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Within the ecosystem of PROXI, there are two tokens functioning for different features respectively. CREDIT will be the utility token and PROXI will be the governance token. CREDIT will be issued soon via a series of Token Sale through multiple channels. CREDIT acts as the medium of payment and gas fees or commissions in the process of on-chain transaction, credit lending, asset issuance, trading, and other similar services. Fees will be partially burned, and partially extracted to the Collateral Pool as the Stabilization Fund to hedge the market risk.
CREDIT is the capped supply ERC-20 token widely used on the PROXI platform. CREDIT tokens are utility tokens designed to be the key indicators of users’ credit and to ensure the deposit and staking of digital assets being used as smart contract locked collateral for value transfers. Also, CREDIT will be the main collateral locked in a staking contract, enabling the issuance of synthetic assets on PROXI platform. Value for CREDIT token holders will increase as demand for multi-collateral would grow and transfer volumes increase with the massive adoption of PROXI originated synthetic assets. Fees for all sorts of operations on the platform are paid out in CREDIT through burning, thus increasing the scarcity of CREDIT for all token holders.
The diagram of PROXI's tokenomics
The CREDIT token is a capped supply token which is set at 100M tokens. Within the total supply there will be a liquidity mining incentive pool(so-called Yield Farming) and the fees for various operations will be burned.
The CREDIT token’s utility lies in its double feature as both collateral and as an entrance requirement to the PROXI Ecosystem. Each use of the PROXI protocol stacks starts with the deposit and lock-up of digital assets and the issuance of credit and other collateral backed synthetic assets by engaging the PROXI Protocol, which requires CREDIT tokens. The expansion of the PROXI derivatives will create demand for CREDIT tokens in the open market as participants will need to purchase or borrow the tokens to meet their operational demands for lowering down the collateral ratio. However, CREDIT token will not be the sole asset permissioned to be used as the collateral to mint synthetic assets on PROXI.
This pooled collateral model enables users to perform conversions between synthetic assets directly with the smart contract, avoiding the need for counterparties. This mechanism solves the liquidity and slippage issues experienced by DEX’s. CREDIT holders are incentivised to stake their tokens as they are paid a pro-rata portion of the fees generated through activity on PROXI Exchange, based on their contribution to the network. It is the right to participate in the network and capture fees generated from PROXI exchanges, from which partial value of CREDIT token is derived. While trading on PROXI Exchange does not require the trader to hold CREDIT in the future.
To stimulate the massive adoption of PROXI platform, PROXI intends to apply the liquidity mining incentive to the multi-collateral and synthetic assets issuance operations. The platform seeks to bridge the gap between two major flaws in the crypto space.
- 1.Negative yielding cryptocurrencies – Most cryptocurrencies are being held in exchanges/wallets without yielding interest. In fact, these stored cryptocurrencies carry a negative yield due to significant storage costs and risks.
- 2.Lack of borrowing avenues in the crypto space – Without protocols like Compound or PROXI, the only place you can “borrow” cryptocurrencies is via centralized exchanges . However, borrowing from these centralized exchanges means that you have to place an inherent trust in them (to not get hacked, have your positions closed prematurely etc).
More importantly, with the introduction of DeFi, the gap between people with a surplus of cryptocurrencies and people with productive uses and investments for those cryptocurrencies can now be bridged. This benefits both parties, as the party with the surplus gets interest for lending, and the borrower can utilize the extra cryptocurrencies for his or her own purpose.
With Liquidity Mining Incentive plan, users could receive CREDIT token as rewards for adopting lending, borrowings, issuance and trading across the platform and thus the platform could go to market in an economic way and CREDIT token could have a native distribution throughout the ecosystem.
An overview of how we plan to allocate our vesting is broken down below:
Token Release Schedule