Design of Protocol
Advancing the decentralization of risk investment finance
3.1 Self-Custody Fund Pool
Any user can inject liquidity assets into the fund pool by connecting their wallet and create a certain number of dual-anchor certificates: Position Token (PT) and Yield Token (YT). These two certificates play crucial roles within the protocol and comply with the ERC20 interface standard. The fund pool is entirely self-custody, allowing users to redeem a specified amount of certificates at any time. During the redemption process, anchor certificates will be proportionally burned to maintain the conservation of protocol assets. The rules for injecting and redeeming liquidity (using Ethereum or Binance Smart Chain as examples) are shown in the table below:
Position Token and Yield Token
Position Token (PT): Position Token is the core asset for position proof within the protocol. Users can obtain PT either by injecting liquidity into the fund pool or through SWAP trading pairs (PT/Synbo-Token). After participating in a project's position proof, the current Alpha Broker becomes a consensus agent for that project, receiving value incentives from the project while also bearing the risk of consensus asset issuance failure.
Yield Token (YT): Yield Token is the staking certificate for Beta Miners to earn protocol farming rewards. After minting Yield Tokens, users need to stake YT to receive mining rewards from the protocol. Depending on the staking duration, users can benefit from different reward multipliers.
For users solely participating in liquidity provision, they are defined as "Beta Miners." If they use PT to participate in consensus decision-making, they are defined as "Alpha Brokers." They are entitled to the following rights:
Capital gains from YT and PT.
The opportunity to participate in project consensus decisions using PT and receive consensus agent incentives.
The chance to acquire consensus assets at a lower cost by participating in consensus decisions.
Redemption Process:
Redemption is a straightforward process where users prepare the specified amount of Position Tokens and Yield Tokens in proportion. The protocol will burn the Position Tokens and Yield Tokens and return the corresponding liquidity assets to the user’s account from the fund pool. This process ensures that the protocol has a rigid redemption capability at any time.
(Note: Redemption does not support single-token operations. Redemption must involve both Position Tokens and Yield Tokens together. Please refer to the rule table for specific details.)
3.2 Farming Mining
Farming mining is the incentive mechanism provided by the protocol for users of Yield Tokens who supply liquidity. It plays a crucial role within the protocol by:
Guiding Community Capital: Facilitating the aggregation of community funds to form decentralized community capital.
Value Transmission: Transferring the value created by Alpha Brokers to Beta Miners who supply liquidity.
Risk and Reward Segmentation: Implementing Alpha-Beta segmentation of risk and rewards, allowing low-risk users to earn capital gains through YT certificates without taking on investment risks.
Balancing Value Output and Input: When Alpha activities are insufficient, the Farming pool provides relatively stable capital gains to ensure Beta Miners' stability and the fund pool's size. Conversely, when Alpha activities are excessive, the Farming pool can accumulate most of the value, leading to periodic deflation.
Farming Incentives are divided into two components: inflation incentives and Alpha incentives.
Inflation Incentives: These are related to the Synbo-Token reward parameters set for each block on the current public chain.
Alpha Incentives: These come from the 20% business fee rate of Alpha Brokers and Issuers, with 80% flowing back into the Farming pool to ensure a continuous cycle or periodic deflation.
Farming Mining Main Rules Design：
Staking Yield Tokens: Users stake Yield Tokens for a fixed period to participate in Farming rewards with corresponding multipliers. The relationship between staking duration and reward multiplier is detailed in the following table::（Note: （1）The multiplier remains effective for unredeemed tokens after the staking period expires.（2）Each staking action forms an independent staking order.）
| Lock-up Period | Yield Multiplier |
|---|---|
0 Months | 1 |
3 Months | 1.1 |
6 Months | 1.25 |
12 Months | 1.5 |
24 Months | 2.0 |
Unstaking Expired Yield Tokens: Users can independently unlock each order after the staking period expires. Upon unlocking, the Yield Tokens are released, the multiplier becomes invalid, and unstaked tokens no longer generate rewards.
Claiming Farming Rewards: Rewards generated by each order based on the yield multiplier can be aggregated and claimed at any time.
Farming Reward Parameters for Different Chains: Different chains set varying Farming reward parameters. The rewards for each block are assessed based on the block production time and business volume of the current chain and are adjusted through community proposals. (Initial parameter tables for different public chains are omitted.)
3.3 Position of Proof
Position Proof refers to the process by which a project achieves consensus and capital investment decisions through the Alpha incentive model and agency-based approach. The participants are Alpha Brokers, whose endorsement and the total amount of their staked assets determine whether the project can successfully secure funding.
For any project's withdrawal check:
The position proof cycle is 3 days.
If the proof is successful, the project moves to the next phase.
If the proof fails, the current check's lifecycle ends.
Main Functions of Position Proof
Demand Validation: A project can only proceed to the consensus asset issuance stage after receiving approval from a sufficient number of consensus users.
Fund Security Assurance: Upon successful consensus decision, the Alpha Broker guarantees that a portion of the funds will be withdrawn by the project party, ensuring the absolute security of the fund pool.
Earning Incentives: Alpha Brokers earn Alpha incentives through their participation in the project's position proof process.
Consensus Asset Issuance Curation: Alpha Brokers act on behalf of the project to distribute consensus assets, assisting in the curation of on-chain distribution.
Main Rules Design
Position Proof Cycle and Rewards/Penalties:
Cycle Duration: The position proof cycle lasts for 3 days. During this period, Alpha Brokers can place bets using Position Tokens or withdraw their bets at any time. Alpha Brokers have the freedom to decide their participation and the amount of their bet based on their own assessments and available information. By betting Position Tokens on a check, Alpha Brokers signal their confidence in the project and provide funding support, earning incentives from the project's value growth.
Bayesian Aggregation Principle: Collective wisdom from independent and diverse decision-makers is used to assess the validity of consensus decisions. In each decision round, participants provide independent and diverse viewpoints along with position weights wαw_\alphawα. Through an incentive and penalty feedback model, multiple rounds of consensus decisions will converge.
Power Value Rules:
The relationship between the cumulative bet amount of an Alpha Broker and the Power in their wallet is given by ∑(Bet Position)<{Power(SYNBO)+0}\sum(\text{Bet Position}) < \{ \text{Power(SYNBO)} + 0 \}∑(Bet Position)<{Power(SYNBO)+0}. The total bet amount cannot exceed the total Power, where 1 Power = 1 SYNBO-Token. The +0 is an adjustable parameter.
As interest representatives, Alpha Brokers increase their threshold by using Power, thereby raising the cost of potential cheating by project parties.
Long and Short Rules:
Long Position: To place a bet on a long position, the following conditions must be met:
Sufficient Position Tokens must be available in the wallet.
An adequate amount of SYNBO-Tokens must be held to provide Power, establishing participation thresholds and helping Alpha Brokers make informed decisions while increasing the cost of manipulation by the project party, making participation more distributed and fair.
During the decision period, Alpha Brokers can freely add to or withdraw from their position based on updated judgments, with the total bet amount not exceeding the Power.
Short Position: Betting SYNBO-Tokens primarily aims to maintain protocol integrity and allows SYNBO-Token holders to intervene in subpar projects. This does not oppose long bettors but serves as a warning mechanism. Short position winners receive 20% of the incentive dividends from long position earners (if dividends are issued).
Fee Rules:
Long Positions: To prevent aggressive behavior from long bettors, a 0.5% fee of SYNBO-Tokens is required when placing a bet, with a minimum fee of 3 SYNBO-Tokens. No fee is charged for withdrawing a position.
Short Positions: To discourage arbitrary actions, a 0.3% fee is required for unjustified withdrawals; no fee is charged when placing a short bet.
Consensus Decision Success Criteria:
After the 72-hour cycle ends, if the total amount of Position Tokens is still greater than 40% of the current check’s financing amount, the consensus decision is considered successful, and the check moves to the next phase.
During the 72-hour period, betting and withdrawing Position Tokens is completely free. The maximum participation amount for Position Tokens is constrained by the parameters set when creating the project check.
Short position bettors place bets using SYNBO-Tokens without affecting the participation and decision criteria of Position Tokens. Short positions serve merely as a reference index for Position Token participants. In case of distribution failure, SYNBO-Token position assets receive 20% of the Position Token asset dividends, without any other risk losses or incentives.
3.4 Consensus Asset Issuance
The growth process of blockchain projects can be abstracted as the ongoing issuance of consensus assets. If the issuance of consensus assets can continuously form consensus under the principles of fairness, efficiency, and transparency—similar to Proof of Work (POW)—it may better unleash the innovative capabilities and social productivity of the blockchain industry, distinguishing itself from the current flawed consensus projects that rely on honor-based financing and centralized capital control.
Consensus Asset Issuance refers to the process where blockchain projects distribute a portion of their tokens to community members who recognize the current market demand for the project. These consensus users, who directly participate in the auction distribution, are defined by the protocol as Investors. Investors can be part of the same consensus group as Alpha Brokers and share the risk of their decisions. However, Alpha Brokers can earn Alpha incentives through consensus decision-making and quickly exit as project agents. Investors, on the other hand, may include some Alpha Brokers or followers who trust and act based on the recommendations of subscribed Alpha Broker experts.
Participation Rules for Consensus Asset Auction
Auction Rights: Ensure you have the necessary auction rights. Project auction rights are divided into two types: Free and Only Checked. If the auction is "Only Checked," users who did not participate in the consensus decision do not have auction rights unless one of their subscribed Alpha Broker experts has participated in the current check, granting them follow-on rights.
One-Way Transactions and Constraints: Auctions are one-way transactions, and the auction assets must comply with release rules such as lock-up periods, initial release ratios, and linear release cycles. These constraints are defined by the Issuer. Investors should thoroughly understand each asset's rules to protect their interests.
Price Curve: The auction price is determined by the distribution progress and time progress within the auction cycle, bounded between a discount price and a premium rate. Participants should identify the optimal entry point. Different issuance capacities and time progress will result in different price curve trends, but the price range will be confined between the maximum discount and maximum premium, as illustrated below:
Distribution Termination: If the virtual price falls below the discount price, the executor can proactively terminate the distribution at any time, ending the current check’s lifecycle. Distribution will cease, but transactions completed before termination will not be affected.
Distribution Duration: If distribution is not terminated, the protocol distribution can last up to 21 days.
Auction Quota Limit: Each participant can only bid for the number of shares specified by the project's constraints and cannot exceed this limit to ensure fairness and dispersion in the distribution. "Only Checked" participants are also subject to maximum distribution limits per user, but guarantees are not limited.
Withdrawal Review: The auction credentials held provide a relative weight for reviewing the project's current withdrawal proposals.
Participating Assets: Use liquidity supply assets from the current chain's fund pool as settlement assets.
3.5 Alpha Incentive Dividends and Settlement
Alpha Incentive: Alpha incentives refer to the rewards earned by participating in the position proof of a project check and achieving consensus decisions. The outcomes of rewards and penalties are reflected in both dividends and settlement.
If the Consensus Decision Fails: Alpha Brokers can easily and freely release their position assets.
If the Consensus Decision Succeeds: The process enters the Alpha incentive phase. Position assets will be locked until the distribution is completed, at which point dividends and settlement can be processed.
Dividends: Dividends refer to the portion of profits above the discount price during the distribution process, allocated to Alpha Brokers' accounts based on their Position Token weight and distribution weight. The actual dividend rate is calculated as:
Actual Dividend Rate=50%×(Distribution Rate+Position Share)\text{Actual Dividend Rate} = 50\% \times (\text{Distribution Rate} + \text{Position Share})Actual Dividend Rate=50%×(Distribution Rate+Position Share)
When the distribution rate is lower than the Position Share, profits will be divided among more distributing agents.
Conversely, if a larger share is distributed, a higher dividend allocation can be obtained.
Settlement: Settlement occurs after the distribution process ends (including cases of distribution termination or failure). It involves a final settlement of risk assets based on the Alpha Broker's Position Token weight and distribution performance weight.
Settlement and Project Withdrawal Rights
Settlement: Settlement is based on the Alpha Broker's Position Token weight and distribution performance weight. After the distribution phase (including termination or failure), a final settlement of risk assets is conducted.
The project's withdrawal rights are tiered as follows：
Tier 1: 40% of the withdrawal rights are available based on the initial distribution progress.
Tier 2: 30% of the withdrawal rights are available as the distribution progresses further.
Tier 3: The remaining 30% of the withdrawal rights are granted at the final stage of distribution.
This tiered approach requires Alpha Brokers to continuously back the project and engage in ongoing marketing efforts to achieve the necessary distribution milestones.
Preconditions for Alpha Incentive Settlement
The settlement of Alpha incentives depends on the completion of the distribution phase, which includes three scenarios: complete distribution, distribution interruption, and distribution termination. For Alpha Brokers, distribution interruption and termination may not necessarily yield favorable results. The specific algorithm involves the achievement status of distribution weights. For example: If an Alpha Broker's Position Token weight is 1% and their distribution weight achievement is 2%, their dividend weight would be 1.5%, while their guarantee weight would be 0%.
3.6 Professionalization: Alpha Broker Experts
While Alpha Brokers operate without permission, not everyone may have the time and resources to deeply research and engage in consensus for projects. To address this, the protocol introduces a specialized role for professional Alpha Brokers—Experts. Any Alpha Broker can upgrade their account to become an Expert, thus earning professional Alpha incentives.
Professional Alpha Broker Design：
Registration and Annual Fee: Complete on-chain registration and pay the annual fee in Synbo-Tokens for professional status.
Subscription Fee Settings: Set and adjust subscription fees to attract followers who value your insights. Subscription fees can also provide higher Power values.
Trust and Follow-Up: Represent and guide followers in consensus decisions, allowing them to invest with confidence. When auction distribution is set to "Only Checked," followers can gain auction rights through their subscription. The protocol encourages the setting of "Only Checked" for quality project distributions to lower financing costs and better meet consensus expansion needs.
Expert Consensus: Some project consensus parameters are set to "Only Experts," meaning only those with Expert status can participate in the consensus process.
3.7 Withdrawal Approval
Withdrawal proposals are made after a project successfully secures the withdrawal amount. The proposal notifies current auction voucher holders and seeks their approval. This process serves two main purposes: it mitigates the risk of fraud, thereby protecting investor interests, and it enhances interaction and communication with consensus users for high-quality projects.
The withdrawal rights of a check are released in stages (refer to Alpha incentives). When a check obtains the withdrawal amount, the project can create a proposal for withdrawal, adhering to the principle of earmarking funds for their intended use. A check can only have one valid withdrawal proposal at a time. Withdrawal proposals are subject to a rejection review process by auction voucher holders. The review period for each proposal is 7 to 14 days. If, within 14 days, the rejection rate from voucher holders reaches 34% or higher, the proposal will be considered failed.
Specific Rules
Withdrawal Rights Release: The release of withdrawal rights is staged with the following ratios: {40%:30%:30%}, corresponding to check and issuance progress: {Consensus decision success, 40% issuance completed, 70% issuance completed}.
Proposal Quantity Limit: There is no strict limit on the number of proposals, but typically, a mini financing project requires 1 to 3 proposals. Additional proposals may be necessary if there is fraudulent behavior from the project.
Review Period Rules: As shown in the table below, for projects that create withdrawal proposals early, investors need to exercise their rights within 7 days by rejecting unreasonable proposals to intervene in the withdrawal process for projects with abnormal distribution progress.
Rejection Threshold | Time Period | Result |
Rejection Rate < 20% | 7 Days | Successful Withdrawal |
Rejection Rate > = 20% | 1～7 Days | Delayed by 7 Days |
Rejection Rate < 34% | 14 Days | Successful Withdrawal |
Rejection Rate >= 34% | 14 Days | Current Withdrawal Proposal Failed |
Withdrawal Approval Rights: When vouchers have not been claimed, each Token equals 1 vote.When vouchers are claimed and moved to the wallet, each Token equals 0.5 votes.Therefore, for projects with insufficient backing, avoid claiming Tokens too early to fully protect your rights.
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