Phoenix Network launches new economic model on Blast L2

Phoenix Network recently announced its official launch on the Blast L2 network and introduced a brand new token and economic model, injecting new vitality into the decentralized derivatives space.

Phoenix Network started its IDO on May 13 and reached its hard cap within 15 days, raising a total of 625 ETH, with subscription amounts exceeding 2.4 million USD. This enthusiastic market response reflects the high interest people have in the project. This article will detail 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, designed to provide an efficient, secure, and transparent perpetual trading environment, attracting more users to participate in the decentralized finance market and providing incentives for it. Its dual-token economic model is an important component of the project.

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

Governance Token PEX

PEX is the governance token of the Phoenix Network, with a maximum supply of 10 million tokens. PEX is primarily used for voting rights in platform governance and serves as the main value storage point for various revenues of the protocol derivatives exchange.

PEX is an asset-backed cryptocurrency. All PEX are minted by the Phoenix treasury at a ratio of 1 PEX for every 0.0002 ETH, and a 10% minting tax will be charged each time PEX is minted.

PEX Minting 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 IDO, with a total of 333,333 PEX minted. Among them, 33,333 coins (10%) were designated as minting tax, and 300,000 coins (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.

Except for the Genesis minting, 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 protocol technology development and maintenance, community node user rewards, and development funds. Over time, the actual circulation of early PEX will slowly increase, but due to various factors affecting the actual supply, it will enter a deflationary phase in the later stages, with the actual circulation being far below 10 million.

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

circulation of PEX

PEX holders can earn staking rewards by staking PEX periodically. The staking rewards increase with compound interest in the form of sPEX and can be unstaked at any time, but the compound interest will be released in equal amounts over a period of 180 days according to the blocks. Users can accelerate the release speed by burning WIN, up to a maximum of 30 days.

Users can also purchase LP bonds by adding liquidity to the PEX-ETH LP, obtaining PEX minted by the treasury. Purchasing LP bonds to obtain PEX and fully staking it can yield 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 trades on PbTrade, while PEX serves 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, and its price performance is anticipated to 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 reserve funds for minting PEX, and 55% is used for repurchasing and destroying PEX. When traders make profits that cause the ETH collateral ratio to fall below 100%, the treasury contract will utilize 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 allocated to PEX stakers, allowing them to earn a portion of the transaction fee revenue in addition to staking rewards. This design tightly links PEX with protocol value and enhances its value capture ability.

Contribution Value Token WIN

WIN is the protocol contribution token of the Phoenix Network, with a theoretical maximum supply of 1 billion tokens. Its main purpose is to reward those who contribute to the growth of the protocol's user base, 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 has established an initial treasury of 10,000 USDB for WIN.

WIN's minting and increase in issuance

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

To earn a high return of 0.2% compound interest every 8 hours, PEX stakers need to spend an additional 20% of the value of staked PEX in USDB to mint WIN. The minted funds enter 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 coin funds is a dynamic variable, initially set at 66%, which decreases as the total amount of WIN increases, with a minimum of 50%.

WIN Redemption and Burn

WIN holders can burn WIN to accelerate the release of PEX staking rewards. This process will lead to the destruction of WIN, thereby boosting 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 in the process. The redemption operation will also cause the WIN price to rise, as the rate of decrease in the total supply of WIN is higher than the rate of decrease in the USDB treasury.

In general, the WIN token model is designed for a one-sided continuous increase: minting WIN, burning WIN, and redeeming WIN for USDB will all lead to an increase in the price of WIN. This mechanism plays an important role in the launch of the protocol and subsequent user growth.

Dual-Currency Economic Model

PEX and WIN play different roles in the economic model of Phoenix Network (Blast L2), being interdependent and promoting each other to drive the platform's development.

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.

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

3. Enhance transparency and fairness: The 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 a core component of its decentralized derivatives trading platform. The two tokens, PEX and WIN, interact within the platform's economy, jointly promoting the platform's development.

PEX serves as a governance token, providing support for platform governance and development, while also incentivizing users to participate through a reward mechanism. WIN acts as a contribution value token, used to reward contributors and accelerate the release of PEX staking rewards through a burn mechanism. The interaction between the two achieves economic balance within the protocol, enhances platform transparency and fairness, and protects user interests.