Pegasus Finance: A Primer

What?

Pegasus is a retail-focused interest rate perpetual. Our novel design uses an oracle to turn an interest rate into a price (3% = 0.03 ETH, 4% = 0.04 ETH, etc), allowing users to long and short a rate directly. On top of this, we are pioneering a new tokenomics model, Peganomics, that lets users stake NFTs (PegaPals) and level them up to earn a greater share of protocol revenue. The goal of Peganomics is to improve protocol stickiness by rewarding users based on their level of conviction.

Why?

Trading rates is interesting because you can express your views on macro trends in crypto. Historically, people borrow more during bull markets to get leverage. This can create massive volatility (see below: borrow rates can 3x in a month). On top of this, many retail traders follow DeFi rates closer than TradFi rates because of the popularity of staking and mining.

Example of High Interest Rate Volatility in DeFi (Aave CRV)

What’s Peganomics?

Peganomics is a new incentive design that rewards holders proportionally to their conviction in the protocol. To do this, we combine aspects of popular tokenomics designs and novel ideas to create a new system. Full whitepaper here (should check it out 👀).

How does it work?

Pegasus is building a perpetual for users to speculate on interest rates. The Pegasus treasury provides ETH as liquidity to the perpetual and receives trading fees in return (also in ETH). In short, the Pegasus treasury is the sole yield farmer of the perpetual. Profits are used to back and mint $PEGA tokens, which are distributed to PegaPal stakers.

Dual asset system for creating a fun rewards mechanism for trading on our perpetual

Holders can level up their PegaPals by burning $PEGA tokens. Each level costs 100 $PEGA, and the level of your PegaPal determines your stake in the pool (ie LVL 1 = 100 $PEGA staked, LVL 2 = 200 $PEGA staked, etc). Since leveling burns 100 $PEGA tokens, users that want to build large staked positions must burn liquidity. This encourages long-term yield farming strategies, as NFTs are less liquid than ERC-20s.

What This Accomplishes

  • Revenue comes from the interest rate perp trading fees.

  • Revenue is distributed proportionally to user conviction (PegaPal Level).

  • Retail traders can progress (level up) towards a goal, and increase their APY along the way.

  • PegaPals and $PEGA introduce new staking, liquidity, and reward dynamics that improve upon current tokenomics designs. Read more in our Peganomics Whitepaper.