🍄Liquidity characteristic
The universal liquidity pool on PEN holds a portfolio of assets, and each asset has a targeted weight in the pool. Pooled assets will be utilized for PEN margin trading to earn fees.
Users can provide liquidity by buying PEN with assets allowed by the portfolio. PEN tokens are minted when buy orders are filled and burnt when sold. The PEN token price is calculated by dividing the PEN pool value by the total PEN supply. After buying PEN tokens, users can stake the tokens to earn protocol income and PEN rewards.
Liquidity-related metrics can be seen on the PEN Statistics.
Buy / Sell PEN
Users can buy PEN tokens on all deployed networks with assets allowed by the portfolio.
Buy / Sell PEN Tutorial
Process transaction speed accurately within 5 seconds.
The pending time serves two purposes:
Prevent potential arbitraging that can harm LP
Since the PEN pool holds a portfolio of assets and allows users to buy PEN with any supported assets, there is potential arbitrage room if front-runners execute quick buy and sell orders with different assets. The pending time can help to eliminate this room for arbitrage.
Ensure the protocol can correctly calculate the universal liquidity across four networks
The PEN protocol needs to consider different network latency and finalization times when calculating the universal liquidity; the pending time helps ensure correct calculation and proper token allocation for PEN buyers and sellers.
PEN Staking
After buying PEN tokens, users can stake them on Peak Network to earn protocol income and PEN rewards. Please check the incentives section for detailed rewards distribution formulas.
PEN Staking Tutorial
PEN Pool Portfolio
The PEN pool holds a portfolio of blue-chip assets and stablecoins, each having a targeted weight in the pool. When the asset weight moves above or below its target, the fees for buying or selling PEN with this asset will adjust accordingly.
If the weight is below target, buying PEN with this asset requires lower fees; selling PEN into this asset requires higher fees.
If the weight is above target, buying PEN with this asset requires higher fees; selling PEN into this asset requires lower fees.
Liquidity composition, weight and multiplexing statistics can be seen on the PEN Liquidity page.
PEN Profits
PEN Profits Sources:
A portion of the protocol fees
Funding payments
Liquidation penalties
PEN token rewards
Protocol-Owned Liquidity (POL)
Sufficient liquidity is crucial for trading protocols, as deeper pools can support higher open interest. However, acquiring and maintaining liquidity can be costly and unstable if solely reliant on liquidity providers (LP). Therefore, instead of “renting” all liquidity from external sources, the PEN protocol implements the POL mechanism to become gradually self-sufficient.
The PENLP pool consists of liquidity from two sources, LP and POL. Upon genesis, the protocol purchased PENLP tokens with funds raised from previous rounds; also, 30% of protocol income will go to POL. POL is the base of the PENLP pool and will grow sustainably with cumulative trading volume. The proportion of POL in the total liquidity is protocol owned ratio (POR.) Furthermore, if someday the POL is sufficient enough, the proportion of the income distributed to the LP might be reduced.
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