Phoenix Network launches a new Token economic model, attracting market attention again.

Recently, the decentralized derivatives protocol Phoenix Network announced its official launch on a certain Layer 2 network and introduced a brand new Token and economic model, injecting new vitality into the decentralized derivatives sector.

Phoenix Network started its IDO on May 13 and announced the end of the IDO on May 29. In just 15 days, the project reached the IDO hard cap, raising 625 ETH and exceeding $2.4 million in subscription amounts. Such a strong market response has sparked people's interest in the Phoenix Network. This article will provide a detailed introduction to the dual-token economic model of the Phoenix Network, including the governance token $PEX and the contribution value token $WIN.

Phoenix Network Overview

Phoenix Network is a decentralized derivatives trading platform deployed on a certain Layer 2 network, aimed at providing an efficient, secure, and transparent perpetual trading environment to attract more users to participate in the decentralized finance market and provide incentives. The dual-token economic model of Phoenix Network is an important component of it.

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

Governance Token PEX

PEX is the protocol governance Token of the Phoenix Network, 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 from 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 PEX minted.

PEX's minting and issuance

The issuance of PEX is closely related to the development 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 a 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 casting, subsequent issuance of 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 gradually increase, but due to various factors such as the value of treasury assets, the price of PEX, and the profitability of positions in derivative exchanges, it will enter a deflationary phase in the mid to late stage, and its actual circulation will be far below 10 million coins.

circulation of PEX

PEX holders can earn staking rewards by staking PEX during the Rebase period. The rewards from PEX staking increase in a compounded manner in the form of sPEX and can be unstaked at any time, but the compounded rewards will 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 fully stake them, they will receive an additional reward of about 5% in PEX tokens.

PEX's destruction and rights

PEX has a close relationship with 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 a strong ability to capture value. In the long term, PEX will be in a deflationary state, and its price performance will also outperform similar products.

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, while 55% is used for repurchasing and burning PEX. The circulation of PEX decreases, raising the price. In extreme cases, when traders make profits and the collateral rate of ETH is below 100%, the treasury contract will activate the reserve funds 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 in addition to the staking rewards, PEX stakers can also earn a share of these transaction fee revenues. This design creates a strong correlation between PEX and the value of the protocol itself, enhancing its value capture ability and benefiting the price performance of PEX.

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 function is to reward those who contribute to the growth of protocol users, while it can also serve as a burning mechanism to accelerate the release of WIN staking rewards.

The WIN Genesis stage will issue 1 million coins for specific phase airdrops and rewards. Apart from the WIN issued in the Genesis, other WINs are minted by the protocol. The protocol establishes 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 will consume USDB. The minted WIN is rewarded to those who contribute to the growth of users for the protocol, and the process of minting WIN will increase the price of WIN.

PEX stakers need to spend an additional 20% of the value of staked PEX (USDB) to mint WIN tokens in order to achieve 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 the remaining 95% rewarded to referrers and node users.

WIN redemption and burning

Users who hold WIN can accelerate the release speed of staked PEX earnings by burning WIN. This process destroys WIN, so burning WIN to accelerate the release of PEX staking earnings will drive up the price of WIN.

In addition, users can redeem WIN for USDB from the USDB treasury at real-time prices. A 15% redemption tax will be charged for redeeming WIN for USDB, and the redemption tax will remain in the USDB treasury. When users redeem WIN, the total supply of WIN decreases at a faster rate than the decrease in the USDB treasury, thus the redemption process will also lead to an increase in the price of WIN.

The WIN Token is a model of continuous unilateral price increase: minting WIN, burning WIN, and redeeming WIN for USDB will all cause the price of WIN to continuously rise. The optimization of the WIN model is an important innovation after the Phoenix Network migrates to a certain Layer 2 network, and this mechanism 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 token WIN play different roles in the economic model of the Phoenix Network. They are interdependent and mutually reinforcing, and will jointly promote the development and prosperity of the platform. Specifically, there are the following aspects:

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

2. Maintain the stability and balance of the platform: The reward mechanism of the contribution value Token WIN and the destruction mechanism that accelerates the release of PEX staking收益 promote a positive cycle of the protocol, thereby maintaining the stability and balance of the platform.

3. Improve transparency and fairness: The issuance and circulation of PEX and WIN are completely 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 interaction and influence of the two tokens, PEX and WIN, will jointly promote the development and prosperity of the platform.

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