PawnHouse Dual Mining Rules & Algorithm
The PawnHouse project team combined and applied both the SMRA theory (2020 Nobel Economic Prize) and The Wisdom of Crowds theory to effectively solve the issue of decentralized NFT asset-pricing and improve the liquidity of NFTs.
PH Token is the native token of PawnHouse, with a total circulation of 1 billion. 60% of the tokens are distributed within four years through liquidity and staking mining methods. PawnHouse’s token mining is divided into the following three stages:
● Stage 1: Supporting liquidity mining based on a loan or transaction amount
● Stage 2: Supporting liquidity mining in a multi-chain environment (fixed total daily supply)
● Stage 3: Supporting liquidity & staking dual mining in a multi-chain environment
This article focuses on the adaptive adjustment algorithm of the mining reward (reward ratio) during the four-year supply period of PH tokens and the token reward distribution rules after cross-chain deployment.
1.1 The Basic Supply of Mining Token Rewards
Mining accounts for 60% (600 million) of PawnHouse’s total token volume, with 51% supplied in the first three years and 9% supplied in the fourth year. The breakdown is as follows:
● 24% of the total tokens are supplied in the first year, 15% in the second year, 12 % in the third year, and 9% in the fourth year.
● Liquidity Mining (10%-60% of total tokens) is designed to incentivize capital providers (The lender who provides tokens in the lending process, the investors who participate in the transaction during the PT circulation period, and the bidder who obtains the asset during the auction period).
● Staking Mining (0%-50% of total tokens) is designed to incentivize the long-term ecology of PH tokens and attract more long-term contributors to the platform.
1.2 Distribution of Token Supply in a Cross-Chain Deployment Environment
Since the current NFT assets are distributed on multiple public chains such as Ethereum, BSC, HECO, FLOW. PawnHouse will support the provision of multi-chain price information and transaction assets for users in the future.
For all public chains newly supported by PawnHouse, the initial mining reward token supply on the first day of launch is 10% of the total release of the platform on that day. After that, the total supply amount on other chains is reduced to 90% to ensure that the total daily amount of PH token supply is fixed.
For example, the current PH mining reward supplied on BSC is 657,534 per day. Then on the day when PH goes online for HECO mining, The PH supply of BSC will be adjusted to 591,780 (657,534*90%), and HECO will be 65,754 (657,534*10%)
The token distribution ratio of each chain will be adjusted every month according to the transaction volume of different chains during the period. Adjustments will be released through the official website and announcements. After PawnHouse opens the community DAO governance, users can adjust in the form of community governance proposals. However, it does not change the total supply of PH tokens for daily mining rewards.
2 Liquidity Mining Algorithm
When the daily tokens are completely mined, the supply will stop. Therefore, after the tokens are mined on the day, users who provide liquidity transactions will no longer receive reward tokens.
The amount of token rewards for mining is automatically adjusted by the following algorithm. For example, in stage 1, the total amount of token rewards for daily liquidity mining is:
On the first day of system launch, the reward ratio for liquidity mining is “1”. That is: for every 1 USDT (or equivalent other tokens) paid for a loan or transaction, 1 PH token reward will be obtained until the token reward is completed on the same day.
2.1 Algorithm A
When all tokens are mined on the same day, the token rewards will be reduced by 1/3 on the next day.
For example, if all 657,534 PH on D day are mined, the basic reward ratio of liquidity mining on D+1 day becomes:
Therefore, about 0.6667 PH token rewards can be obtained for every 1 USDT (or equivalent other tokens) paid for each loan or transaction until the token rewards are completed on D+1 day.
2.2 Algorithm B
If all the reward tokens in a natural day are not mined, the token amount gets carried over to the next day based on the unmined part, which will cause the token reward ratio to change on the next day. Situations at this time are as follows:
1) The remaining token quantity on D day ≥ the token supply quantity on D day, then the token reward ratio on D+1 day doubles.
For example, if the basic reward ratio for liquidity mining on D day is 0.20, the remaining amount of tokens before the end of D day is 800,000 PH, which is more than 657,534 of this chain’s supply. Then this chain’s reward ratio on D+1 day is:
Therefore, 0.4 PH token rewards can be obtained for every 1 USDT (or equivalent other tokens) paid for each loan or transaction until the token rewards are completed on D+1 day.
2) The remaining token quantity on D day < the token supply quantity on D day, then the token reward ratio on day D+1 is calculated based on the remaining amount.
For example, if the basic reward ratio for liquidity mining on D day is 0.20, but the remaining amount of tokens before the end of D day is 200,000 PH, which is less than the supply of the chain of 657,534. Then this chain’s reward ratio for liquidity mining on D+1 day is:
Therefore, about 0.2359 PH token rewards can be obtained for every 1 USDT (or equivalent other tokens) paid for each loan or transaction until the token rewards are completed on D+1 day.
- In multi-chain mining, the daily supply on different chains is different.
- Daily Supply, Remaining, and Reward Ratio are all shown on pawnhouse.io