We know there has been a lot of curiosity around the “Tokenomics” of the Phenom Tokens and we thought it would be a good opportunity to create some longer-form content around it. So in this post, we take a deeper dive into the particulars of the token and we hope you find it helpful!
The token is simply an ERC-20 Smart Contract written on the Polygon network. It's a digital asset that can be stored in any wallet that supports ERC-20 tokens on the Polygon blockchain. The token gives the holder the following:
Unlike most tokens or cryptocurrencies in the crypto space, the Phenom Token is not designed to be speculated on or traded on the open market. One of the core parts of the Phenom Mission is to keep 100% ownership within the poker community. So we have made the decision to prevent the token from being listed on any exchange and have limited the transferability function of the token so that it can only be received as a reward or redeemed back to the site. It cannot be transferred to any other party.
There are only two ways to acquire tokens.
The Phenom Token has a Max Supply of 50 million tokens. 25 million of that supply are put into a Community Pool which are distributed to the players via rewards. Any redeemed tokens go back into that same pool regardless of where they come from (example: if a founder or investor redeems their tokens, this can increase the overall amount of tokens in the Community Pool). This means that ownership of Phenom Poker becomes more decentralized over time, therefore making sure the players always have a significant say over the future of the platform. In the earliest days of Phenom Poker, voting power is concentrated among the founding team, ambassadors, and investors. This is by design so the site can be launched and operated without the hindrance of every early decision needing to go to a community vote. This also allows the Treasury to build reserves quickly, which is crucial to having enough capital to support future Redemptions.
Since rewards rates are tied to token price, growing revenues are needed to distribute tokens at the same rate. Price growth will also trigger a steady demand for redemptions. This results in a distribution curve that is designed to be perpetual - meaning the site never runs out of tokens to distribute but also never needs to increase the overall supply of tokens.
Phenom Poker earns revenue similar to virtually every other online poker site - by collecting a small fee known as rake. In ring games, this is a small percentage of the pots generated. In tournaments it's a small fee added to the buy-in amounts. Phenom Poker’s rake structure will be very competitive and among the lowest in the industry.
50% of all the Net Rake generated is automatically paid out to all token holders every week. So if you have earned Phenom Tokens and you are holding them, you will see USDT payments arrive in your wallet every week that you continue to hold the tokens. If site revenue grows, so do your Revenue Share payments! You receive these distributions whether you continue to play on the site or not. Since rakeback payments are calculated on the current token price - the earliest site users have the opportunity to earn tokens at the lowest possible price - our launch price of $0.50/token.
One of the most common questions we get is “If I can’t trade your token, then what’s the point of having a token?”. It’s a fair question. After all, most tokens out there exist for the sole purpose of trading. We have taken a different approach. We don’t think the market needs yet another speculative coin. Rather, we are interested in the underlying technology that powers most tokens and dApps (decentralized applications) - Smart Contracts. A Smart Contract is simply a program on a blockchain that executes automatically when certain conditions are met. In other words, it allows for the automation of tasks that typically require human intervention or an intermediary. We use this technology to automate things like - joining or leaving a table, Revenue Sharing, rewards (distributing tokens), redeeming tokens, managing rake, and more. The below illustration shows how Phenom Poker uses smart contracts to move money.
The price of the Phenom Token is automatically set once per week based on the following formula:
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At Public Launch, the token price will be $0.50 and remain at that price until the price automatically sets in week 5. This method reduces volatility and increases fairness for token holders. Since price is tied directly to revenue, redeeming tokens has no effect on price at all. As a token holder, you know that if the site revenue grows, so will the value of your tokens, along with your revenue share payments. You don’t have to worry about insiders or anyone else “dumping” tokens and crashing the price. You also don’t have to worry about some unforeseen market condition affecting the price either (for example if the crypto market crashes unexpectedly).
In summary, Phenom Poker was created to be a poker platform that is truly by the players, for the players. The Phenom Token is the mechanism to give the poker community not only a real say over Phenom's future, but also to participate in value creation should the site be successful. We believe this creates true long term incentive alignment and is in stark contrast to what we have seen from the online poker industry in recent years. We hope you'll join us on the digital felt and as fellow owners of Phenom Poker.
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