Puzzle Tokenomics

PUZZLE will be a key attribute of the Puzzle Swap service used as a utility token. This article presents the token characteristics with an innovative concept of the deflationary model with a parent pool.

In short:

• Initial emission: 485,000 tokens
• No additional emission
• 3 ways of token utilization

PUZZLE tokenomics effectively capitalizes on all the benefits of the project and the original mega pools mechanics, so the token is expected to grow along with the development of Puzzle Swap as a product.

PUZZLE token application

PUZZLE staking

PUZZLE token owners will be able to put it into staking. The core reward for staking is receiving a portion of commissions from transactions in all pools of the service, including the custom pools.

Currently, the commissions are divided at a 40/60 ratio between the protocol and the liquidity providers. This 40% will be spent on PUZZLE buybacks, which will be distributed partly among PUZZLE holders, and partly returned to the trader as a cashback. The ratio may be changed over time.

Thus, PUZZLEs can be put into staking in order to receive new PUZZLEs as passive income. However, new PUZZLEs are not issued out of thin air, as is common in many DeFi projects, but are bought back from the market for a protocol fee.

Trading subscriptions

Puzzle Swap can have infinite pools, each with its own settings defined by the owner, including the commission per transaction: for example, the current default pool commission on Puzzle Swap is 2%.

For frequent users, the service features preferential exchange conditions by offering a subscription for PUZZLE tokens. Different subscriptions can be offered for a single trade, for several trades, for a given amount in USD, or for a certain time period. The key idea is that they allow the trader to save money by spending PUZZLE.

For instance, there can be a monthly trading subscription with a 50% discount worth 2 PUZZLE. If the monthly trading volume for the user is 100,000 USD, this would save them 1000 USD. In this case, the subscription becomes beneficial given that the price of the PUZZLE token is below $500.

The subscriptions are likely to be launched as NFT artefacts in February 2022.

Artefacts

The artefacts will eventually be introduced within the product and will be required for exclusive functionality, such as creating your own puzzle (custom pool).

Let’s say have $10,000 in EGG, $5000 in NSBT, and $5000 in WAVES in your wallet. The best solution would be buying an artefact to create your own pool for 20 PUZZLE with a 50/25/25 ratio and putting all your tokens there so that not a single penny is idle! You can earn up to 60% of commissions from your pool.

The artefact mechanics will be presented in 2022 with an aim to expand the user options while driving the demand for PUZZLE.

It is important that the utility role of the token will be growing along with the expansion of the product’s functionality. For example, in case of a launch of the DEX aggregator on Puzzle, its commissions will also be distributed among PUZZLE stakers.

The more prominent a product is in the Waves ecosystem, the more powerful PUZZLE utility is.

Economy injection

The issue of 485,000 tokens will be distributed as follows:

• 400,000 will be injected into the economy through the so-called parent pool
• 25,000 would be the team’s share with a one-year lock
• 20,000 will be budgeted for community incentives: contests for developers and liquidity providers, and of course meme competitions
• 40,000 will be set aside as a treasury to be used for strategic tasks in the distant future, such as launching a project fund

The single most important characteristic of such a token injection model is the almost complete absence of inflation, i.e. the issuance of new tokens. With the exception of the 85,000 controlled by the team, tokens can only appear in the economy through purchase in the parent pool.

Parent pool details

As the only source of tokens in the economy, the parent pool becomes the key link in the entire service. Parent pool was launched on the day of token release as a mega pool with the following ratio: 80% PUZZLE, 10% USDN, 10% USDT. The starting price of PUZZLE was 0.10 USDN or 0.10 USDT.

This allows PUZZLE to be purchased for one of the two stablecoins in a single transaction, and its significant weight in the pool ensures a gradual growth of the exchange rate.

The only drawback of this parent pool configuration is that over time the volatility of the rate becomes extremely low due to accumulated liquidity. To solve this problem, a “halving” mechanic is incorporated into the tokenomics: when the PUZZLE price in the pool reaches a certain point, the team has the right to withdraw up to half of the liquidity from the pool, in order to add volatility to the token and make its way to the Pluto easier.

All tokens withdrawn from the pool will be used for listings on other exchanges (as was already done with the listing on Swop.fi) or liquidity return if needed. The USD withdrawn from the pool will be spent on marketing activity so that there is no need to pay influencers with PUZZLE tokens which get immediately sold, as our experience shows.

At what values of USD balance in the parent pool does halving occur? Starting with 15 USD at each subsequent doubled value, that is, when the token reaches 30 USD, 60, 120, 240, etc.

👆👆👆 Based on the ratio of tokens in the pool, disregarding halving, we can make the following prediction about the price of a token depending on the number of USD spent to buy a token in the parent pool.

Thus, the unique PUZZLE tokenomics is based on three principles:

• No emission sources and constant deflationary pressure
• Clear use cases and the option of a consistent staking income
• Favorable pricing formula at the base of the parent pool along with the halving feature

The combination of these principles should provide strong growth potential for the PUZZLE token, and consequently the entire product, which is aspiring to become the leading DeFi service in the crypto space.

We strongly believe that this tokenomics model is a new light for DeFi space 🥇🔥 Enjoy DeFi 2.0 and WavesFi combined!

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