What's so appealing about Phoenix Network, which completed the IDO fundraising of 625ETH in 15 days and is about to deploy Blast L2?

Recently, the well-established decentralized derivative product protocol Phoenix Network announced its official launch on Blast L2, and introduced a brand new Token and economic model, undoubtedly adding new vitality to the decentralized derivative product track.

Earlier, Phoenix Network announced that it would conduct an IDO on its official website on May 13th. On May 29th, Phoenix Network tweeted that its PEX Token IDO has ended, reaching the IDO hard cap in just 15 days, raising a total of 625 ETH, with a subscription amount of over $2.4 million. What is the charm of Phoenix Network in such a hot market sentiment? This article will provide a detailed introduction to Phoenix Network (Blast L2)'s dual token economic model, including the governance token $PEX and the contribution value token $WIN.

Overview of Phoenix Network

Phoenix Network is a Decentralization derivative trading platform built on Blast L2, aiming to attract more long users to participate in the Decentralized Finance market and provide incentives and value capture by providing an efficient, secure, and transparent perpetual trading environment. The dual-token economic model of Phoenix Network (Blast L2) is an important component of it.

In the Decentralized Finance market, the economic model is crucial for the success of a project. It not only determines the token distribution and incentive mechanism of the project, but also affects the long-term development and market performance of the project. A good economic model can attract more investors and users, thereby promoting the rapid development of the project.

Governance Token PEX

PEX is the protocol governance Token of Phoenix Network, with a Maximum Supply of 10 million. One of the main functions of PEX is to serve as the voting power for platform governance, and another important function is to serve as the main value storage point for various revenue of protocol derivatives exchange.

$PEX is an asset-backed Cryptocurrency, and all $PEX are minted by the Phoenix Treasury at a rate of 0.0002ETH for 1 PEX. Each time $PEX is minted, the $PEX protocol will charge a 10% minting tax.

• PEX 的mintissuance

The issuance and vesting of PEX are closely related to the development process of the Phoenix Network. In the early stages of the project, the genesis minting was done through the initial decentralized issuance (IDO), with a quantity of 333,333 PEX. Among them, 33,333 PEX (10%) are used as the minting tax, and 300,000 PEX (90%) are used for IDO distribution and initial liquidity addition. The IDO price was 0.0025 ETH, and the initial listing price was 0.0031 ETH. The IDO has raised a total of 625 ETH.

In addition to the Genesis minted PEX, the subsequent additional PEX can only be minted through bond sales. By selling LP bonds, the treasury holds 100% Liquidity of the PEX-ETH trading pool.

The minting tax of PEX is used for the technical development and maintenance of the protocol, community node user rewards, and development funds. Over time, the actual circulation of early PEX will slowly increase, but due to various factors such as the value of treasury assets, PEX price, and Derivatives exchange position profits affecting the actual supply, it will enter a deflationary phase in the middle and late stages, and its actual circulation will be far below 10 million coins.

The risk-free value of the national treasury assets (Treasury-RFV) (calculated in terms of ETH) determines the upper limit of PEX minting, according to the formula:

• The circulation of PEX

1. PEX holder can obtain stake rewards by staking PEX according to the Rebase cycle:

The income of PEX stake increases in the form of sPEX compound interest, and can be released at any time. However, the compound interest income cannot be obtained immediately, but will be released in equal amounts according to the Block over 180 days. The release speed can be accelerated to a minimum of 30 days by burning WIN.

2. Users can also purchase LP bonds by adding PEX-ETH LP Liquidity, obtaining PEX minted by the treasury. When users purchase LP bonds to obtain PEX and stake the full amount, they will receive an additional 5% PEXToken reward.

The above are two ways to increase the Circulating Supply of PEX, and the increased Circulating Supply comes from the treasury mint.

• DESTRUCTION AND RIGHTS OF PEX

Governance Token PEX has a close relationship with Derivatives exchange PbTrade. The Treasury is the counterparty for all trades on PbTrade in the short term, while PEX is the counterparty in the long term. Therefore, PEX has a strong value capture ability. In the long run, PEX will be in a deflationary state, and its price performance will also outperform similar products.

In most cases, traders incur losses. 35% of the treasury’s profits are stored in the national treasury as reserve for minting PEX, and 55% of the treasury’s profits are used to repurchase and destroy PEX. As the circulation of PEX decreases, the price rises. In extreme cases, when traders make a profit and the collateralization ratio of ETH is less than 100%, the national treasury contract activates the reserve to mint PEX, which is then sold to fill the gap in the treasury’s ETH pool.

The ability of Token to capture the value of the project itself determines the success or failure of the Token economy design of the project. Derivatives exchange PbTrade will feed back 25% of the trading fees to PEX stakers, which means that PEX stakers can not only earn staking rewards, but also receive a portion of the trading fee income.

The governance Token of many Decentralized Finance protocols is weakly correlated with the value of the protocol itself, and the governance Token has poor value capture ability, so the price performance is not ideal. However, PEX is very good at avoiding this issue.

• Contribution Token WIN

WIN is the protocol contribution Token of Phoenix Network, with a theoretical Maximum Supply of 1 billion. It is mainly used to reward those who contribute to the rise of protocol users. At the same time, it can also be used as a burning mechanism to accelerate the release of WIN stake earnings.

During the WIN Genesis phase, 1,000,000 tokens will be issued for specific phase Airdrops and rewards. Except for the WIN issued during the Genesis issuance, all other WIN tokens will be minted by the protocol. The protocol will establish an initial USDB treasury of 10,000 tokens for WIN minting.

• Minting of WIN

WIN is minted by stakePEX users, and minting will consume USDB. The minted WIN is rewarded to those who contribute to the rise of protocol users. The process of minting WIN will pump up the price of WIN.

PEX stakers need to spend an additional 20% of the value of stakePEX (in USDB) to mint WIN tokens and receive a high yield of 0.2% compound interest every 8 hours. The minted funds go into the USDB treasury, with 5% of the minted WIN allocated to the protocol development fund, and the remaining 95% rewarded to invitees and Node users.

$WIN The Usage Ratio of Minting Funds is a dynamic variable, initially set at 66%. For every additional 5 million WIN tokens, the usage ratio will drop by 2%, with a minimum usage ratio of 50% when the total WIN supply reaches 40 million tokens.

Newly added WIN casting volume = (coinage fund * fund utilization rate) / WIN price

WIN price = Total value of USDB reserve / WIN circulation

Due to the existence of capital utilization rate, the speed of USDB treasury increase is always higher than the speed of WIN issuance. The larger the amount of WIN issuance, the faster the USDB treasury will increase. Therefore, minting WIN will make the WIN price higher and higher.

• Redemption and Burning of WIN

Users holding WIN can accelerate the release of stakePEX earnings by burning WIN. This process will pump the price of WIN due to the destruction of WIN, accelerating the release of PEX stake earnings.

In addition, users can also redeem WIN from the USDB vault at the real-time price of USDB. A 15% redemption tax will be charged for redeeming WIN to USDB, and the redemption tax will remain in the USDB vault. The redemption process will also pump the price of WIN, as the rate of decrease in the total supply of WIN is higher than the rate of decrease in the USDB vault.

Therefore, the WIN token follows a one-sided continuous pump model. In summary: mintWIN, burn WIN, and redeem WIN for USDB will all cause the price of WIN to continuously pump. The optimization of the WIN model is an important innovation after Phoenix Network migrated to Blast. This mechanism will play a significant role in protocol launch and subsequent user rise.

Dual Currency Economic Model

Governance Token PEX and protocol contribution Token WIN play different roles in the economic model of the Phoenix Network (Blast L2), and they are interdependent and mutually reinforcing, jointly promoting the development and prosperity of the platform. Specifically, in the following aspects:

1. Inject funds and Liquidity for the protocol: The minting and circulation of PEX and WIN can bring more long-term funds and Liquidity to the Phoenix Treasury and Gold Treasury, promoting the development and prosperity of the platform.

2. Maintain the stability and balance of the platform: The reward mechanism of contribution value Token WIN and the destruction mechanism of accelerating PEX stake income release promote the positive cycle of the protocol, thereby maintaining the stability and balance of the platform.

3. Improve transparency and fairness: The circulation of PEX and WIN through minting is completely executed on-chain through Smart Contracts, ensuring fairness and transparency.

Summary

The dual-token economic model of Phoenix Network is an important part of its decentralized derivative trading platform. The interaction and impact of PEX and WIN tokens in the platform economy will jointly promote the development and prosperity of the platform.

PEX as a governance Token, provides support for the governance and development of the platform, and also serves as a reward mechanism, incentivizing users to participate in the construction and development of the platform. WIN, as a contribution value Token, is used to reward those who contribute to the rise of the protocol, and can also serve as a burning mechanism, accelerating the release of PEX stake earnings. Through the interaction of PEX and WIN, the economic balance within the protocol is achieved, while also enhancing the transparency and fairness of the platform, protecting the interests and rights of users.