Phoenix Network log in to Blast L2, launching an innovative 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.

On May 29, Phoenix Network announced that its PEX Token IDO has ended, reaching the IDO hard cap within 15 days, raising a total of 625 ETH, with subscription amounts exceeding 2.4 million USD. This booming market response demonstrates the appeal of 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.

Overview of Phoenix Network

Phoenix Network is a decentralized derivatives trading platform deployed on Blast L2, aiming to provide an efficient, secure, and transparent perpetual trading environment to attract more users to participate in the decentralized finance market and provide incentives and value capture for them. Its dual Token economic model is an important component of the platform.

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

Governance Token PEX

PEX is the protocol governance Token of the Phoenix Network, with a maximum supply of 10 million coins. The main functions of PEX include platform governance voting rights and serving as a major 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 by the protocol for each minting.

Minting and Issuance of PEX

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 IDO distribution and adding 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, community node user rewards, and development funds. Over time, the actual circulation of early PEX will slowly increase, but due to various factors affecting its actual supply, it will enter a deflationary phase in the mid to late stages, and the actual circulation will be far below 10 million coins.

The risk-free value of treasury assets (Treasury-RFV) determines the upper limit of PEX minting.

circulation of PEX

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

Users can also purchase LP bonds by adding liquidity to the PEX-ETH LP and 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 serves as the short-term counterparty for all trades on PbTrade, while PEX acts as the long-term counterparty, thus PEX has a strong value capture capability. In the long run, PEX is expected to be in a deflationary state, with price performance likely to outperform its peers.

In most cases, when traders incur losses, 35% of the profits from the treasury position are deposited into the national treasury as reserves for minting PEX, and 55% is used for the repurchase and destruction of PEX. When traders make profits and the ETH collateral ratio is below 100%, the treasury contract activates the reserve for minting PEX, which is then sold to fill the gap in the treasury ETH pool.

25% of the trading fees from the derivatives exchange PbTrade will be returned to PEX stakers, meaning that PEX stakers can earn this portion of trading fee income in addition to their staking rewards.

Contribution Value Token WIN

WIN is the protocol contribution Token of the Phoenix Network, with a theoretical maximum supply of 1 billion coins. It is mainly used to reward those who contribute to the growth of protocol users, while also serving as a burning mechanism to accelerate the release of WIN staking rewards.

The Genesis phase will issue 1 million WIN for specific stage airdrops and rewards. Apart from the Genesis issuance, all other WIN will be minted by the protocol. The protocol establishes an initial treasury of 10,000 USDB for WIN.

WIN Token minting and issuance increase

WIN is minted by users who stake PEX, and the minting will consume USDB. PEX stakers need to spend an additional 20% of the value of staked PEX (USDB) to mint WIN Token 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 referrers and node users.

The usage rate of WIN minting 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 utilization rate of funds, the increase rate of the USDB treasury is always higher than the issuance rate of WIN. The larger the issuance of WIN, the faster the increase rate of the USDB treasury. Therefore, minting and issuing WIN will continuously drive up the price of WIN.

WIN redemption and burn

WIN holders can accelerate the release speed of staked PEX earnings by burning WIN. During this process, WIN is destroyed, which will lead to an increase in the price of WIN.

Users can also redeem WIN from the USDB treasury at the real-time price for USDB, incurring a 15% redemption tax. During the redemption process, the rate at which the total amount of WIN decreases is faster than that of the USDB treasury, which will also cause the price of WIN to rise.

Overall, the WIN Token is a unidirectional continuous rising model. Whether it is minting WIN, burning WIN, or redeeming WIN for USDB, it will cause the price of WIN to keep rising. This mechanism optimization is an important innovation after the Phoenix Network migrated to Blast, which will play a significant role in the protocol launch and subsequent user growth.

Dual-Currency Economic Model

The governance Token PEX and the protocol contribution value Token WIN play different roles in the Phoenix Network economic model, interdependent and promoting each other, 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 Phoenix treasury and vault, promoting platform development.

2. Maintain platform stability and balance: The reward mechanism of WIN 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 justice.

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 platform's development and prosperity.

PEX serves as a governance Token, supporting the governance and development of the platform, while also incentivizing user participation through a reward mechanism. WIN, as a contribution value Token, is used to reward contributors and can accelerate the release of PEX staking rewards through a burning mechanism. The interaction between PEX and WIN achieves economic balance within the protocol, enhances platform transparency and fairness, and protects user interests and rights.