The AXiS ALiVE Fusion on PulseChain

Author/Organization: AxisAlive & Jonni Saks

Publication Date: 11/22/2024

Abstract

AXIS and ALIVE, two innovative tokens on the PulseChain network, aim to revolutionize the decentralized finance (DeFi) space through a commitment-based, deflationary model that rewards users for their commitment duration and token burn. ALIVE, which begins with zero tokens and operates with a small market cap, uses a unique time-based lock and burn system, promoting scarcity and enhancing the value of committed tokens over time. This whitepaper explores AXIS as an educational DeFi tool, the mechanisms of ALIVE, and how they foster a self-balancing, efficient capital burn model within the PulseChain ecosystem.

Introduction

PulseChain is a decentralized blockchain network designed to provide fast, cost-effective, and scalable solutions for DeFi users. Within this landscape, AXIS and ALIVE were created to introduce a unique approach to cryptocurrency commitment and rewards. AXIS, a standard token on PulseChain with a capped total supply of one million, serves as an educational tool that teaches users to analyze price trends, liquidity, and blockchain transactions in real time. Meanwhile, ALIVE, a commitment-based lock and burn token, builds upon AXIS to incentivize long-term commitment by rewarding users who lock and burn their AXIS holdings for specified durations. This model introduces scarcity and amplifies value for committed users, offering a new perspective on DeFi tokenomics and commitment incentives.

Problem Statement

Many existing DeFi tokens face challenges such as unsustainable inflation, lack of commitment incentives, and limited transparency. These issues reduce user engagement and result in volatile market dynamics, where speculative trading outweighs long-term investment. The need for a robust, commitment-based model that rewards user loyalty and promotes token scarcity has grown. ALIVE addresses these challenges by introducing a deflationary, self-balancing model that incentivizes token holding and burning over time, providing a solution for sustainable DeFi token management.

Detailed Content

Background and Context

AXIS serves as an educational tool within PulseChain, teaching users how to navigate DeFi through real-time price action and blockchain data. Its capped supply of one million tokens ensures a maximum total supply to ever exist, while its market supply of around 500 tokens makes it a rarity among DeFi assets. ALIVE, on the other hand, introduces a commitment-based, dynamic supply model where users receive rewards for locking and burning AXIS tokens for set durations. This time-based lock and burn approach encourages systemic value appreciation over time, by utilizing the first ever free market floating rebate, making it appealing to both novice and experienced investors seeking investment in commitment-based communities.

Tokenomics and Self-Balancing Mechanism

ALIVE operates with a unique self-balancing mechanism. Starting with zero tokens and a small market cap, ALIVE allows users to lock and burn AXIS tokens in exchange for ALIVE payouts based on their commitment period. ALIVE rewards early users with higher initial payouts while growing end payouts for all users as more AXIS is committed from the community supply. The two token model (fusion) ensures a dynamic and adaptive supply system that balances rewards and incentives proportionally with long-term commitment. This means that over time AXIS supply contracts and ALIVE supply expands based on the amount of value vested and length of commitments. Because AXIS has a maximum total supply, there is a calculable theoretical maximum number of ALIVE units that can ever be minted.

Safety and Immutability

Security is a cornerstone of the ALIVE ecosystem. As an admin-free, immutable contract audited by CertiK, ALIVE guarantees code safety and reliability. Its modular design allows developers to build upon it without risking core contract integrity, making it a flexible yet secure asset for users seeking stability in DeFi investments.

User Incentives and Strategies

ALIVE offers incentives for various user types, from speculators interested in arbitrage to investors seeking value in burnt AXIS tokens. Its unit bias and small market cap make it accessible, while advanced strategies like ratio trading and commitment laddering allow users to maximize rewards. Early participants benefit from better start payouts, while the deflationary mechanics improve end payouts, creating a balanced reward system that encourages both short and long-term engagement.

Interface and User Experience

ALIVE’s front-end, hosted on axisalive.app, provides a range of user-friendly tools, from global supply metrics to individual analytics. The interface features widgets for tracking AXIS and ALIVE balances, commitment data, and user data directly from the blockchain. This institutional-grade dashboard empowers users to make informed decisions with clear, real-time insights into their investments and the broader ecosystem.

Case Studies with Jonni Saks

As has been familiarized by Richard Heart's, HEX, if the market has a reduction in supply coupled with static or increasing demand, the price of the token gets forced upward by natural supply and demand market dynamics. However, if the rate at which staking commitments occur slows down, it can have the opposite effect due to supply inflation rising, and not enough demand to sustain the rate of price growth. This can lead to lowered or negative adoption until the "debt" is cleared and the market rebalances.

The innovation of the dual-token fusion with AXIS and now, ALIVE, is that the market now has the ability to toggle rewards in a flexible way that enables the market to act proportionately with the current market conditions at any given time, rather than simply adhering to a fixed inflation rate that will inflate regardless of whether or not there is enough demand to absorb the new supply.

ALIVE supply starts at zero, and can only be minted by new burn and duration commitments made from the AXIS supply. The relative price ratio between AXIS and ALIVE will generate a free market floating rebate. The rebate should range anywhere between 0% and 100%, and under certain conditions, it can even extend temporarily beyond 100%. Under ALL conditions where the rebate rate is under 100%, there is always more capital being burned than there is being minted. And so the only differentiation becomes the magnitude at which positive price pressure occurs. When the rebate rate is high, upward price pressure is low. When the rebate is low, upward price pressure is high. The ALIVE token pricing relative to the AXIS token pricing will allow the market to find the steady rebate rate at which the most new commitments are being made to capture the highest ROI returns.

Because of the predictability in the supply dynamics between AXIS and ALIVE, it is possible to calculate a threshold in liquidity at which point, a flywheel becomes activated, which brute-forces an upward price trend for both tokens in the dual-token fusion system.

Activating the Flywheel

Let's deep-dive into this concept of brute-forcing upward price pressure using predictable supply dynamics..

The table below shows a range of rebate rates and their corresponding minimized-sum allocations between the two tokens, AXIS and ALIVE. Minimized-sum in this case means that the market-maker is positioned to get the minimized return when a new user buys AXIS token off the market to then commit it for a max duration and claim their rebate to then sell their ALIVE token. This also corresponds to minimized risk for the market maker according to each rebate rate.

Once the table above is understood as the market-maker's minimized risk allocation positions according to the active rebate rate, the chart below can be used to determine where the collective of market makers can find brute-forced profitability (AXIS and ALIVE token prices trending upward) based on how much liquidity exists compared to the fused market cap of AXIS and ALIVE.

The top row of numbers (shown in yellow font with the blue background) represents a factor of how much liquidity backing is supporting the combined market cap of AXIS and ALIVE according to allocations presented above with the corresponding rebate rates. For example, if the number on the top row is 1, then it means that there is a 1:1 ratio between liquidity backing and market cap. If the number is 0.1, then it means that a factor of 0.1, or 10% of the market cap is being supported in liquidity backing.

As you look across the rows, the percentages represent the minimum expected ROI if all of the existing AXIS tokens were committed and used to claim and sell the ALIVE rebate reward.

Taking an example from the chart - at the 5% rebate rate with 10% liquidity to market cap ratio, the minimum expected ROI once all AXIS holders use the supplied rebate would be +90%.

As can be seen on the chart, the higher the rebate rate is, the more liquidity is required to support the rebate at the higher rate. Such is the case with any asset that increases in price, so that is naturally to be expected.

In summary, this brute-forced profitability chart describes how to keep the rebate rate stable at a floor rate, where the rebate rate cannot break down lower as long as the liquidity remains in place with the given market cap conditions.

***Please note that this is a mathematically theoretical chart that assumes maximum conditions of 100% of liquidity being supplied to the market. Under realistic conditions with lower liquidity, the brute-forced profitability is much more easily achieved. This chart does not in any way represent the expectations of the actual market behavior. Rather, it is a mathematical proof of how liquidity conditions put upwards pressure on price.

Over time, the market should find a stable rebate rate at which the market will have found a balance between the rate of new AXIS token commitments being made with positive returns and price appreciation occurring at a regular frequency. When that stability is achieved, the ratio pricing between AXIS and ALIVE would remain tightly bonded, and could trend similarly to that of the, for example, Liquid Staked ETH chart versus ETH. A snapshot of that chart is shown below as a reference.

Chart Link

Cryptocurrencies are only as useful as they are adopted. And the user acquisition in crypto is captured according to an attention economy. With the new ALIVE token, AXIS token holders now have the ability to increase attention, retention, and adoption, virtually automatically, by supporting the new ALIVE token. All of the capital that flows into the ALIVE token gets stored as value that eventually gets transformed into long-duration commitments that amplify the user-retention, and therefore, the growth in capital into the system over time. The balance between the AXIS and ALIVE price can, therefore, be seen as a marketing amplifier, or user-acquisition mechanism.

Conclusion

ALIVE introduces a new paradigm in DeFi by leveraging instant rewards to bring new demand for long term commitment-based token model that incentivizes long-term holding. Through its modular, secure, and self-balancing design, ALIVE creates a sustainable model that appeals to diverse user profiles, from speculators to long-term investors. This approach highlights the potential of commitment-driven DeFi tokens to foster value appreciation, transparency, and active user engagement through the power of these fusion systems.

AUDIT REPORT:

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