Protocol Controlled Value (PCV)

Protocol Controlled Value (PCV), is a subset of Total Value Locked. However, instead of allowing users to temporarily lock tokens in return for rewards, the protocol inherits ownership of the tokens. The protocol is able to use this capital to pursue its objectives, such as maintaining the stability of the peg, providing liquidity, and generating yield.

Essence can even maintain balances in governance tokens of integrating platforms and leverage these tokens to contribute to the governance process throughout the ecosystem.

Liquidity

Many DeFi protocols are heavily reliant on mercenary liquidity, with them offering high rewards and incentives. However, this approach is unsustainable in the long run, as liquidity providers are only loyal as long as the rewards are active. As a result, capital can quickly disappear, often being detrimental to the protocol's long term success.

By providing our own liquidity instead of relying on external sources, Essence avoids the pitfalls of mercenary liquidity. This results in stable and long-term liquidity for the Essence ecosystem, ensuring the protocol's long-term stability and sustainability. In short, PCV enables Essence to provide a reliable source of liquidity that is aligned with the protocol's goals and objectives, rather than being subjected to the whims of external liquidity providers.

Direct Redeemabilty

All CHI is redeemable directly for PCV reserves. This is the key to allowing CHI to scale effectively while staying decentralized. If a stablecoin can always be purchased for $1 and sold for $1, it can scale to arbitrary supply and meet the demands of a growing DeFi ecosystem. Transparent on-chain redemptions offer a key value boost over centralized alternatives such as USDC or USDT, which helps to maintain the stability of the Essence ecosystem, as users can be confident in the underlying value of CHI.