PerlinX Tokenomics Experiment — Phase 2

CY Tan

Published in

PERL.eco

4 min readNov 6, 2020

Review of Phase 1 Results & Announcement of Buyback & Lock

TLDR:

Phase 1 of tokenomics experiment (liquidity mining) successful
Phase 2 of tokenomics experiment (Buyback & Lock) to begin gradually from 10th November 2020.
Sustainable liquidity incentive rewards will continue to be distributed to users.
PERL reward payout cycle will now be every Tuesday to match UMA’s distribution cycle.

Phase 1 Recap and Result

In Phase 1 of the experiment, we explored liquidity mining with the aim to achieve a sustainable positive feedback loop. That is, to attract deep liquidity to the platform and incentivising continuing trading volumes.

At the same time, liquidity mining was also an experiment to study how an inflationary model might operate (simulated by the issuance of PERL reward from Perlin treasury). In the last 8 weeks, a total of 7,888,184.48 PERL (US$239,446.17 PERL price aggregated with time) was distributed from the treasury, attracting up to $1.8 million USD worth of liquidity, and ~250 users. At the same time, there was ~ $2.5 mil USD in trading volume generated, resulting in a total of $7.5k in trading fees distributed among all stakers.

At the time of writing, there is around $3k USD worth of PERL to be distributed weekly to ~150 active stakers that have locked up around $700k USD worth of cryptocurrencies.

Key Takeaways

Throughout Phase 1 of the experiment, we have received a high volume of diverse feedback from the community on the tokenomic parameters:

Price is down. Inflation is bad, you shouldn’t simulate inflation. Please make it more sustainable (in early Phase 1)
Price is down. The reward is too low. For the risk that we are taking we need higher APR. (in late Phase 1)
Stop distributing PERL, BAL, UMA. Do a buyback instead.

It’s easy to see why there was such polarised feedback while we tried to simulate the different rates of supply inflation. The key challenge was properly simulating a meaningful ‘value-add’ that would drive growth in the ecosystem user base (e.g. the robust buy & hodl audience critical to most healthy token ecosystems). As the results of Phase 1 have shown, more focused experimentation is needed to more effectively meet this challenge.

What’s next — Phase 2

To address the issues identified in Phase 1, Phase 2 will be focused on finding a sustainable balance between rewarding active participants and identifying a healthy rate of growth in platform participant numbers.

Therefore, under Phase 2 of our ongoing tokenomics experiment, PerlinX will implement a discretionary on-market Buyback & Lock program beginning 10th November 2020. This 4-week long experiment will be separated into 2 x 2-week periods. The schedule of Phase 2 is provided below:

9th November: Last day where 100% of the current PERL budget will be allocated to the airdrop to PerlinX stakers.
10th November — 23rd November (10/40,100): Normal LPs and pxAsset LPs will receive 10% APR and 40% APR of PERL rewards respectively. Both normal LPs and pxAsset LPs will receive BAL reward, but only pxAsset LPs will receive the UMA developer mining reward. 100% of the current budget will be allocated to buyback & lock.
24th November — 7th December (0/20,160): Normal LPs will no longer receive any PERL reward and pxAsset LPs will receive 20% APR of PERL reward. Both normal LPs and pxAsset LPs will receive BAL reward, but only pxAsset LPs will receive UMA developer mining reward. 160% of the current budget will be allocated to buyback & lock.
8th December onwards: All normal LPs will receive the full amount of BAL reward, and all pxAsset LPs will receive 70% of UMA developer mining reward, and the full amount of BAL reward. Buyback & Lock will be done on a discretionary basis.

Note: To be eligible for UMA rewards, you’ll need to be a token sponsor (minter) of the pxAsset.
The current budget is calculated based on the total reward as if the APR is 20% and 60%.

PerlinX Liquidity Incentives Will Continue

There will be no change to the BAL and UMA distributions. BAL rewards will need to be claimed from claim.balancer.finance, and details on the distribution of UMA rewards will be announced soon.

During this period, any introduction of new synthetic pxAssets may be accompanied by a separate liquidity mining program to ensure sufficient liquidity for the trading of any new synthetics.

PerlinX Liquidity Incentives Cycle Update

UMA’s Developer Mining Reward is being distributed every Tuesday. In order to streamline the distribution process, we will be shifting the PERL reward cycle to every Tuesday, in-line with the UMA developer mining reward cycle.

4 days worth of reward from November 6 to November 9 will be added to the next airdrop to reflect this change.

Have questions?

Join us on Telegram or Discord! We would be happy to answer them.

Send us feedback on what pxAsset you’d like to trade/mint next and how you’d like to see the tokenomics being conducted!

Useful links

PerlinX & UMA Synthetic PxAsset Minting

Part 1: Introducing PxUSD & what you can do with it
Part 2: All the Calculations & Values You Need to Know
Part 3: How do I Manage My Position?

PerlinX User Guides:

Providing Liquidity Guide
PerlinX Synthetic Asset Guide

Stay tuned for more updates and announcements on our channels:

Twitter | Discord | Telegram Announcements | Telegram Discussion