PegaPals Part 2: Auctions
With some game theory on why you want to win early 👀
Today we’re explaining another path into the PegaVerse, auctions. If you missed the other parts, find them here. Task Contributors, motivations, better (3,3).
Auction Details
Auctions for PegaPals will begin simultaneously with The Great Race and start at a reserve price of 0.25 ETH. Auctions will start at 24 hours each, and as demand rises, be shortened down to a few hours. The variable auction lengths give us a lever to effectively adjust distribution in accordance to demand to keep a healthy distribution/value flow for auction participants. The winner of each auction will receive their PegaPal at its conclusion and be able to immediately (3,3) stake to earn rebases. All funds earned from the auctions will be sent to the treasury to back more $PEGA tokens to be paid out in future rebases. Moreover, winners of the auctions will be able to help design their own tasks for The Great Race. Lastly, in order to compensate the team, every 10th auction will be sent to the team wallet. This acts as a vesting process where team members are dripped rewards continuously over time to incentivize continual development.
Key Benefits for Winning an Auction :
- Immediately stakeable (rebase 2 win)
- Input on designing the next task (plug your own work 🤔)
- Earlier winners can stake when supply is still low meaning more share of each rebase (💸💰)
- No need to do tasks to get a PegaPal. Win the auction, instantly receive your NFT. 🏃💨
Some Game Theory (Alpha 🤫)
Winning the first auctions becomes super valuable as the treasury for calculating staking APY will be almost entirely the revenue from the first auction. Thus the first winner captures a good portion of their contributions back in $PEGA.
Moreover, the first winner will be able to catch 3 rebases before the second auction is settled (24 hours per auction / 8 hours a rebase = 3 rebases), meaning they will have 50% of the staked supply for 3 rebases (50% since the other Pegapal will be the team’s staked PegaPal). Thus, by the time the second winner stakes, the first winner will have a much larger supply, 1 PegaPal + 3 * rebase. This is a huge advantage because as the total staked increases with new capital and user inflow, earlier winners will experience less relative dilution on every mint. This effect occurs for every winner of an auction including the second, third, fourth, and so on, but decays with each winner. This was designed in order to reward auction winners in proportion to the amount of risk they take on. The first winner takes on the most risk as the treasury is small and $PEGA is still in price discovery, but as more winners mint, the treasury grows proportionally and their risk is also reduced. Furthermore, this should incentivize auctions to be competitive from the start which improves the long-term protocol health for Pegasus.
Why auctions?
All (3,3) models need a reliable source of income in order to sustain and grow APY for rebases. While our core revenue will eventually come from our Interest Rate perpetual before the launch auctions will serve as the primary revenue intake instead of bonding. A portion of the revenue from the auctions will then be used to LP our interest rate perpetual, which will then generate trading fees as revenue back to the treasury.
Moreover, we heard feedback that some contributors wanted to invest more passively in the protocol without having to go through the questing process that task contributors must do to enter. Thus, we created the auction mechanism for users to immediately enter the system and receive a Pegapal while also allowing the protocol to grow its treasury.
