Phoenix Network launches an innovative dual Token economic model on Blast L2

Recently, a well-known decentralized derivatives protocol announced its official launch on the Blast L2 network, introducing a brand new Token and economic model, injecting new vitality into the decentralized derivatives field. The protocol started its IDO on May 13 and reached its hard cap in just 15 days, raising 625 ETH, with subscription amounts exceeding $2.4 million. Such a strong market response reflects the high attention investors are paying to this project. This article will detail the protocol's dual Token economic model on Blast L2, including the governance Token $PEX and the contribution Token $WIN.

Project Overview

This is a decentralized derivatives trading platform deployed on Blast L2, aimed at providing an efficient, secure, and transparent perpetual trading environment, attracting more users to participate in the decentralized financial market and providing incentives and value capture for it. The project's dual Token economic model is a core component.

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 mechanisms but also affects the long-term development and market performance of the project. An excellent economic model can attract more investors and users, driving the rapid growth of the project.

Governance Token PEX

PEX is the governance Token of the protocol, with a maximum supply of 10 million coins. The main function 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's derivatives exchange.

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

PEX Minting and Issuance

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

Except for the PEX minted during the genesis, 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 PEX minting tax is used for the technical development and maintenance of the protocol, rewards for community node users, and the development fund. Over time, the actual circulation of early PEX will gradually increase, but due to various factors affecting its actual supply, it will enter a deflationary phase in the middle and late periods, with the actual circulation far below 10 million coins.

PEX circulation

PEX holders can earn staking rewards by staking PEX during Rebase periods. The staking rewards increase in a compounded manner in the form of sPEX and can be unstaked at any time, but the compounded rewards must be released in equal amounts over 180 days according to the blocks. The release speed can be accelerated by burning WIN, up to a maximum of 30 days.

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 equity

PEX is closely related to derivatives exchanges. The Treasury serves as the short-term counterparty for all trades, while PEX acts as the long-term counterparty, thus PEX has strong value capture capability. In the long run, 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 position are deposited into the treasury as reserve funds for minting PEX, while 55% is used for repurchasing and destroying PEX. This will lead to a decrease in the circulation of PEX and an increase in price. In extreme cases, when traders make profits that cause the ETH collateral rate to fall below 100%, the treasury contract will enable the reserve funds to mint PEX, which will then be sold to fill the gap in the treasury's ETH pool.

In addition, 25% of the trading fees from the derivatives exchange will be returned to PEX stakers, meaning that PEX stakers can earn a portion of the trading fee income in addition to the staking rewards themselves. This design creates a strong correlation between the value of PEX and the protocol itself, which is beneficial for the value capture of PEX.

Contribution Value Token WIN

WIN is the contribution value Token of the protocol, with a theoretical maximum supply of 1 billion coins. Its main function is to reward those who contribute to the growth of the protocol's users, 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 airdrops and rewards during specific stages. Apart from the WIN issued at genesis, all other WIN are minted by the protocol. The protocol has established an initial treasury of 10,000 USDB for WIN.

WIN's minting increase

WIN is minted by users staking PEX, and the minting will consume USDB. The minted WIN is rewarded to those who contribute to the growth of the protocol users, and the minting process will increase the price of WIN.

PEX stakers can earn a high yield of 0.2% compound interest every 8 hours by additionally spending 20% of the staked PEX value (USDB) to mint WIN tokens. The minting funds will go into the USDB treasury, and of the minted WIN, 5% will be allocated as a protocol development fund, while the remaining 95% will reward the referrers and node users.

The usage rate of WIN coin funding is a dynamic variable, initially set at 66%. For every increase of 5 million WIN in total supply, the usage rate decreases by 2%, with a minimum usage rate of 50%.

WIN Redemption and Burn

Users who hold WIN can accelerate the release speed of PEX staking rewards by burning WIN. Since WIN is destroyed in this process, burning WIN to accelerate the release of PEX staking rewards will increase the price of WIN.

In addition, users can redeem WIN for USDB from the USDB vault at the real-time price, with a redemption fee of 15% for continuing to remain in the USDB vault. Since the total supply of WIN decreases at a faster rate than the USDB vault during the redemption process, this will also cause the price of WIN to rise.

Overall, the WIN Token model is designed for unilateral continuous growth: minting WIN, burning WIN, and redeeming WIN for USDB will all cause the price of WIN to continuously rise. This mechanism will play an important role in the protocol's launch and subsequent user growth.

Dual-Currency Economic Model Summary

The governance token PEX and the protocol contribution token WIN play different roles in the economic model of this project. The two are interdependent and mutually reinforcing, together driving 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 treasury, promoting the development of the platform.

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

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

The dual-token economic model of this project is an important component of its decentralized derivatives trading platform. The interaction and influence of the two tokens, PEX and WIN, within the platform's economy will jointly promote the development and prosperity of the platform. Through the interaction of PEX and WIN, economic balance within the protocol is achieved, while also enhancing the platform's transparency and fairness, protecting the interests and rights of users.