The truth behind the $1.37 billion fundraising of PulseChain: Innovation or scam, risk or opportunity?

Original author: Yinan (以南)

Introduction:

PulseChain is a hard fork chain of Ethereum that contains the complete state of the Ethereum blockchain. It is the first hard fork to do so, which means it preserves the records of every transaction, user account, and smart contract interaction on Ethereum.

This platform aims to reduce the computational pressure on the Ethereum blockchain and create a cost-effective alternative for smart contract developers.

PulseChain aims to increase the value of the Ethereum network by sharing some of the network load and reducing gas fees. The block time of Ethereum is 15 seconds. However, the block time of PulseChain is 12 seconds, which the official claims makes it faster and more scalable.

PulseChain is a branch of Parlia, which uses the Proof of Stake (PoS) consensus mechanism on the Binance Smart Chain (BSC). However, the project has shifted towards a new Proof of Stake Authority (PoSA) consensus model, which introduces native validator staking, rotation, and reward reduction contracts.

As of the time of writing, PulseChain has 15,893 validation nodes across the network. Anyone can become a validator by staking 32,000,000 native PLS tokens. Validators earn a portion of the transaction fees from the entire network.

Pulsechain completed the testing of versions V3 and V4 earlier this year and officially launched on May 14th.

Team:

The founder of PulseChain is Richard Heart, who is also the founder of HEX.

RH is an American cryptocurrency entrepreneur. As early as 2015, when Ethereum raised funds through crowdfunding, Richard Heart became one of the first large-scale investors.

He has hundreds of thousands of followers on both Twitter and Youtube, and opinions about him are mixed. While he has a large number of loyal fans, many people believe that his projects are nothing more than Ponzi schemes and dismiss him with contempt.

HEX tokens allow holders to earn up to nearly 40% annualized returns by locking their tokens. The project raised $60 million on its first day of issuance, setting a record for blockchain token fundraising at the time. From 2019 to 2021, HEX saw a maximum increase of 10,000 times, making Richard Heart even more famous.

RH is also an extremely marketing-savvy person. Previously, he bought a 555.55-gram black diamond with 55 facets, symbolizing HEX's maximum staking period of 5555 days, and named it "The HEX.COM Diamond". He also sponsored the Daytona 500 race in which JJYeley, one of the three-time champions, participated.

HEX：

HEX claims to be the world's first high-interest blockchain certificate of deposit, offering significant ROI promises to early adopters. The blockchain project was distributed to Bitcoin holders in the form of a snapshot of the Bitcoin UTXO set that appeared on block height 606227 on December 2, 2019, by Richard Heart.

At first, the HEX distribution to Bitcoin holders was 10,000 HEX per 1 BTC. Bitcoin holders could only claim HEX within the first year of issuance. During this period, HEX could also be obtained by interacting with the HEX smart contract and donating ETH.

At the end of the first year of issuance, all HEX coins that have not been claimed by Bitcoin holders will be distributed to other active HEX users. After the first year of launch, the maximum annual inflation rate of HEX is designed to be 3.69%.

HEX holders can stake their tokens for a period of time (1-5555 days) and receive their principal and interest upon reaching the specified deadline. However, users who stake HEX will face inflation, and if they end their stake before the designated lock-up period, they will be penalized with a deduction of half of their earnings.

For example, with a 10% collateralization rate and a 3.69% inflation rate, the annualized yield for the pledger would be 36.9%. HEX has an OA address that holds 90% of the total token supply. The community claims that this address has never sold a single token in the past three years, and HEX has never been subject to a hack.

In addition, the project also designed a promotion reward mechanism, where users referred by others can receive a 10% reward, and the referrer will receive a 20% reward. Later, JACK was inspired by HEX and created XEN.

Airdrop:

The PulseChain airdrop will begin upon the launch of the PulseChain blockchain. Anyone who holds an Ethereum token balance in a non-custodial wallet will receive a 1:1 balance of PLS tokens without any action required, allowing users to access all Ethereum tokens on PulseChain. Any ETH held in non-custodial wallets will be replaced by PLS balances. However, all ERC-20 tokens will retain their original names.

But this airdrop is almost worthless, more of a gimmick, because at this time the price of PLS is three zeros after the decimal point, and the 1:1 exchange rate can be almost ignored.

Mechanism:

On the Pulse network, almost all projects are launched through the Sacrifice event, which is a donation mechanism. There is no donation limit, and token distribution is determined based on the amount of donation.

At the beginning of the donation, the PLS community donated $670 million, while the PLSX community donated $1 billion. Towards the end of the donation period, the OA wallet (HEX's genesis wallet, widely believed to be RH's wallet in the HEX community) donated approximately $13 billion and $54 billion to the two projects respectively.

Token Economics:

PLS is the native token of PulseChain, serving as the token for paying GAS on the payment network. It uses the PRC-20 token standard, which is a variant of the Ethereum ERC-20 standard.Token total supply: 135T. The tokens held by the address with over 90% ownership (the largest HEX address) theoretically do not participate in market circulation. The community has confidence in this, while those outside the community see it as a double-edged sword.

PulseChain validators receive 75% of all PLS tokens generated from transaction fees. The remaining 25% is burned, reducing the circulating supply. Additionally, when the final stage of the project roadmap is completed, PLS tokens will be used for community governance and on-chain voting.

The PLSX token is the platform token for PulseX exchange, used for discounted fee payments and trader incentive mechanisms. Token holders can receive benefits such as PLS airdrops and fee reductions. The PLSX token also has a certain cost consumption property. 21% of PulseX fees will be used to purchase and then destroy PLSX tokens.

INC token is a reward token for staking mining, obtained by staking LP.

Project Ecology:

PulseX:

PulseX is the official DeFi token exchange platform for PulseChain. It is a fork version of Uniswap. It will provide network participants with access to DeFi features such as AMM, liquidity pools, and liquidity mining.

Liquid Loans:

Liquid Loans is the largest third-party team on PulseChain, dedicated to developing its native over-collateralized stablecoin. Its community has donated nearly $50 million and participated in nearly 10,000 wallets. Users can collateralize $PLS and borrow interest-free stablecoin $USDL, and $LOAN tokens will also be issued to reward stable pool pledgers. Liquid Loans is a fork of the LiquityProtocol protocol on Ethereum.

Powercity:

Powercity is a team composed of loyal followers of RH. It is a complex small ecosystem combination, with sub-projects covering staking, cross-chain bridges, lending, NFT exchanges, and more.

Ph Series - Phiat, Phamous, Phux, Phatty:

Phiat is a fork of AAVE V2, an on-chain bank that allows for collateralization and lending of multiple tokens. Its purpose is to provide leverage, shorting, and hedging tools for RH tokens.

Phamous is a fork of GMX on PulseChain, a perpetual contract exchange that allows for long and short positions on tokens with high liquidity on the Pulse network.

Phux is a fork of Balancer V2, aiming to create an exchange that focuses on stablecoin exchange and multi-currency liquidity pool indexing. These liquidity pools can consist of up to 8 different tokens.

Phatty is a wallet aggregator similar to Debank, which can better display on-chain assets, especially assets on the PulseChain. It can not only display the holding amount of spot assets, but also the share of staked assets.

Summary:

Currently, the entire ecosystem of PulseChain is dominated by Richard Heart and the HEX community. Most of the projects in the ecosystem are forks of leading projects on Ethereum. The introduction articles and audience on Crypto Twitter are not yet widespread. The community promotion is mainly driven by the Pulse community, and there is currently no VC participation in the entire ecosystem project. Fundraising is mainly raised within the community, but it should be noted that community members are wealthy. The PLSX community alone raised $1 billion, and the total raised was $55.4 billion, with many donations in the form of HEX.

Recently, the focus of attention on the main network has been on data. A few days after the main network went online, the total TVL of Pulse on Defillama reached nearly $500 million, ranking 8th among public chains, surpassing Solana, FTM and other public chains. However, there are only a few projects in the ecosystem, and almost all of the TVL comes from PulseX, with the PLSX-WPLS trading pair accounting for more than 40%. Today, on May 25th, the TVL has started to decline, reflecting that some funds are withdrawing. In terms of the market, on May 23rd, OKX announced the listing of PLS and officially opened the PLS/USDT trading pair on May 24th. Before this, buying PLS required cross-chain transfer of funds to Pulse and purchasing a small amount of PLS as gas fees off-chain. In terms of the community, there is currently only one official Telegram group, and no other documents or blogs have been seen. The official Twitter is updated infrequently, while the founder RH updates more frequently.

Finally, whether a place with few people is a risk or an opportunity is subject to individual judgment. As for the current situation of Pulse, it is as described above. If you wish to participate, please conduct a more in-depth analysis and investigation on your own.

Related links:

Official website: https://pulsechain.com/

Twitter：https://twitter.com/pulsechaincom

Telegram：https://t.me/PulseChainCom

DEX：https://app.pulsex.com/swapCross-chain bridge: https://bridge.pulsechain.com/#/bridge

The translation of the content is:

Burning data: https://plsburn.com/

Block explorer: https://scan.pulsechain.com/Pulse ecosystem's new project and donation data website: https://www.hexpulse.info/projects

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