Analysis of P12's Swap mechanism and P12 governance scheme

The last article took you to understand P12's game currency issuance method, CastDelay, Meritocracy management system, economic growth, and model. Today, I will give you a detailed explanation of P12's Swap mechanism and its governance model.

P12 Swap Mechanism

P12 is a GameFi ecosystem, each game has an ecosystem token, P12 and multiple game coins as game currency.

If players want to participate in games released in the P12 ecosystem, of course, they need some game currency used in specific games, which is the ticket to the game world. How do players get specific in-game coins?

Can players get these tokens directly on a decentralized exchange like Uniswap or Curve? If there are trading pairs, that won’t be a problem. However, the P12 ecosystem has its Swap system specially designed for the exchange between the ecosystem token P12 and each in-game currency, it provides maximum liquidity between these currency pairs, and introduces the protection of the interests of gamers mechanism. So we recommend gamers to get ecological token P12 from other swaps and then exchange P12 for the game currency they need in P12 Swap.

Transactions between P12 and in-game currency are conducted through automated market makers (AMMs).

P12's Swap will support a variety of AMM models, including Constant Product Market Maker (CPMM) such as Uniswap: Mixed Function Market Maker (HFMM). Such as Curve Finance: and, Weighted Math AMM if required.

P12 will introduce other suitable models in Swap. In the first phase, P12 uses CPMM in Swap, because it is concise and has full technical support. In the CPMM market of the P12 ecosystem, liquidity providers create liquidity pools by depositing trading assets (such as game coins and P12 Tokens) into trading pair contracts.

The P12 ecosystem supports different kinds of AMMs to choose from. In addition to the widely adopted CPMM, P12 Swap also supports stable Swap to meet the needs of developers who want to peg their in-game currency with P12Token. If a game has more than two in-game tokens, or developers wish to provide liquidity in different proportions, they can choose weighted pools

  • Market Maker

    People in Web 3.0 are already familiar with Constant Product Market Makers (CPMMs).

    This part shows web3.0 newbies how CPMM works, and the P12 ecosystem welcomes players who are or have not been involved in web3.0 games. Liquidity providers inject tokens into exchanges that generate token pools (i.e. liquidity pools) (P12 - Game Tokens).

  • Weighted pool

    Weighted pools enable developers to build pools with different token counts and weights.

    Weighted pools use weighted math (powered by Balancer) and are designed to allow swaps between any asset, whether they have any price correlation or not. The price is determined by the pool balance, pool weight, and the number of tokens being exchanged.

    If the weights remain the same, the spot price offered by the weighted pool will only change as the token balance changes.

    If the pool owner (developer) does not add or remove tokens from the pool, the token balance can only be changed through transactions. The constant surface causes the price of tokens bought by traders to rise and the price of tokens sold by traders to fall. Knowing that the value after the transaction is the same as before the transaction, P12 can calculate the amount of coins players get when they send P12 to the pool.

  • Stability pool

    Stable pools in the P12 ecosystem are designed for game coins that may be pegged to P12.

    Stability pools use stability math (based on StableSwap, popularized by Curve), which allows for significantly larger trades before encountering significant price impacts, greatly increasing the efficiency of capital-like swaps.

Governance model

When it comes to governance, you may first think of weight and governance rights.

  • GameMaster

    Means the player is the master of the game.

    In traditional centralized games, players have no real governance. Decentralized Autonomous Organization (DAO) is a new organizational structure in Web 3.0 that enables players in the P12 ecosystem to have real governance rights.

    The P12 DAO consists of multiple smart contracts connected by Aragon. As for voting weights, the standard Aragon-to-voting (1:1) method is replaced with voting weights proportional to lock-up time, similar to Curve Finance7.

    P12 tokens can be locked in Votingescrw, instead of voting with a certain number of tokens, the lock time can be chosen.

    Voting is both amount-weighted and time-weighted, where time is calculated by how long the P12 Token cannot be unlocked.

    The voting weight decreases linearly with time To get more veP12, there are only two ways:

    • Increase the amount of pledged P12
    • Extend the lock-up time of P12

    If the same amount of P12 is pledged, the longer the lock-up time, the greater the amount of veP12 obtained by the pledge. If P12 is pledged as veP12, the pledger loses liquidity, because veP12 is not tradable, and the pledger cannot release the pledge in advance.

    Therefore, as a trade-off, veP12 holders get the following incentives

    • P12 DAO Governance

      In addition to voting on proposals for the healthy and sustainable development of the P12 ecosystem, P12 has also introduced a collection mechanism. Players can have the tools to protect their interests when game developers act maliciously against players. Players can initiate significant penalties for game developers through standard seizure proposals, and the assets obtained from the penalties will be confiscated from the P12 treasury.

    • Receive revenue sharing rewards from the P12 ecosystem, including some Swap transaction fees and SecretShop transaction fees.

    • More incentives, P12 will design incentives for all developers and gamers in the P12 ecosystem to make veP12 work, P12 believes that P12 is a sustainable and prosperous gaming ecosystem, and will allow all participating in P12 people benefit.

    On the one hand, P12 rewards based on usage statistics, economic activity, and Keynesian policies under meritocracy. For example, in the quantitative indicators of UsageStatistics, the value of a specific game can be calculated based on the number of registered players, the number of token holders, the number of monthly active users, etc., and games with higher values ​​will receive higher rewards.

    On the other hand, P12 regulates the behavior of game developers by introducing Slashing mechanism. If game players think that the developers are cutting leeks, veP12 holders can initiate a proposal to seize the P12-game token LP tokens held by game developers. The slashing mechanism is also implemented through Aragon.

    The decision was made based on the number of votes cast by P12, and only a two-thirds-plus vote in favor of the proposal would pass.

    Once the proposal is implemented, the LP tokens corresponding to P12 and game tokens will be allocated to P12 and game tokens after the delay days calculated by RemoveLiquidity. Specifically, P12 will be returned to the P12 treasury, and game coins will be returned to the game developer's address.

In summary, this article explains the swap mechanism and governance scheme of P12. Shows how P12 promotes the design goals of guaranteed true ownership, transparent prices, guaranteed liquidity, verifiable scarcity, and ultimately enforceable governance. Overall, this paper aims to lay a solid foundation for the P12 ecosystem and establish the sustainability and viability of the P12 economy.

With the popularity of the metaverse concept, buying and selling real estate in the virtual world has become more and more popular, and it has even set new highs in virtual real estate transaction amounts many times. The metaverse will evolve into a fully functional economic model in the coming years, providing an interconnected virtual experience for our real life, just like email and social media do today.

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