Pencils Protocol is a decentralized platform that offers auction services for native assets and RWAs, as well as unified yield aggregation services for users to maximize asset utilization. Pencils Protocol also serves as a native Scroll gateway for liquid asset staking and restaking.
Vaults
Pencils Protocol Vaults 1.0 will first be integrated with Scroll's leading DEX and the Vaults Pool will be connected to the DEX liquidity pool. Users will be able to participate by selecting their preferred LP tokens in the Pencils Protocol Vaults Pool and flexibly set different leverage ratios. The Vaults contract will automatically allocate the necessary leverage funds from the Staking deposit pool, satisfying users' desire for higher returns and providing a convenient and efficient experience for multiplying funds.
Vault 2.0 will add collaboration with the leading Liquid Restaking protocol, allowing participating users to receive both the yield of native Staking and multiple token rewards (including EigenLayer, LRT, Pencils Protocol, DEX and Scroll).
In the future, Vaults will integrate delta-neutral strategies, synthetic on-chain returns and exotic on-chain options.
Interest rate (APR)
The interest rate received by depositors in Pencils protocol vaults is determined by a floating interest rate model similar to that used in mainstream lending protocols. This model adjusts the interest rate based on the availability of funds in the deposit pool, ensuring that depositors are fairly rewarded for their deposits.
When the utilization rate of the deposit pool is high, i.e., more funds are borrowed, the interest rate (APR) increases. A higher APR rewards depositors for providing liquidity when it is in high demand and encourages more users to deposit their tokens.
Conversely, when the utilization rate is low, indicating an excess of available funds in the deposit pool, the interest rate will decrease accordingly. This dynamic adjustment helps maintain a balanced ecosystem and prevents excessively high interest rates during periods of low borrowing activity.
Leveraged mining process
Users can borrow funds through vaults to increase returns.
- The user holds a small amount of USDC and chooses to borrow more USDC.
- Vaults allocate the assets to 50% ETH and 50% USDC.
- The assets are deposited into the DEX liquidity pool, and the received LP tokens are staked to earn rewards.
- For subsequently integrated assets like LRT, similar steps are followed.
Interest on borrowed funds will be automatically accrued and paid into the Staking deposit pool to pay rewards to depositors. By valuing principal and limiting leverage multiples, Vaults ensures that depositors' funds are safeguarded without the risk of liquidation.
Farming Unified and Leveraged Yield Aggregation Services
When you deposit tokens into the Pencils protocol vault, your funds are put into a pool that borrowers can access to enhance their positions.
As a depositor, you receive income from interest paid by borrowers, protocol points “pencils” , scroll points and many other enhanced rewards from Pencils' partners.
Pencils Protocol Vaults prioritizes the safety of your funds by carefully evaluating each borrower's principal and setting strict leverage limits. This approach ensures the safety of your funds.
Launch Formats
The launchpad beta featuring fair launch models and toolkits.
LaunchPad Alliance and Progressive Ownership features facilitate innovative solutions for token issuance and user loyalty, and can provide scalable infrastructure for auctions and staking.
The Pencils holders will receive more favorable allocations from projects launching on Pencils Protocol.
Pencils Protocol offers an auction platform that helps users to sell their digital assets and investors to earn higher and more stable returns in the secondary market.
- English Auction: This type of auction raises the price of an asset from low to high. The seller sets an initial price and a minimum increment. Investors bid for a certain period of time, and the highest bidder at the end of the auction wins the asset.
- Dutch auction: The seller sets a starting price and a fiat percentage, then gradually decreases the price of the token according to a set rule until all investors have bid for the asset. a set rule of thumb until all investors agree on the price or the asset is will be sold out.
- Fixed-price auction: The seller sets a fixed price on the and tokens are sold to investors at that price until sold out until sold out or a deadline is reached.
- Batch Auction: This type of auction balances the prices by allowing investors to bid on a desired number of assets and prices within a certain time frame. Pencils Protocol System Contract automatically determines the optimal price and allocates assets to investors who bid at or above that price.
- Liquidity Bootstrapping Pools (LBP): LBP is a variant of the Dutch auction that originated from the Balancer auction model. The seller creates a pool of tokens and stablecoins by setting an initial weighting factor and rate of change. Investors purchase tokens via swaps, and the weight of a token in the pool decreases over time, lowering its price. Each pair of tokens in the pool has a spot price determined by their weight and balance.
- Gradual Dutch Auctions (GDA): GDA divides asset sales into a series of Dutch auctions, including a discrete GDA (for selling NFTs and other integer assets) and a continuous GDA (for selling interchangeable tokens). In discrete GDA, all auctions start simultaneously, with each subsequent auction having a higher starting price.
In the Pencils Protocol auction platform, both assets and sellers participating in auctions must be verified, while buyers do not. The AML system of the auction platform continuously monitors transactions and triggers alerts if any anomalies are detected.
Shop
The Pencils Protocol Shop (supporting multi-chain point transactions, pre-market trading, custom unlocking tools, onchain Loyalty ProgramsWeb3 equity cards, celebrity tickets, fan benefits, physical Goods and RWAs, ERC404, etc.), NFT Launch, NFTFi, decentralized insurance services, ERC404 Dex, etc.
Users can utilize DAPP to margin trade NFTs, real world assets (RWAs), points and derivatives, expanding the utility and application of their holdings in the Pencils protocol ecosystem.
