Original author: Jiang Haibo, PANews

The funds on the blockchain have started to decline since 2021, and it is difficult for new public chains to attract large amounts of funds. However, the recently launched PulseChain and the on-chain decentralized exchange PulseX are surprising. PulseX has attracted a TVL of US$500 million for PulseChain within a week of its launch, making PulseChain's TVL directly rise to the eighth place. In this article, PANews will take you through the background and potential risks of PulseChain’s sudden emergence.

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Founder Richard Heart and the controversial HEX

The success of PulseChain is inseparable from the background of its founder, Richard Heart. Judging from the Twitter data, the official Twitter of PulseChain is rarely updated, while the founder Richard is working hard on marketing and has achieved good results. It can be said that the success of PulseChain is mainly due to the background of the founder Richard, which starts with the cryptocurrency HEX he once created.

HEX was issued on Ethereum through the Bitcoin UTXO snapshot in early December 2019, and Bitcoin holders can receive it for free. HEX is the world's first high-interest blockchain certificate of deposit, also known as the encrypted version of traditional time deposit. Richard said that HEX can monetize the time value of money in a better way. In the traditional world, the amount of money issued is increasing and the value is gradually decreasing. The inflation rate of HEX is set and falls below 3.69% within a year.

Holders of HEX can stake their tokens for a period of time (1-5555 days), and receive the principal and interest of the investment when the specified period is reached. Stakers can enjoy considerable value-added speed, and users who hold HEX without locking will suffer inflation, and will suffer great losses if they end the pledge early. For example, at an inflation rate of 3.69% and a pledge rate of 10%, the pledger’s annualized rate of return is 36.9%.

HEX received a lot of criticism when it was launched, including privacy issues in token claiming and a Ponzi-like token structure. Although Bitcoin holders were initially able to receive HEX tokens for free, they also sacrificed their privacy. In addition to free collection, users can also send ETH to the fund pool to obtain newly issued HEX tokens.

From being worthless in 2019 to its peak in 2021, HEX has increased by tens of thousands of times, which also made Richard, the founder behind it, even more famous. The myth of HEX’s sudden wealth has changed the fate of many losers, and the founder Richard also has a similar failure background to these people.

This allowed HEX to attract countless followers for Richard, and some of them built PulseChain with Richard and actively promoted it. Well-known figures including XEN founder Jack Levin are supporters of HEX and are actively cooperating with marketing.

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PulseChain’s airdrop plan

After HEX reached its peak, Richard started another encryption project, namely PulseChain, which is an Ethereum fork chain built by Richard to reduce the Gas fee in transactions. PulseChain supports EVM, can be directly connected through Metamask, and the block generation time is about 10 seconds.

But the situation after going online is quite different. As of May 23, PLSburn.com shows a supply of 135 T of PLS, a price of $0.000256, and a market cap of $35 billion. If you hold 1 ETH worth $1850 on Ethereum, you can only get 1 PLS airdrop worth $0.000256 on PulseChain, which is almost negligible.

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The unique "Sacrifice" attracts a large amount of financing

When Richard was designing PulseChain, he also laid out the DEX on the chain. PulseX is the DEX on PulseChain, which is compared to Uniswap on Ethereum.

Both PulseChain and PulseX have conducted a financing method called "Sacrifice", which means that investors "give up" their cryptocurrencies while receiving free, valueless airdrops of PulseChain and PulseX native tokens. Starting from their own interests, users participating in Sacrifice obviously hope to profit from the airdrop, which can be considered as a financing method adopted by PulseChain to avoid legal risks.

Tokens that can participate in Sacrifice include HEX, USDC, ETH and other mainstream currencies. The earlier you participate, the more tokens you will get. According to the rules of PulseX, before January 10, 2022, 10,000 Sacrifice Points can be obtained for every $1 of Sacrifice tokens, and then the capital required to obtain 10,000 points every 24 hours will increase by 5% until February 25 every Sacrifice $9.91 to get 10,000 points.

Sacrifice seems to be a common financing method in PulseChain, and Hexpulse.info also counts a number of projects that use this method of financing.

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Liquidity mining boom after the launch of PulseChain

Through the above-mentioned Sacrifice financing method, PulseChain’s native token PLS and PulseX’s native token PLSX also have a very high basic market value. The $1 billion funding round for decentralized exchange PulseX is also one of the largest in cryptocurrency.

As of May 23, the only project on PulseChain displayed by DeFiLlama is PulseX, and the TVL of PulseX is 500 million US dollars, which makes the TVL of PulseChain directly rise to the eighth, surpassing the old public chains such as Solana and Fantom, and even Ten times that of emerging public chains Aptos and Sui.

According to data from PLSburn.com, the current prices of PLS ​​and PLSX correspond to 2.52 times and 1.13 times the sacrifice price respectively, which may further strengthen the cohesion of the HEX community. HEX, which used to have a high market value, was perfectly transferred to new projects in this way, and made profits during the downturn of the encryption market.

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Risks in PulseChain

PulseChain has achieved rapid development, but it is also accompanied by great risks. INC tokens (Incentive Token) are issued for liquidity mining in PulseX. As the liquidity in PulseX increases, the price of INC also continues to rise. According to data from GeckoTerminal, the price of INC has increased more than 10 times since May 19. The liquidity in both INC-WPLS and INC-PLSX exceeds $40 million.

The most liquid trading pair in PulseX is PLSX-WPLS within the ecosystem. The liquidity of this trading pair is 213 million US dollars, and the corresponding APR is only 65%. The corresponding liquidity of USDC, USDT, ETH and other mainstream currencies is not much, and the highest liquidity of WETH-WPLS among related trading pairs is 22.44 million US dollars. Explain that the funds in PulseX mainly come from the HEX and PulseChain ecology, and it is still not attractive to external funds.

Almost all mining in PulseX needs to form a trading pair with PLS, and the most liquid PLSX-WPLS APR is already relatively low. Once this part of funds starts to sell or INC starts to fall, it is easy to cause a death spiral, resulting in liquidity and Token prices both fell.