Phoenix Network log in Blast L2, launching a brand new dual Token economic model

Recently, the decentralized derivatives protocol Phoenix Network announced its official log in to Blast L2 and launched a new Token and economic model, injecting new vitality into the decentralized derivatives track.

Phoenix Network started its IDO on May 13 and announced its completion on May 29, reaching the hard cap within 15 days, with a total of 625 ETH raised and subscription amounts exceeding 2.4 million USD. Such a booming market response has sparked interest in Phoenix Network. This article will provide a detailed introduction to the dual-token economic model of Phoenix Network on Blast L2, including the governance token $PEX and the contribution value token $WIN.

Phoenix Network Overview

Phoenix Network is a decentralized derivatives trading platform built on Blast L2, aimed at providing an efficient, secure, and transparent perpetual trading environment to attract more users to participate in the decentralized financial market and offer incentives. Its dual Token economic model is an important component of the project.

In the decentralized finance market, the economic model is crucial to the success of a project. It not only determines the Token distribution and incentive mechanisms but also affects the project's long-term development and market performance. A good economic model can attract more investors and users, driving the project's rapid growth.

Governance Token PEX

PEX is the protocol governance Token of the Phoenix Network, with a maximum supply of 10 million coins. The main purpose of PEX is to serve as the voting power for platform governance, and it is also the primary value storage point for various revenues of the protocol derivatives exchange.

PEX is an asset-backed cryptocurrency, with all PEX minted by the Phoenix treasury at a rate of 1 PEX for 0.0002 ETH, and a 10% minting tax will be charged for each minting.

PEX's minting and issuance

The issuance of PEX is closely related to the development history of the Phoenix Network. In the early stages of the project, a genesis minting was conducted through an IDO, with a total of 333,333 PEX minted. Among them, 33,333 PEX (10%) were allocated as minting tax, and 300,000 PEX (90%) were used for the IDO distribution and to add initial liquidity. The IDO price was 0.0025 ETH, and the initial listing price was 0.0031 ETH.

The subsequent issuance of PEX can only be minted through bond sales. By selling LP bonds, the treasury holds all the liquidity of the PEX-ETH trading pool.

The minting tax of PEX is used for the technical development and maintenance of the protocol, rewards for community node users, and development funds. Over time, the actual circulation of early PEX will gradually increase, but due to various factors, it will enter a deflationary phase in the mid to late stages, with the actual circulation far below 10 million coins.

The risk-free value of treasury assets determines the upper limit of PEX minting.

circulation of PEX

PEX holders can earn staking rewards by staking PEX according to the Rebase cycle. The staking rewards increase in the form of sPEX through compound interest and can be unstaked at any time, but the compound interest rewards will be released in equal amounts over 180 days, which can be accelerated to a maximum of 30 days by burning WIN.

Users can also purchase LP bonds by adding PEX-ETH LP liquidity to obtain PEX minted by the treasury. When users purchase LP bonds to obtain PEX and stake it in full, they will receive an additional reward of approximately 5% in PEX tokens.

PEX's destruction and rights

PEX is closely related to the derivatives exchange PbTrade. The treasury acts as the short-term counterparty for all transactions on PbTrade, while PEX serves as the long-term counterparty, thus PEX has strong value capture capabilities. In the long term, PEX is expected to be in a deflationary state, and its price performance is likely to outperform similar products.

In most cases, when traders incur losses, 35% of the profits from the treasury positions are deposited into the national treasury as reserves for minting PEX, and 55% is used for repurchasing and destroying PEX. In extreme cases, when traders make profits and the ETH collateral ratio is less than 100%, the treasury contract will activate the reserve to mint PEX, which will then be sold to fill the gap in the treasury's ETH pool.

25% of the PbTrade transaction fees will be returned to PEX stakers, meaning that PEX stakers can earn not only from staking itself but also from this portion of transaction fee revenue. This design enhances the correlation between PEX and the value of the protocol itself, increasing PEX's value capture ability.

Contribution Value Token WIN

WIN is the protocol contribution value Token of the Phoenix Network, with a theoretical maximum supply of 1 billion coins. Its main purpose is to reward those who contribute to user growth for the protocol, and it can also serve as a burning mechanism to accelerate the release of WIN staking rewards.

During the genesis phase, 1 million WIN will be issued for specific phase airdrops and rewards. Aside from the genesis issuance, all other WIN are minted by the protocol. The protocol has established an initial treasury of 10,000 USDB for WIN.

WIN's minting and issuance increase

WIN is minted by users who stake PEX, and the minting process will consume USDB. The minted WIN is rewarded to those who contribute to the growth of the protocol's users, and the minting process will cause the price of WIN to rise.

PEX stakers need to spend an additional 20% of the staked PEX value (USDB) to mint WIN tokens in order to earn 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 as a protocol development fund and 95% rewarded to the referrer and node users.

The usage rate of WIN token funds is a dynamic variable, initially set at 66%. For every increase of 5 million WIN coins, the usage rate decreases by 2%, with a minimum usage rate of 50%.

Due to the existence of capital utilization rates, the increase in the USDB treasury will always be faster than the issuance speed of WIN. The larger the issuance of WIN, the faster the increase in the USDB treasury. Therefore, minting and issuing WIN will continuously drive up the price of WIN.

WIN redemption and burn

Users who hold WIN can accelerate the release speed of PEX staking rewards by burning WIN. This process will increase the price of WIN as it is destroyed.

Users can also redeem WIN from the USDB vault at real-time prices for USDB, and a 15% redemption tax will be charged for the redemption, which will continue to remain in the USDB vault. The redemption process will also cause the WIN price to rise.

The design of the WIN Token model results in a one-sided continuous upward price trend: minting WIN, burning WIN, and redeeming WIN for USDB will all lead to an increase in the price of WIN. This mechanism will play an important role in the protocol's launch and subsequent user growth.

Dual-Currency Economic Model

The governance token PEX and the protocol contribution token WIN play different roles in the Phoenix Network economic model, being interdependent and mutually reinforcing, together promoting the development and prosperity of the platform:

1. Injecting funds and liquidity into the protocol: The minting and circulation of PEX and WIN bring more funds and liquidity to the Phoenix treasury and vault, facilitating platform development.

2. Maintain platform stability and balance: The reward mechanism of WIN and the destruction mechanism that accelerates the release of PEX staking profits promote a positive cycle in the protocol, maintaining platform stability and balance.

3. Increase transparency and fairness: The minting and circulation of PEX and WIN is fully executed on-chain through smart contracts, ensuring fairness and impartiality.

Summary

The dual-token economic model of the Phoenix Network is an important component of its decentralized derivatives trading platform. The two tokens, PEX and WIN, interact and influence each other within the platform's economy, jointly driving the development and prosperity of the platform.

PEX serves as a governance Token, providing support for the platform's governance and development, while also acting as a reward mechanism to incentivize users to participate in the platform's construction and growth. WIN, as a contribution value Token, is used to reward those who contribute to user growth for the protocol, and can also serve as a burning mechanism to accelerate the release of PEX staking rewards. Through the interaction of PEX and WIN, economic balance within the protocol is achieved, enhancing the platform's transparency and fairness, and protecting users' interests and rights.