In December, we released the first implementation of the Particle Bridge, a custom smart contract system that enables the fractionalization of non-fungible tokens (NFTs).
With this first Particle Bridge, users are able to convert their Gen0 PGFK into xPGFK, the fractional, fungible version of the PGFK. This mechanism introduced the concept of the Dual State Asset (DSA), a digital asset class that exists simultaneously in both fungible and non-fungible states.
Since launch, the Particle Bridge has 694 PGFKs have been converted into 694,000 xPGFK, representing roughly 3.47% of the total Gen0 PGFK supply.
In the initial design of the PGFK-xPGFK supply system, PGFK generation number was determined by numerical identifier based on minting sequence:
- Gen0 = 1–20,000
- Gen1 = 20,001–100,000
- Gen2 = 100,001–1,000,000
- Gen3 = 1,000,001–10,000,000
This means that the first 20,000 PGFKs generated for the September 2020 sale will forever be considered Gen0 and the first 1,000 to be converted into a new PGFK would kick-off Gen1 PGFK.
This design also initially planned for there being numerous generations of xPGFK, which would correspond to the generation of PGFK that was fractionalized through the Particle Bridge.
As with any experimental system, substantial iteration is required to create a sustainable mechanism that is able to persist through a decentralized ecosystem. With the aforementioned design, the following flaws have been identified:
- Generations based on minting sequence could result in bot activity that would artificially accelerate the system. This would negatively impact the upcoming Polyient Vault system that relies on generation difference to drive yield competition.
- Generation-based xPGFK tokens would cause a fungible token liquidity crisis and dampen the impact of the DSA system.
To address the flaws detailed above, we have upgraded the PGFK generation system to shift away from being driven by minting sequence.
Instead, PGFK generations will be determined by time-boxed windows where all PGFKs generated within a specific time frame will be mapped to a corresponding generation. This introduces the concept of “Generation Events,” which function as bridge identifiers between PGFK generations.
All PGFKs minted after the first Generation Event will officially be identified as Gen1 PGFK until the second Generation Event is reached. We are planning on a roughly 6-month cadence between Generation Events and more details will be unveiled soon as to when users can expect this process to begin.
PGFK generation identification will be made both at the contract and metadata levels, impacting a number of key metrics associated with PGFKs.
First, each generation of PGFK will be assigned a specific “Yield Weight”, which identifies its relative impact within the upcoming Polyient Vault system. Given that Gen0 PGFKs have the highest rewards, the weight of their inclusion in a Polyient Vault will be the main measurement point for all subsequent generations.
This is an important note as PGFKs will have the ability to plug into a number of different types of Polyient Vaults, all of which will have unique reward outcomes for participants. This system will open the door for substantial user choice, creating a first-of-a-kind decentralized ecosystem experience.
Second, each generation of PGFK will have a specific number of xPGFK it can output. This is a major upgrade to the deflationary nature of the DSA system, as not only is the supply of each generation of PGFK trending towards zero, but also the total supply of xPGFK.
For both Yield Weight and xPGFK output, there is a 25% reduction in value between generations. However, the 1,000 xPGFK requirement to form a new PGFK in the Particle Bridge will remain, meaning that each subsequent generation will have reduced capacity to create new PGFKs.
Once Generation 7 is reached, the xPGFK required to form a new PGFK will match the xPGFK output when a PGFK is sent through the Particle Bridge. This will enable a non-deflationary steady state that will allow for lifetime transfers between PGFK and xPGFK at an adjusted supply cap.*
*Note: we are keeping the door open to adjusting the xPGFK input metric according to real-time data from user activities.
Updated xPGFK Utility
With the introduction of Polyient Games Unity Token (PGU) as the major base pair for the Polyient DEX, including pairs for in-game currencies and partner governance tokens, the focus of xPGFK will now be shifted towards its unique deflationary tokenomics and fractional NFT use cases. This approach will enable xPGFK to stand alone among the core Polyient Games Ecosystem tokens to further add clarity around the utility.
We plan on opening up the Particle Bridge beyond PGFKs to work with a variety of internal and external NFTs to enable the creation of an entirely new fractional NFT asset class, called NFT Particles. This will feature unique decentralized products across finance, utility, art and gaming NFTs.
Therefore, xPGFK is now destined to be leveraged for Particle-related DeFi protocols, including fractional NFT farms. Once circulating liquidity for xPGFK hits a critical level, it will also serve as a base pair on our upcoming fractional NFT market, called the Particle Market.
More details on the expanded Particle Bridge, NFT Particles and the Particle Market will be released later this year.
Benefits to Polyient Games Ecosystem Users
The upgrade to the PGFK<>xPGFK tokenomics is ultimately designed to help establish xPGFK as a standalone token within the Polyient Games Ecosystem, in order to achieve the following results:
- Improve incentives for PGFK holders to convert into xPGFK to take full advantage of the very first Dual State Asset.
- Drive demand side for xPGFK through a combination of one-of-a-kind deflationary tokenomics and utility.
- PGFK generations can now be defined by the yield properties and xPGFK output conversion rate, providing a clear-cut way for users to track the PGFK value prop.
Ultimately, we see xPGFK as being a major adoption vehicle for the Polyient Games Ecosystem and a premier token option for participation in upcoming DeFi protocols.
About Polyient Games
Polyient Games, a subsidiary of investment group Polyient, is a unique investment ecosystem focused on the NFT and decentralized finance (DeFi) markets. Polyient’s portfolio includes both equity and token holdings from leading NFT and DeFi projects.