BugFrag traders are merchants in the Mega Man Battle Network games who exchange various Battle Chips or Navi Customizer parts for varying amounts of BugFrags. These merchants are notable in that they often are the only sources of rare Battle Chips that cannot be obtained through other means, and in each game starting from Mega Man Battle Network 3, one of these merchants always holds a Giga Chip which requires at least 100 BugFrags to trade for.
A chip trader machine can be found in Mega Man Battle Network 3 Blue and White versions in Secret Area 3, and also appears in subsequent Mega Man Battle Network games. This trader allows the player to trade 10 BugFrags for a Chip.
The trader can give out many kinds of chips, including V4 Navi Chips, with the exception of the exclusive Navi chip, i.e. the MistMan/V2/V3/V4 battlechip is unobtainable in the Blue version, you cannot obtain, as the BowlMan/V2/V3/V4 chip is in White version.
By using the trader 30 times (i.e. trading 300 Bug Frags) and meeting other conditions (i.e. defeating Serenade, which in turn requires the player to have completed their Regular 200 Chip library) the player can then face Bass GS, an upgraded version of the regular Bass. It's revealed that the Bugfrag Trader is tied to Bass, and the bugs traded in are the reason why he is stronger.