Fees & Yield Distribution
Last updated
Last updated
Our Fee and Yield distribution is split into 5 categories, designed to establish a symbiotic relationship between our Private Pool Indexes, our exclusive Protocol Owned Indexes & the token itself. This system design results in multiple positive feedback loops that build momentum over time to propel the network in a self sustaining manner, irrespective of user adoption.
Yield directly generated from volatility by virtue of our private index pools interacting with our trading engine is split as follows.
70% of all value is compounded back into indexes. The logic here is to ensure liquidity providers receive a lions share of the yield our network extracts. Compounding is an optional selection for users, however by compounding yield back into your index pool we achieve optimization benefits.
Compounding increases the unitary value of the entire networks potential to extract yield from opportunities created by volatility. The more value left in our ecosystem, the more value we are able to extract in the future (momentum).
Compounding your value will result in your position diluting the value extraction power and share of yield your position is entitled to vs those who passively harvest their positions.
Compounding your position entitles you to a boost to your PPN emission allocation. As mentioned above the more value the ecosystem retains, the better our network is able to perform as such users who elect to auto compound their positions will be rewarded for their efforts to strengthen our network.
The network fee logic aims to ensure the project has enough capital to be self sustainable, whilst also strengthening our trading engine capital and insuring ample rewards are sent to token stakers. Of the yield extracted 30% is routed through the network fee channels. They are broken down into four categories as follows, each designed to establish positive feedback loops to strengthen our ecosystem and reinforce the value of the PPN token.
10% of the ecosystems entire yield is directed to PPN token stakers, giving our token Omni properties. This is an incredibly powerful concept because this allows people to participate in our ecosystem even if they don't wish to have exposure to certain asset classes within our Indexes. The omnifarious opportunity this delivers means stakers can gain exposure to the yield from all our ecosystem's indexes without holding the underlying assets.
This effectively makes the PPN token an infinite call option on the value extracted across all of our indexes
This segment is divided by a cross section of yield flow where: 50% of the Network Owned Liquidity yield flow is directed to our trading engine capital: This capital is owned by the entire network and acts as a pool of capital for our trading engine to access inorder to execute arbitrage trades. Think of this as the initial capital used to engage any and all arbitrager opportunities our network executes. Growing this pool of capital is extremely important, because the larger the pool grows the larger our trade execution opportunities grow along side it.
More trading engine capital means we can scale the size of the arbitrage opportunities we execute.
50% of the Network Owned Liquidity yield flow is directed to :our Protocol Owned Indexes: The protocol owned indexes are indexes that support the PPN token directly, pairing the PPN token with "Blue Chip" assets. This is also an important component to our ecosystems architecture as it establishes a foundation of value and ensuring resilience in all market conditions. You can read more about the effects this has on our tokens value in the tokenomics section of this document.
10% of all yield extracted by the network is directed to a protocol treasury for servicing protocol overheads. The cost to running our trading engine and ensuring its maintenance and upkeep includes subscriptions to many infrastructure vendors such as BloxRoute, ChainLink, 1inch, private server infrastructure to name a few. Ensuring the protocol establishes enough income to support these maintenance overheads is imperative to the sustainability of our ecosystem.
Any surplus capital left in the network overhead treasury, will be directed to growing protocol owned indexes. Once Protocol Owned Indexes start to produce enough yield where 50% of the yield they produce can sustain all maintenance overheads, the 10% Network Overhead fee will be deprecated, with this additional yield being directed to PPN token stakers, effectively doubling the rewards that token stakers receive.
