Phoenix Network launches a new dual Token model to support the development of the Decentralization derivation market

Recently, 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 Decentralization derivation track. The project initiated its Token issuance on May 13, and within just 15 days, it reached its fundraising cap, raising a total of 625 ETH, with subscription amounts exceeding 2.4 million USD. Such a hot market reaction reflects investors' high attention to Phoenix Network. This article will provide a detailed introduction to the dual Token economic model of Phoenix Network, including the governance Token PEX and the contribution Token WIN.

Overview of Phoenix Network

Phoenix Network is a decentralized derivation 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 financial market and provide corresponding incentives. Its dual Token economic model is a core component of the project.

In the field of Decentralization Finance, 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 rapid project growth.

Governance Token PEX

PEX is the protocol governance Token of the Phoenix Network, with a maximum supply of 10 million coins. PEX is mainly used for platform governance voting rights and is also the primary value storage point for various revenues from the protocol derivation exchange.

PEX is an asset-backed cryptocurrency, with all PEX created by the Phoenix treasury at a ratio of 1 PEX minted for 0.0002 ETH. Each time PEX is minted, the protocol will charge a 10% minting tax.

PEX 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, the genesis minting was conducted through the first decentralized issuance (IDO), with a total of 333,333 PEX issued. Among them, 33,333 PEX (10%) were allocated as seigniorage, and 300,000 PEX (90%) were used for IDO distribution and to add initial liquidity. The IDO price was 0.0025ETH, and the initial listing price was 0.0031ETH.

Except for the PEX created during 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 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 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 stages, and the 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 staking rewards increase in a compound 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 block. Users can also purchase LP bonds by adding PEX-ETH LP liquidity to obtain PEX minted by the treasury. Users who purchase LP bonds and stake the full amount of PEX will receive an additional approximately 5% PEX Token reward.

PEX's destruction and rights

PEX is closely related to the derivation 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 value capture ability. In the long term, PEX will exhibit a deflationary state, and its price performance may 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, and 55% is used for repurchasing and destroying PEX. In extreme cases, when traders' profits lead to an insufficient ETH collateral rate of less than 100%, the treasury contract will enable reserve fund minting of PEX, which will then be sold to fill the gap in the treasury ETH pool.

In addition, 25% of the trading fees from the derivative exchange PbTrade will be allocated to PEX stakers, allowing PEX stakers to earn part of the trading fee revenue in addition to staking rewards. This design enhances the value capture ability of PEX and helps improve its market performance.

Contribution Value Token WIN

WIN is the protocol contribution value Token of the Phoenix Network, with a theoretical maximum supply of 1 billion pieces. Its main purpose is 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 WIN staking rewards.

WIN's minting increase

WIN is minted by users who stake PEX, and the minting process will consume USDB. PEX stakers need to spend an additional 20% of the value of staked PEX in USDB to mint WIN tokens in order to earn a high return of 0.2% compound interest every 8 hours. The minting funds go into the USDB treasury, with 5% of the minted WIN allocated to the protocol development fund and the remaining 95% rewarded to the referrer and node users.

The usage rate of WIN token funds is a dynamic variable, initially set at 66%, decreasing as the total amount of WIN increases, with a minimum of 50%. Due to the existence of the usage rate, the increase in the USDB treasury is always higher than the speed of WIN issuance, hence the minting and issuance of WIN will continuously drive up the price of WIN.

WIN Redemption and Burn

WIN holders can accelerate the release of PEX staking rewards by burning WIN. Additionally, users can redeem WIN for USDB from the USDB vault at the real-time price, with a 15% redemption tax applied at the time of redemption, which will continue to remain in the USDB vault.

Overall, whether it is minting WIN, burning WIN, or redeeming WIN for USDB, it will lead to an increase in the price of WIN. This mechanism design helps to drive the protocol launch and subsequent user growth.

Advantages of the Dual-Currency Economic Model

In the dual-token economic model of Phoenix Network, PEX and WIN play different roles, are interdependent, and promote each other, jointly driving the development of the platform. Specific advantages include:

1. Injecting funds and liquidity into the protocol: The minting and circulation of PEX and WIN brings 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 earnings promote a positive cycle of the protocol.

3. Improve transparency and fairness: The minting and circulation of PEX and WIN are fully executed on the smart contract chain, ensuring fairness and justice.

The dual-token economic model of the Phoenix Network is an important component of its decentralized derivation trading platform. Through the interaction of the two tokens, PEX and WIN, it jointly promotes the development and prosperity of the platform. PEX, as a governance token, supports platform governance and development while incentivizing user participation. WIN, as a contribution value token, rewards contributors and acts as a burning mechanism to accelerate the release of PEX staking returns. The interaction between the two achieves economic balance within the protocol, enhances platform transparency and fairness, and protects user interests and rights.