What are the two innovative DeFi projects, Whitehole & Pacman, that are about to IDO on Arbitrum? (Part2)

06/03/2023·1Y

In the previous article "What are the two innovative DeFi projects, Whitehole & Pacman, about to IDO on Arbitrum? (Part1) | veDAO Research Institute", veDAO Research Institute introduced the multi-asset lending protocol Whitehole Finance in the Arbitrum ecosystem. The project raised 450,000U in funding within 15 minutes of the IDO opening on April 26, demonstrating the significant potential of innovative DeFi.

Link to the article

In this article, veDAO Research Institute continues to bring the interpretation of the innovative DeFi project Pacman Finance on Arbitrum. As a protocol that focuses on decentralized leveraged mining, at first glance, we might think that Pacman Finance is no different from other mining projects in the ecosystem, just another repetition of the wheel. However, in fact, Pacman Finance still has a certain level of innovation, such as the Lego combination of multiple ecosystem tokens and the concept of "veIDO".

It is worth noting that Pacman Finance also has plans for an IDO in mid-May, but there are currently no further details disclosed. veDAO Research Institute will continue to keep a close eye on this project with the readers.

Pacman Finance: Decentralized leveraged mining protocol on Arbitrum

Official website:

https://pacman.finance/

Twitter:

https://twitter.com/_pacmanfinance

More information:

https://app.vedao.com/projects/26dba2d658436a51877b926f5ce167db12e93316052113f17c96fdceddabcc1f

Project Introduction:

Pacman is the first community-oriented decentralized leveraged yield and liquidity aggregation protocol on Arbitrum. The specific business is to use the interest from leveraged mining to pay borrowing interest, generating excess returns. At the same time, Pacman is also a community-driven project, where token holders can vote on proposed changes to the protocol, ensuring transparency and fairness. All performance fees will be distributed to VePAC token stakers who have governance rights. Pacman's three major advantages:

Concentrated liquidity: Pacman uses its liquidity to concentrate funds through the Farm ETH trading pair, greatly improving the efficiency of liquidity providers' funds and reducing liquidation risks.
Unique Vetokenomics: Pacman has built a Vetokenomics system around VePAC and oPAC based on Curve and FOO (Fungible Ownership Optimization) to reduce the frequency of Farm and Dump scenarios and increase the lifecycle of the economic model.
ETH liquidity expansion aggregator: By increasing the utilization of ETH funds on the lending side, Pacman allows users to use ETH as collateral and provide interest-free loans. In addition, Pacman will also provide LSD services for users on Arbitrum.

How does it work?

Pacman finance does not rely on a single decentralized exchange, but provides multiple liquidity leveraged yield Farms, combining multiple liquidity pools to maximize returns. Since most decentralized exchanges (DEX) on Arbitrum operate with different governance models, Pacman Finance will serve as a middleware layer to provide decentralized yield Farm services to ordinary users.

Borrowing: This is the core element of Pacman Finance, providing more liquidity to the platform and allowing platform users to earn more passive income. In addition, Pacman Finance allows investors to earn higher returns by borrowing funds. With the ability to earn interest on borrowed funds, investors can increase their returns without investing more capital.
Farming: Users can also use the yield aggregator to reinvest in leverage yield farming, generating higher returns.
Voting: Users need to hold vePAC to participate in voting. vePAC is a specialized ERC-721 token that implements the vested voting (ve) model, representing the user's base position. Users participating in voting will be able to receive rewards through accepting bribes.
Bribing: Pacman borrows and integrates the ve(3,3) governance model. There are two types of bribes in the system:
Voting bribery - Users/protocols can bribe voters to produce voting results for specific token pairs, and in return, they will distribute bribes proportionally.
Leverage Farm Lps bribery - Tokens can be directly bribed to leverage Farm Lps stakeholders to incentivize liquidity growth for the target currency pair. This is mainly applicable to protocols that want to effectively guide liquidity on Pacman. To be listed on the bribery list, each product must open source its code and submit an audit report, and pass Pacman's testing and review.

veIDO

Different from the common IDO concept on the market, Pacman Finance adds a staking element based on IDO. According to the official explanation: PAC will be initially released, and the PAC-ETH trading pair will be opened, priced at 0.0000133333 ETH, about $0.025, and 15% of the total PAC will be sold through three rounds of veDAO, 4,500,000 PAC. According to the rules of veIDO, the listing price range for PAC is $0.39~$0.6, and the FDV range is 19.71M~30M.

On the Launch page, users can choose whether to exchange PAC for vePAC (Note: In the first round of veIDO, players exchanging vePAC will receive a Genesis NFT, which will have a higher voting weight and oPAC exercise discount, as well as the privilege to exchange into xPAC, which will be explained in detail below).

In short, Pacman Finance sells vePAC, and you can choose the lock-up period, the longer the lock-up period, the greater the discount for buying PAC. No lock-up means no discount.

Details of the three rounds of veIDO fundraising:

Token Economics

Different from the traditional single-token or dual-token model, the Pacmen Finance ecosystem requires a total of four tokens & NFTs to play a role together.

PAC: The native token of Pacmen Finance, with a total supply of 30,000,000. The release of PAC will be divided into three stages, with different reduction amounts in each stage. 18,000,000 PAC will be distributed over a process of more than 120 epochs, with exponential decay of 10%~1%.

vePAC: The staking version of PAC, is an NFT-based token based on the ERC-721 standard and is non-transferable. It represents a user's voting weight and PAC lock-up amount/time information.

Users obtain it by locking up PAC tokens. The longer the lock-up period, the more vePAC they will receive.

In this respect, Pacman Finance's model is almost identical to the Curve model, and even the previously mentioned Whitehole Finance in the previous article has almost followed the Curve model.

Uses of vePAC:

Governance voting: Vote on governance proposals, add or remove new metrics, change protocol parameters, and approve budgets, etc.
Weighted voting: Vote on how rewards are distributed across different gauges.
Accept vote bribes.
Earn protocol income.

In vePAC, in addition to regular NFTs, there is also a type of Genesis NFT, which functions the same as regular vePAC, and users can only obtain it by participating in Pacman Finance's veIDO. In the early stages of ecosystem governance, Genesis vePAC has a significant voting weight advantage. Under the same conditions, in the first round of voting, the weight of Genesis vePAC is 150%; in the second round, it is 130%; and in the third round, it is 110%. In the subsequent oPAC exercise process, holders of Genesis vePAC will also enjoy a higher basic discount rate than other users.

In addition, for different batches and different time points of PAC staking behavior by users, the two different types of vePAC obtained by the user can also be merged to generate a new vePAC. The new vePAC will accumulate the total value of the old vePAC and inherit the longest lock-up time of the two old vePACs.

Currently, the lock-up periods for vePAC are 6 months, 12 months, 18 months, and 24 months. When users choose a 24-month lock-up period, they will be able to exchange vePAC for a new token: xPAC.

xPAC: The tokenized version of vePAC locked up for 24 months, using the ERC-20 standard. Users can freely exchange between vePAC and xPAC at a 1:1 exchange rate for 24 months of lock-up. It is worth noting that xPAC itself does not enjoy governance rights of vePAC or the right to receive protocol income.

Essentially, xPAC can be seen as a way for users to express a bearish view on vePAC. It allows users who are uncertain about the future of vePAC or want to leave to escape their principal through xPAC.

However, it is worth noting that the minting address for xPAC has not yet been disclosed, and the official statement is that users with Genesis vePAC will be given priority for the repurchase of their xPAC. As for the detailed rules of repurchase, Pacman Finance has not disclosed more information. Currently, it is speculated that the repurchase of xPAC may not be done in real-time and may require users to queue and wait. Although it seems that xPAC gives staking users a chance to "change their minds" once, it seems that this opportunity is not easy to obtain.

oPAC: oPAC is a bullish option token for PAC, allowing its holders to purchase PAC at a cost lower than the market price.

The discount strength of oPAC is reflected in the exercise price (Strike Price): According to the article "Understanding Pacman: Decentralized leveraged mining protocol on Arbitrum", the current PAC price * (1-discount rate). Factors affecting the discount rate: B(x)+L(x), where B(x) is determined by the change in PAC price, the higher the price, the higher B(x); L(x) is determined by the protocol TVL, that is, the more LP, the longer the lock-up time, the higher L(x).

In other words, the higher the price of the protocol's native token PAC and the overall TVL of the protocol, the higher the discount strength of oPAC. Through the combination payment mode of oPAC+ETH, users can obtain PAC at a discounted price.

For example, assuming PAC is $0.78, the current ETH price is $1600, the discount is 30%+20%, the discount rate is 50%, and the exercise price is $0.39. Then, the user can exchange 1 oPAC+0.00024375 ETH for 1 PAC. When the user sells the PAC, they will make a profit of $0.78; and the protocol's treasury will receive 1 oPAC+0.00024375 ETH=$0.39.

In addition, the project has introduced the ve model, oPAC can be exchanged 1:1 for vePAC, and holders of vePAC can receive protocol income from the treasury.

Note that oPAC only supports the creation of new vePAC NFTs and cannot add more PAC tokens to existing vePAC NFTs, but users can choose the vePAC merge function to consolidate their staking holdings.

The core business of Pacman Finance is leveraged yield Farming. As the product becomes more advanced and users increase, the income of Pacman finance farmers will depend on protocol fees. In the early stages, Pacman will attract more users and funds by encouraging early contributors to deposit, leverage Farm, and govern. In addition, Pacman Finance's protocol income will also include: lending & staking rewards, Farm rewards, voting rewards, etc.

Conclusion

Unlike Whitehole Finance in the previous article, Pacman Finance has attracted more industry attention. According to veDAO platform data, the current measurement of Pacman Finance's Twitter followers is 5646, with 11 top KOL followers, 3 asset whales, and 15 NFT whales.

Overall, the entire model of Pacman Finance is quite cleverly designed, and the interrelationship of multiple tokens gives users more opportunities to participate: whether it is earning profits from staking vePAC or from holding oPAC for bullish exercise, or the simpler secondary wave of PAC tokens. Multiple channels give users more options for wealth allocation. It is worth noting that because Pacman Finance has set lock-up and non-lock-up fundraising hard caps in the IDO section, when the user's preference fundraising amount reaches the limit, whether the user is willing to accept another fundraising method? This may be a question that participating users need to consider carefully. Unable to participate in non-lock-up fundraising, and the possibility that xPAC may not be freely tradable, choosing lock-up fundraising means taking on the risk of price decline due to lock-up.

Overall, as a very early innovative DeFi product on Arbitrum, Pacman Finance is worth our continued attention.

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