Strategic Alliance with Tangible

Pearl Exchange
5 min readJun 2, 2023

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As we’ve already shared, Pearl’s goal is to innovate on the Solidly/ve(3,3) model by spinning the flywheel backwards, building a protocol that utilizes a projectable increase to bribes from Epoch to Epoch as the driver to token demand and ultimately liquidity provision.

We’re also believers in the forthcoming RWA revolution in DeFi and saw a strategic opportunity to embrace this shift, building a product focused on the needs of protocols and users looking to invest in tokenized real world assets. There’s a huge first-mover advantage to owning this space and we’re looking to capture it.

Given our desire to pursue the strategies above, it quickly became clear that an integration with Tangible — one of the biggest bribers in the space — made a lot of sense. They agreed and we’ve spent the past few months stealth building Pearl in communication with their team and working through many of the protocol details together.

REAL USD: THE BRIBE ENGINE FOR PEARL

Building a DEX strategy that relies on a projectable increases to bribes means one must find this source of funds. We had been intrigued by Satin’s (RIP) auto-bribe mechanism using CASH and thought a similar mechanic might work well for us.

Boiled down: By using a native-yield stablecoin as the base to all pairs, the yield can be diverted from the LPs (they’ll accrue plenty via emissions) and sent to voters i.e. auto-bribe. As DEX liquidity grows, so does the market cap for the stablecoin and native yield accrued. Basically, the bigger the TVL, the bigger the bribes.

That still presented the challenge of identifying a yield-generating stablecoin we could build with, one with a reliable source of yield. Real USD ended up being the perfect solution in more ways than one.

In the short term, Tangible’s ability to mint USDR with TNGBL (up to ~10% of the backing) gives Pearl a deep source of bribes immediately at launch. Pulling a page from the FRAX playbook, Tangible’s already shown a willingness to invest heavily to build liquidity for Real USD. They’ve been one of the top bribers on Curve as well as other key Solidly forks over the past few months. And as a result, Real USD has grown tremendously. It’s clear they understood how this game works. If they could get our flywheel spinning, it would mean a potentially limitless growth engine for them.

What we didn’t immediately expect or understand were some of the long term benefits to building with USDR. Minting with TNGBL has been a topic of controversy in the space, it remains an open item in an ongoing conversation between Tangible and the Curve Risk team. However, at scale, USDR auto-bribing becomes self-sufficient. Between Tangible’s ability to farm their POL to recycle bribes and the inflow of new yield from the growing USDR TVL in Pearl, minting with TNGBL will be unnecessary. The 8% in Real USD yield should fully sustain the bribes required to maintain our flywheel, growing consistently to counteract emissions inflation over time.

However the real benefit to Real USD yield is the projectability of off-chain sources. Centralization concerns are always a risk, but with the cyclical nature of crypto and general unpredictability of the space, we believe there’s a stability in rental income that’s nearly impossible to find elsewhere in crypto. We would not feel comfortable building the DEX using a projection on yield earned from stablecoin farming strategies. Staked ETH yield is the only thing that comes close to comparison.

DEEP LIQUIDITY FOR TOKENIZED RWAs

Beyond the integration of Real USD, Pearl is committed to building deep liquidity for tokenized RWAs. It’s hard to escape this building narrative in DeFi with protocols now offering tokenized access to T-Bills, carbon credits and collectables in addition to assets like gold and real estate. Simply looking at the size of some of these categories as they exist off-chain, by migrating a small fraction of these assets on-chain we’ll add multiples to the total crypto TVL. These assets will need liquidity and Pearl is focused on building an exchange that caters to the needs of RWA protocols and investors.

Tangible has agreed to establish protocol-owned liquidity for its upcoming Baskets product on Pearl, creating new opportunities through the creation of a variety of unique token pairs. Tangible’s UK Real Estate Basket paired with USDR, allowing customers to earn two streams of yield while farming tokenized real estate assets. Or consider yield farming a stable pair of Pax Gold and the Tangible Gold Basket. While the category is still in its infancy, the possibilities are limitless when DeFi composability meets tokenized RWAs.

PARTNERSHIP DETAILS

As a matter of full transparency, we wanted to share the key details of the partnership here:

  1. USDR will be the exclusive base stablecoin in all whitelisted pairs on the site. To receive a gauge, a token being paired with a stablecoin will need to be paired with USDR.
  2. Only whitelisted tokens will be approved to pair with USDR. As a result, only the top protocols and Tangible’s RWA Basket tokens will receive a gauge on the DEX.
  3. Tangible will receive 20% of the initial Pearl supply, allocated as follows:
  • 10% to Tangible 3,3+ holders
  • 10% to Tangible Labs, used to direct emissions and bribe recycling

INCENTIVE ALIGNMENT

In the case of Pearl and Tangible, the incentives are completely aligned for both teams to build and support this ecosystem. In this arrangement, success is shared and mutually beneficial as a result of DEX TVL being conjoined with USDR TVL. As the DEX TVL expands so does the market cap of USDR. This brings new revenue to Tangible and larger bribes to Pearl, pulled from the USDR’s native yield. These bribes drive demand for Pearl, which pulls new liquidity into the DEX.

Added to this, Tangible and its users have the benefit of an initial allocation of vePearl, giving them all stake in the long term success of the protocol.

Recapping aligned incentives for both Pearl and Tangible:

We’re incredibly excited for the launch of Pearl and our alliance with Tangible. Shared optimism is high.

Epoch 0 launches June 8th and emissions begin to flow for Epoch 1 on June 15th. We hope you’ll join us for the start of something big.

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Pearl Exchange

The premier liquidity layer on Polygon and first DEX to focus on tokenized real world assets.