Funders
Last updated
Last updated
"Each new portal discovered required an initial energy surge to become functional.
With a sharp spike in econcomic power, the Portals began facilitating new and exciting outcomes while rewarding those who helped bring them to life."
-Epigraph of the Traveler
When a specific Portal is ready to launch, it’ll undergo an initial funding phase where funders can deposit PSM tokens up to a certain limit.
In return, they’re given receipt tokens based on the “rewardRate.” For example, if someone deposits 100 PSM tokens and the rewardRate is 1,000%, they’ll get receipt tokens for 1000 PSM.
These receipt tokens, called bTokens, can later be redeemed for PSM.
However, bToken holders are not guaranteed to receive a 1:1 ratio of PSM tokens to bTokens. Instead, they hold a claim on a percentage of the total amount of PSM within the funding pool.
You can think of the funding pool as a redemption pool, and it receives 10% of all PSM tokens deposited into a Portal over time (via the arbitrage process explained in the next section).
If there are 1 million PSM tokens deposited into a Portal during the initial bootstrapping period with a 1,000% rewardRate, there will be 10 million bTokens held between depositors. If one depositor has 5 million bTokens(50% of the total), they can redeem them for 50% of accrued PSM.
Continuing the above scenario, imagine that time has now passed and there are 100k PSM in the funding pool. The depositor with 5 million bTokens decides to redeem them for 50k PSM, or 50% of the pool total.
Now, the 5 million redeemed bTokens are gone. That means there are 5 million left, and 50k PSM in the funding pool. This is actually advantageous for remaining bToken holders. For example, a depositor who still has 1 million bTokens can now claim 20% of the funding pool instead of their original 10%.
As the funding pool grows, they’ll accumulate rights to more deposited PSM. Thus, funders are incentivized to wait to redeem their bTokens, which means that the PSM in the funding pool will likely remain there for a long time.
This provides deeper liquidity to the Portals.
As mentioned earlier, the initial bootstrapping phase is one of two primary ways that Portals will accrue PSM tokens. The other way is through arbitrage opportunities.
