Phoenix PHB Utility Mechanisms, Fiat Onramp, & Consortium Buying
Dear Phoenix Community,
As we have introduced earlier, the Phoenix Core Development team is creating various ways for adoption of the Phoenix network (Oracles, Blockchain, and DataX) that would minimize friction and simplify various use cases, ultimately lowering the barriers to adoption and accelerating use cases.
Specifically, our last article talked about separating the entire platform into components. These “products”, or modules enable users to pick which is the easiest and most suitable use case for them. They are able to start via data verification for data exchange or AI-related datasets, or simply acquire new datasets via vendor APIs via DataX. This gives them much more choice in quick applications to engage with the Phoenix ecosystem other than only using the Phoenix blockchain.
This is why today we would like to discuss mechanisms we’ve explored and designed to maximize adoption speed for enterprise users, at the same time of benefiting the Phoenix ecosystem and token value. Specifically we would like to outline mechanisms for fiat/stablecoin onramping, as well as what we call consortium buying.
Data Services Onramp
We will start experimentation of these onboarding methods as early as mid-May, and are likely to optimize and improve on these processes as deemed suitable. The chart below illustrates the initial process for data services onramp.
What we refer to data services are services that can be delivered on a transactional per data basis — so this means accessing data feeds via Phoenix Oracle. It may look complex but for the end-user it’s really simple:
- The end user, which could be an enterprise, business user or partner would be paired with a service provider or agent that can service them contractually. This would depend on geography and location but may be just Phoenix Core Dev if the user is Asia-based.
- The end user will receive “credits” for a fixed payment sum of fiat/stablecoin in return that they will be able to use with Phoenix Oracles/DataX. These credits will work on-chain, and are likely to be pegged 1 credit: 1 USD, working effectively like a stablecoin. The purpose of credits is to separate data services pricing and settlement with PHB, which price is dynamic.
- The service provider will be in charge of sending the balance as a stablecoin (USDT/USDC/BUSD) to the algo execution firm (purchasing agent), which currently for most purposes is Principle68, our market making partner.
- The sum is then separated into average cost basis (estimated around 85%) and margin (around 15%). Cost basis refers to the cost of the data from the data partners. The margin refers to the margin or discount that Phoenix DataX can obtain as a “wholesale” or distribution role.
- The cost basis will be used to algorithmically execute TWAP (time-weighted average price) buy orders on the exchange and ultimately converted fully into PHB, which will enter the Phoenix Ecosystem Reserve. The margin will directly be sent as stablecoin to the reserve to help hedge principal risk.
- Phoenix Ecosystem Reserve will use its own fiat/stablecoin balance sheet to transact with 3rd party data partners — in this way it takes a form of principal risk.
- Effectively one can see how this may help ecosystem growth as well as token value.
An alternative to standalone one-party purchase transactions of credits, for larger sums and transactions we are able to have a similar or alternative model of “consortium buying”.
A consortium may consist of 2 or more parties that may have similar timing of purchase of services and credits. As the sum of a consortium buy would be larger (ie. >$200,000), it will increase the liquidity of PHB and have certain positive effects. As a tradeoff, in this method of purchase, both cost basis and margin will be used for exchange execution of PHB. The tradeoff is understandable as consortium buys decreases Phoenix reserves’ principal risk as well.
The benefit of consortium buying is that Phoenix Core Development team is able to participate with enterprise users and other parties as well, and the process is similar to a buyback but with enhanced size.