The PRISM & xPRISM Tokens

The PRISM Token

PRISM is a utility token and will be the base asset of each liquidity pool on the PRISM Swap decentralised exchange. As the amount of assets refracted by PRISM increases, more liquidity pools with PRISM will be created, and if the value of the non-PRISM assets in the pools increases, so must the value of the PRISM in the pools.

The xPRISM Token

PRISM holders who wish to participate in governance and earn protocol fees can stake their PRISM tokens and receive xPRISM in return, with a 21 day unstaking period. They will also be able to instantly swap their xPRISM back to PRISM on the AMM.

xPRISM has a few key properties:

1. Governance: 1 xPRISM = 1 unit of voting power. Only xPRISM can participate in governance, making decisions on asset listings, community spending and more.
2. Fees: xPRISM holders will receive a share of protocol revenue. This will be done by using the fees levied by the protocol to buy PRISM on the PRISM Swap decentralised exchange and then adding those PRISM tokens to the xPRISM pool.

These fees include:

1. 10% of the yield of yASSETs bonded in PRISM, e.g. yLUNA tokens that are in the normal yLUNA staking contract or the yLUNA farming event.
2. 100% of the yield of unbonded assets, e.g. yLUNA tokens that are being used to provide liquidity
3. 0.1% of the value of all swaps generated in PRISM Swap
4. 0.3% of the value of all limit orders successfully executed in PRISM

A user can stake PRISM into the xPRISM pool and receive xPRISM tokens in return. The xPRISM tokens they receive represent their ownership share of the total PRISM tokens in the xPRISM pool. Fees the protocol levies are used to buy PRISM tokens on the decentralised exchange and those PRISM tokens are distributed into the xPRISM pool. As a result the exchange rate between xPRISM:PRISM increases in the same manner as aUST:UST. With time, holders can burn their xPRISM and redeem a greater number of PRISM tokens in return, enabling depositors to collect rewards simply by holding xPRISM.

xPRISM Exchange Rate = (PRISM In Pool) / (xPRISM Supply)

When rewards are claimed (minimum once per day) and converted to PRISM on the AMM, the purchased PRISM is placed into the xPRISM pool which means the value of xPRISM increases relative to PRISM because the exchange rate is increasing according to the above formula. This is because xPRISM is a claim on the total amount of PRISM in the xPRISM pool and as more PRISM tokens are added into the pool from fees, the more PRISM tokens the xPRISM holder has the right to claim.

xPRISM received = (PRISM in) / (Total PRISM in pool + PRISM added) x (xPRISM supply)

If a user no longer wishes to receive rewards or participate in governance they can start the 21 day burn of their xPRISM to receive physical delivery of their share of PRISM in the xPRISM pool. The amount of PRISM received is calculated by the following formula:

PRISM out = (xPRISM burned)/(xPRISM total) ×Total PRISM in pool

Or alternatively the user could choose to swap their xPRISM for PRISM on the PRISM Swap decentralised exchange.

Example:

Utility of xPRISM

1. Because xPRISM is a claim on a pool of PRISM tokens you don’t need to manually claim staking rewards and decide what to do with them. Your rewards are auto-compounded. This could also mean xPRISM is a capital asset and not an income asset
2. Many governance tokens are locked away and illiquid, but xPRISM is a liquid token and can be used elsewhere in DeFi whilst still increasing in value vs PRISM.
3. xPRISM can be used in liquidity pools and still increases in value vs PRISM as it is a compounding token. For example you could be a liquidity provider in the xPRISM-PRISM liquidity pool and be earning xPRISM yield, AMM fees and liquidity incentives.
4. xPRISM works well cross-chain. You could send xPRISM over bridges to other chains and know that the value of xPRISM is constantly increasing vs PRISM. For similar reasons you could also send xPRISM to centralized exchanges or non-custodial wallets and still receive the benefits of the compounding.
5. xPRISM could be used as collateral in other DeFi protocols. As a compounding token xPRISM could be approved by governance in other protocols to be pledged as collateral to borrow, lend or mint other assets whilst still compounding in value vs PRISM.

PRISM Initial Distribution

70,000,000 PRISM tokens will be distributed in the PRISM Forge launch event. After the launch, PRISM governance will be switched on and the PRISM-UST and xPRISM-PRISM liquidity pools will be seeded on the PRISM Swap decentralised exchange.

There are several key points regarding the PRISM token distribution:

1. There are no airdrops of PRISM tokens and as such no airdrop tokens that can be sold when the protocol is listed on the decentralised exchange.
2. Vesting tokens for contributors and partners are subject to a smooth linear vesting period between month 6 and month 24. All those receiving vesting tokens have played an important role in the building, designing and functioning of the protocol. As it is linear vesting there are no large unlocks.
3. As there has been no fixed price swap event at a low price there are no holders of PRISM with large unrealized gains who may otherwise be inclined to take immediate profits and sell on the initial DEX listing.
4. It is intended that a large amount of initial liquidity will be provided meaning that the protocol does not rely on large inflationary liquidity incentives which could otherwise dilute holders.
5. Any tokens used by the treasury to provide the initial liquidity will remain the property of the treasury.

Everyone who participates in PRISM Forge has made an active choice to buy tokens rather than being a passive recipient. Therefore, given there are no airdrops and no team tokens released at TGE, the only people that can sell in phase 2 are people that have already chosen to actively buy in phase 1.

PRISM can be used to be a liquidity provider in any of the pools. Users can also participate in governance from the point of initial DEX listing and xPRISM holders will start accruing fees the protocol earns which are used to buy PRISM which is distributed into the xPRISM pool as is described above.

Additional Resources

To learn about the full Prism Protocol Launch please see our launch announcement here: https://prism-protocol.medium.com/prism-launch-announcement-7c2c92448b70

For all the latest updates and information: Telegram, Discord, Litepaper and Resources ➡ prismprotocol.notion.site

Disclaimer: These dates may be subject to change pending market conditions or otherwise. Fees levied by the protocol listed may be subject to change. For further disclaimers please see https://bit.ly/3IAHWpK