A Deep Dive into Function Island

By FrankWhite | Ethereum Echoes | 3 Oct 2024

1. What is Function Island?

Function Island is a massively integrated DeFi protocol that gives users many ways to interact with Pulsechain. The platform offers a suite of applications such as staking (several options), liquidity provision, farming, and even a DEX (decentralized exchange).

2. Core Tokens

The ISLAND token [0xDFB10795E6fE7D0Db68F9778Ba4C575a28E8Cd4c] plays a key role in the Function Island ecosystem. It has a fixed supply of 300,000 tokens; it serves as a means for distributing value among stakeholders and can be an appreciating store of value. Holders of ISLAND tokens can stake them to earn rewards from protocol-generated revenue. ISLAND holders can also earn from staking in liquidity pools, making it a versatile asset for those looking to engage in long-term value accumulation within the ecosystem.

The FARM token [0xfd4d3A2fd12C7f3146428a2ebDCb489550Ae9bea] is emitted at a very slow rate, has a very low supply, and is a key part of the ecosystem. It was the first inflationary reward token for FI, and it may soon turn deflationary. Users can earn FARM by making LP (on PulseX V2) and then staking those PLP on the site.

The iDAI token [0x32A12Bdbeb8280d38292e6491070Ebadf826EE50] can only be created with a real dollar behind every one (1 DAI mints 1iDAI), and has a small fee if redeeming via the treasury. It's currently able to be earned via: LP farming (fiDEX LP (instead of the usual inflationary methods,the iDAI rewards come from fees), and iBOND staking (iBOND [0x883bBad0cd22A7dD1881A63Cf00E3b8cb03E6836] is 1:1 backed by DAI from ETH, mints with 1 DAI and has a small fee to redeem).

3. upTokens

One of the unique offerings on Function Island is the upToken ecosystem. These tokens are designed to increase in value over time, thanks to a 5% fee applied during minting and redemption. This fee is retained in the respective contract to drive the appreciation of its value. While there is a fee to mint/redeem, there is no fee on transfer, so things like creating liquidity pools and trading on a dex only have a small fee (usually 0.2 or 0.3%).

4. Ecosystem and Applications

Function Island’s ecosystem is diverse, with various applications that serve different needs. Some notable features include:

iDAI: 1:1 backed with DAI from ETH; Users can mint with DAI, buy on fiDEX, or earn by staking LP.
DEX (Decentralized Exchange): Function Island provides its own DEX where users can trade assets and add liquidity to pairs like ISLAND and iDAI.
Farming: Users can add liqudity and stake their tokens to earn FARM, ISLAND, and iDAI.
Single token staking: Users can stake ISLAND tokens to share in PLS generated from fees.

5. Active & Experienced Community

The founder and lead developer, Don Function (Donny D), has several years of programming experience, including everything from the frontends we see to everything behind the scenes that make it work. His knowledge and readiness to help the community improve is inspirational, and that's coming from the non-biased part of me. Defi Prince is our community manager, social media expert, and also writes frequent updates for all new products/partnerships/etc. Recently, I joined the team as an intern, doing small/background jobs like outreach & research. The community behind Function Island is several years old, with a wide array of members from around the world with interest in many crypto ecosystems as well as experience and knowledge in several key areas. This has led to continual improvement of existing products as well as development of new ones and integration across several blockchains.

6. POWHR.XYZ

powhr.xyz is an additional site (created/maintained by FI) which has several dapps and has deployments on 6 (yes, six) EVM chains. Here's a look at each dapp:

Hourglass is a specialized bonding curve algorithm and volume-revenue sharing model implemented in a smart contract - whenever PLS is deposited, the price & supply of PLS3D increases, and a 10% fee is distributed between existing holders of PLS3D, proportionate to share of the total supply. PLS3D can be withdrawn at any time, and the price & supply of PLS3D decreases, and a 10% fee is distributed between existing holders of PLS3D, proportionate to share of the total supply. Hourglass is deployed on all 6 chains in the dropdown in the upper right (PLS, BASE, BSC, FTM, POL, CRO).

Stack is a simplified savings contract for PLS. Users can deposit PLS into the contract, and earn interest on their deposit. The interest is generated by a 10% fee on deposits & withdrawals, of which 80% is distributed to all users who have deposited PLS into the contract. Users can withdraw their PLS at any time, and the interest they have earned is added to their withdrawal amount.

Daily is a contract similar to Stack, except its dividends are not completely distributed immediately on transaction - instead, 80% of dividends are kept in a pool and distributed to stakers over time. The remaining 20% is distributed to stakers immediately. This creates an effect of "daily" dividends, which grow with user-generated and fee-based volume. Daily is deployed on all 6 chains in the dropdown in the upper right (PLS, BASE, BSC, FTM, POL, CRO).

7. Multiple External Partnerships

Function Island has multiple and deep connections across Pulsechain, with more added as they fit. These range from FI providing some service for them or vice-versa, to community based liquidity building efforts. Even more partners not pictured here.