Portal Energy

"When understanding of the Portals' inner workings reached new depths, it was determined that upon each interaction, a Possum faced a choice.

While the Portal provided the means to make this choice, the ultimate decision rested with the individual."

-Epigraph of the Traveler

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The feature that ties all three Portal users together is the “Portal Energy.”

We’ll explain exactly what Portal Energy is soon, but first let’s take a look at how it’s used within the protocol.

When a user deposits USDC into Portal, they receive upfront yield in the form of Portal Energy, which can then be withdrawn as PSM immediately due to an internal Portal Energy/PSM liquidity pool.

Although Portal Energy itself isn’t exactly a token, its “value” is determined at the end of the bootstrapping phase when all PSM has been funded into the Portal. The Portal then contains a Portal Energy/PSM LP which has an initial price of Portal Energy-to-LP upon completion of the bootstrapping phase.

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

Now, the easiest way to define Portal Energy is as a loan from your future earnings – or in other words, your upfront yield.

For example, say you stake 100 USDC and the maximum lock duration is 1 year. In return, you receive 100 Portal Energy.

This 100 Portal Energy is your upfront yield, which you can redeem immediately. Over time, the Portal Energy balance will increase in proportion to the amount of principal staked.

In general, depositors will receive 1 Portal Energy per token staked (USDC in above example) per year of staking. So, if you only withdraw 25 Portal Energy, you can withdraw your full balance after 3 months. However, if you withdraw 100 Portal Energy immediately, you’d need to wait a year before withdrawing all your funds.

The Portal Energy amount is also included in an internal Portal Energy/PSM LP. When the depositor goes to claim the upfront yield, the Portal sells Portal Energy to get PSM tokens.

Now, there are also three ways which the depositor can “speed up” the accrual of their Portal Energy.

The first way is by depositing more USDC, which will give you more Portal Energy instantly and also accrue more Portal Energy over time. That Portal Energy, of course, can then be switched to PSM in order to withdraw it. However, this method is somewhat inconvenient as it requires you to have more collateral handy.

The second mechanism involves Portal Energy’s ERC-20 property. Because Portal Energy is actually mintable as an ERC-20 token, it could eventually be used as a way to trade credit balances. For example, someone could buy someone else’s Portal Energy and burn it to increase their own Portal Energy.

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

Another feature of the Portal Energy/PSM LP is that it’s a full range LP, so the price can be moved in a theoretically infinite range if large orders are placed. This is opposed to a concentrated liquidity range, where there’s a maximum and minimum price set by LP parameters. Ultimately, this leads to Portal Energy being treated as a type of yield derivative, where users could create secondary markets on CLMMs such Uniswap V3 for different Portal Energy tokens (clTokens).