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

Recently, Phoenix Network announced its official launch on Blast L2 and introduced a brand new Token and economic model, injecting new vitality into the decentralized derivatives track. Phoenix Network recently completed a highly anticipated IDO, reaching its hard cap of 625 ETH in just 15 days, with a subscription amount exceeding 2.4 million dollars. Such a hot market response highlights the unique charm of Phoenix Network. This article will delve into Phoenix Network's dual Token economic model 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 built on Blast L2, dedicated to providing an efficient, secure, and transparent perpetual trading environment, attracting more users to participate in the decentralized finance market and providing corresponding incentives. Its dual Token economic model is a core component of the platform.

In the field of decentralized finance, 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 project's long-term development and market performance. 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 pieces. 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 revenue streams of the protocol derivatives exchange.

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

PEX minting 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 carried out through an IDO, with a total of 333,333 PEX. Among them, 33,333 PEX (10%) were allocated 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 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, community node user rewards, and development funds. 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 mid to late stage, with the actual circulation being far below 10 million coins.

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

circulation of PEX

1. PEX holders can earn staking rewards by staking PEX during the Rebase period.
2. Users can purchase LP bonds by adding PEX-ETH LP liquidity, obtaining PEX minted by the treasury.

Destruction and Rights of PEX

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, giving it strong value capture capabilities. In the long run, PEX is expected to be in a deflationary state, and its price performance is expected 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, and 55% is used for the repurchase and destruction of PEX. In extreme cases, when trader profits cause the ETH collateral rate to fall 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 ETH pool.

25% of the PbTrade transaction fees will be returned to PEX stakers, meaning that PEX stakers can earn not only from staking itself but also from this portion of transaction fee revenue. This design enhances the correlation between PEX and the value of the protocol itself, improving PEX's value capture ability.

Contribution Value Token WIN

WIN is the protocol contribution value Token of the Phoenix Network, with a theoretical maximum supply of 10 billion pieces. Its main role is to reward those who contribute to the growth of the protocol's user base, and it can also serve as a burning mechanism to accelerate the release of WIN staking rewards.

WIN Token minting and issuance

WIN is minted by users who stake PEX, and the minting process consumes USDB. PEX stakers must spend an additional 20% (USDB) of the value of their staked PEX to mint WIN tokens in order to receive a high yield of 0.2% compounding interest every 8 hours. The minted funds enter the USDB vault, with 5% of the minted WIN allocated as a protocol development fund and 95% rewarded to the inviter 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%.

WIN Redemption and Burning

WIN holders can accelerate the release speed of staking PEX rewards by burning WIN. Users can also redeem USDB from the USDB treasury at the real-time price of WIN, with a 15% redemption tax applied during the redemption process, which will remain in the USDB treasury.

The WIN Token model is designed for one-sided continuous increase: minting WIN, burning WIN, and redeeming WIN for USDB will all lead to a continuous rise in the price of WIN. This mechanism will play an important role in the protocol's launch and subsequent user growth.

Dual-Currency Economic Model Summary

In the dual-token economic model of the Phoenix Network, PEX and WIN play different roles, are interdependent and mutually reinforcing, and together promote the development of the platform:

1. Inject funds and liquidity into the protocol
2. Maintain platform stability and balance
3. Enhance transparency and fairness

Through the interaction of PEX and WIN, the Phoenix Network achieves economic balance within the protocol, while enhancing the platform's transparency and fairness, effectively protecting users' interests and rights. This innovative model is expected to bring new development opportunities for decentralized derivatives trading platforms.