fee recipient

Fees accrue to the treasury wallet at 0x062c0D92…0944e0. This is a hardware wallet controlled by the protocol operator and does not have admin keys over the vault.

Seniority

Seniority (SR) is Mercato's on-chain loyalty system. It tracks how early and how long a wallet has participated in the protocol. Seniority is not a token, has no monetary value, and cannot be transferred or purchased.

How it accrues

Points accrue proportionally to cbBTC deposited × time held. Each wallet has a daily_rate derived from its current vault balance. The longer and earlier you deposit, the higher your seniority — permanently. There is no catchup mechanism for late entrants.

What higher seniority means

Phase 1: leaderboard ranking visible at /seniority. Genesis depositors hold the highest rank permanently.

Phase 2 (coming): strategy voting weight proportional to seniority score; priority queue position for large redemptions during liquidity buffers.

Referrals

Referring another depositor increases your referrals_count and boosts your accrual rate. Referral tracking is on-chain via signed referral links stored in the vault contract.

AI agent operations

Mercato runs 11 AI agents across three teams. They operate on a coordinated daily cycle: a morning intelligence pass at 4–5AM UTC gathers fresh data, synthesises strategy, and writes a directional plan before the growth and ops agents wake up. Daily Brief compiles a backward-looking CEO summary at 9AM, incorporating the morning plan.

No human in the loop for routine operations. Strategy changes, outreach, competitor monitoring, and treasury alerting all run autonomously within defined policy bounds.

Morning cycle (4–9AM UTC)

Agent roster

Consensus protocol

Before any autonomous strategy execution, Strategy must get agreement from Daily Brief. Protocol reviews edge cases. If agents disagree, the proposal escalates to the human operator. GTM actions (campaigns, outreach strategies) require Marketing to open a round that Daily Brief reviews before execution. This prevents unilateral decisions by any single agent.

What agents cannot do

Every strategy change is validated by the PolicyValidator smart contract before execution. No agent can exceed the 60% single-strategy cap, bypass the 24-hour rebalance cooldown, or use unapproved adapter addresses. The contract enforces these limits regardless of what the agent proposes.

Security

Smart contracts

The bxBTC vault is built on the ERC-4626 standard. The PolicyValidator contract enforces all strategy bounds on-chain — they cannot be changed without redeployment. Contract addresses will be published on Basescan at launch.

Treasury address: 0x062c0D924D21d60E4eD05Fb5BBEA80aC1a0944e0

Audit

An independent security audit is scheduled for Phase 1 contracts. Results will be published here when complete. Until then, the contracts are open for review. Do not deposit more than you are comfortable with — smart contract risk is real.

No admin keys

The treasury wallet has no ability to withdraw user funds from the vault. Upgrade mechanisms, if any, will be governed by on-chain policy. There is no backdoor.

Questions

Reach us at hello@mercato.sh.