Portal Energy

• Portal Energy (PE) is a representation of the time value of deposited assets

• When a depositor claims upfront yield, PE is swapped for PSM via the internal PE/PSM LP

• PE is mintable as an ERC20 token, and could be used as a yield derivative

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When a user deposits funds into Portal, they instantly get access to a credit amount of Portal Energy (PE). This credit can then be withdrawn as PSM immediately via an internal PE/PSM liquidity pool.

The “value” of PE is determined at the end of the bootstrapping phase when all PSM has been funded into the Portal. Then, the PE/PSM LP is created.

Here’s a look at a hypothetical scenario:

• Portal raises 1 million PSM in its initial bootstrapping phase.

• Portal Energy/PSM LP exchange rate set to 5:1 (5 Portal Energy = 1 PSM)

• Portal has 1 million PSM and 5 million Portal Energy

• The LP uses the constant product formula x*y = k, where x = 5 million and y = 1 million

• K is fixed for the entire life of the Portal

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The easiest way to define PE is as an advance payment from your future earnings – or in other words, your upfront yield.

For example, say you stake 100 HLP in our HLP Portal, and the maximum lock duration is 3 months (1/4 years). In return, you receive 25 PE, which can be redeemed immediately and withdrawn as PSM. Over time, the PE balance will increase in proportion to the amount of principal staked.

3 Ways to Accelerate PE Accrual

The first way is by depositing more principal tokens (e.g. HLP), which will give you more PE instantly and also accrue more PE over time. However, this method is somewhat inconvenient as it requires you to have more collateral handy.

The second mechanism involves PE’s ERC-20 property. Because it’s mintable as an ERC-20 token, it can be used as a way to trade time value. For example, someone could buy someone else’s PE tokens and burn it to increase their own PE inside the Portal.

The third way takes PE’s liquidity mechanism to the next level by allowing users to directly swap their PSM tokens for PE. In other words, the user would be paying back their time-debt with PSM.

PE as a Yield Derivative

Since the accrual rate of 1 PE is 1 token staked for 1 year, it can easily function as a yield derivative. Imagine that the price of 1 PE-ETH is 0.05 ETH. It means that you can sell the time value of 1 year staking 1 ETH for 0.05 ETH, or in other words, you can get 5% APR upfront.

This feature of PE accrual rates allow for efficient yield markets on CLMMs such as Uniswap V3 when paired with their corresponding principal token. (i.e. PE-ETH with ETH, PE-USDC with USDC and so on).