Growth factor involved in bone and cartilage formation. During cartilage development regulates differentiation of chondrogenic tissue through two pathways. Firstly, positively regulates differentiation of chondrogenic tissue through its binding of high affinity with BMPR1B and of less affinity with BMPR1A, leading to induction of SMAD1-SMAD5-SMAD8 complex phosphorylation and then SMAD protein signaling transduction . Secondly, negatively regulates chondrogenic differentiation through its interaction with NOG . Required to prevent excessive muscle loss upon denervation. This function requires SMAD4 and is mediated by phosphorylated SMAD1/5/8 .