Dual Token System

SPAI Finance operates with two interconnected tokens that work together to create a sustainable algorithmic synthetic ecosystem.

spBNB - The Synthetic Asset

spBNB is a synthetic token designed to maintain a 1:1 peg with BNB through algorithmic mechanisms.

Key Characteristics

• Target peg: 1 spBNB = 1 BNB

• Not backed by collateral - Peg maintained algorithmically

• Primary use: Liquidity provision and farming

• Minted during expansion - New spBNB created when protocol expands

• No inherent burn mechanism - Supply management through PSM

How spBNB Functions

spBNB is designed to trade at 1:1 with BNB through a combination of:

1

Arbitrage incentives

When price deviates, traders profit by restoring peg.

2

Emission controls

Minting only occurs when TWAP is above peg.

3

PSM fees

Create buy pressure to support the peg.

4

Liquidity management

AI optimizes pool depth for stability.

When you provide spBNB/BNB liquidity, you're essentially creating a pseudo-stablecoin pair. As long as the peg holds, your position experiences minimal impermanent loss while earning trading fees and SPAI rewards.

spBNB Supply Dynamics

Unlike fixed-supply tokens, spBNB supply is elastic:

• Expands when trading above peg (TWAP > 1.01)

• Contracts when trading below peg (via reduced usage and PSM)

• Stabilizes when at peg (0.99 - 1.01)

Total supply adjusts based on market demand and protocol health, similar to how central banks adjust money supply—but governed by algorithms and AI rather than human committees.

SPAI - The Reward Token

SPAI serves as the protocol's reward and governance token, capturing value from ecosystem growth.

Key Characteristics

• Fixed maximum supply - Creates scarcity value

• Primary reward token - Distributed to liquidity providers

• Governance rights - Participate in protocol decisions

• Stakeable - Lock SPAI to earn spBNB during expansion

• Value capture - Benefits from protocol success

How SPAI Functions

SPAI is the "premium" token that represents protocol ownership:

1

LP Rewards

Both farms distribute SPAI to liquidity providers.

2

Expansion Rights

Staked SPAI earns newly minted spBNB.

3

Governance Power

SPAI holders can influence protocol direction.

4

Speculative Value

Price appreciates with protocol success.

While spBNB aims for stability, SPAI is intentionally volatile. Its price should increase as:

• Protocol TVL grows

• More users farm and stake

• PSM generates revenue

• Market recognizes protocol value

SPAI Supply Dynamics

SPAI has a predetermined emission schedule:

• Fixed total supply cap - No unlimited inflation

• Distributed over time - Rewards decrease gradually

• Linear emission - Predictable distribution rate

• Farm allocation - Split between spBNB/BNB and SPAI/BNB pools

This creates scarcity value while ensuring sufficient rewards to bootstrap liquidity.

How the Tokens Interact

The two-token system creates a self-reinforcing ecosystem:

The Expansion Cycle

1

spBNB trades above peg

High demand for spBNB pushes price above peg.

2

Protocol expands

New spBNB is minted during expansion.

3

SPAI stakers receive expansion rewards

Staked SPAI holders are allocated newly minted spBNB.

4

Increased supply pushes price toward peg

Minted supply brings price back toward 1:1 with BNB.

5

Cycle repeats

The process continues as long as demand remains strong.

The Value Capture

1

Users farm

Participants farm to earn SPAI rewards.

2

PSM captures fees

When rewards are claimed, PSM captures fees.

3

Fees strengthen treasury

Captured fees bolster the protocol treasury.

4

Strong backing enables sustainable expansion

A healthy treasury supports continued, sustainable expansions.

5

SPAI value increases

SPAI appreciates as the protocol succeeds.

The Balance

The system is designed so that:

• spBNB remains stable for reliable farming

• SPAI captures the upside from protocol growth

• Farmers can choose their risk profile (stable vs volatile pools)

• Expansion is sustainable through treasury backing

Token Economics Summary

Feature	spBNB	SPAI
Target Price	1 BNB	Market-determined
Supply	Elastic (expands/contracts)	Fixed maximum
Primary Use	Liquidity provision	Farming rewards & staking
Risk Profile	Peg risk (can depeg)	Price volatility
Value Driver	Peg maintenance	Protocol growth
Yield Source	Receives via staking during expansion	Distributed as farm rewards

Choosing Your Exposure

Understanding the dual-token system helps you choose strategies:

For Stability Seekers

• Farm spBNB/BNB pool (minimal IL when peg holds)

• Stake SPAI during expansion for spBNB rewards

• Focus on peg maintenance and treasury health

For Growth Seekers

• Farm SPAI/BNB pool (higher APR, standard IL)

• Accumulate SPAI during early phases

• Focus on protocol adoption and TVL growth

For Balanced Approach

• Split capital between both pools

• Compound some rewards, take profits on others

• Monitor both peg health and SPAI price trends

Risk Considerations

The dual-token model creates specific risks:

For spBNB holders:

• Peg can break (trade below 1 BNB)

• Death spiral possible if confidence lost

• Recovery dependent on protocol mechanisms

For SPAI holders:

• Price highly volatile

• Value dependent on protocol success

• No intrinsic backing or peg

For LP providers:

• Impermanent loss from both tokens

• Smart contract risk

• Liquidity risk during high volatility

Understanding these risks is essential before deploying capital.