Tokenomics
PSM Utility
The purpose of PSM is to interlink the utility value of our protocols and to incentivize growth. This purpose can be expressed in different forms, depending on the specific protocol. Possum Labs adopts the principle of Hyperstructures when developing DeFi protocols.
PSM Supply
PSM was deployed on Ethereum L1 with a fixed total supply of 10,000,000,000 tokens.
A conservative estimation of circulating supply can be retrieved from Coingecko.
Non-circulating tokens are held by the Possum Labs treasury for future use.
Value accrual from TopCut
TopCut Finance brings Precision Markets to DeFi.
PSM can be exchanged for ETH from the immutable TopCut Vault.
The Vault collects 5% of trading volume from TopCut Markets to service affiliate rewards & loyalty rewards as described in the TopCut documentation. The Vault is expected to grow relative to protocol activity.
In parallel, the Vault’s ETH balance backs PSM through a direct conversion mechanism.
The conversion follows a “halving” logic. 100 million PSM can be exchanged for 50% of the Vault’s balance at time of conversion. This is also the maximum amount that can be exchanged in a single transaction.
For example, if a holder wants to convert 200M PSM, two sequential transactions are required, leading to a withdrawal of 75% of the Vault’s balance (1 * 50% + 0.5 * 50%).
Smaller amounts can be converted proportionally, e.g. 1M PSM for 0.5% of the Vault’s balance.
This mechanism incentivizes gradual conversions over time instead of sudden, large balance changes due to high value conversions.
The converted PSM tokens are effectively burned as they are stuck inside the TopCut Vault forever.
Last updated