Crypto Gloss

Pharaoh Exchange

Pharaoh Exchange is Avalanche’s leading ve(3,3) decentralized exchange — adapting the Velodrome/Aerodrome model to Avalanche with PHAR governance tokens, vePHAR vote-locking, weekly gauge voting that directs PHAR emissions to liquidity pools, and a bribe marketplace where protocols incentivize liquidity providers, all combined with concentrated liquidity pools (CLMM) for capital efficiency.

Overview

Pharaoh Exchange launched on Avalanche as the chain’s native ve(3,3) DEX — filling the same role that Velodrome plays on Optimism and Aerodrome plays on Base. The ve(3,3) model was pioneered by Andre Cronje and adapted by Velodrome; Pharaoh applies it to Avalanche, offering protocols a decentralized way to procure liquidity on Avalanche through a bribe/gauge system. Pharaoh has grown to become one of Avalanche’s largest DEXes by TVL, serving as the primary venue for Avalanche ecosystem projects to bootstrap and maintain protocol-owned or incentivized liquidity.

ve(3,3) Architecture

The protocol is built around the following components.

PHAR and vePHAR

  • PHAR — Pharaoh’s governance and emission token
  • vePHAR — PHAR locked for up to 2 years receives vePHAR (vote-escrowed); longer lockup = more vePHAR
  • vePHAR is non-transferable (unlike receipt tokens) — lockup commitment
  • vePHAR holders receive:
  1. Voting power over weekly gauge emissions
  2. Bribes paid by protocols for their votes
  3. Trading fee revenue from pools they voted for

Weekly Gauge Cycle

Each epoch (weekly):

  1. Protocols post bribes — deposit tokens into bribe contract for specific pools
  2. vePHAR holders vote — allocate vote weight to pools they support (incentivized by bribes)
  3. PHAR emissions are distributed — each pool receives PHAR proportional to its vote weight
  4. LPs receive PHAR — liquidity providers in voted pools earn PHAR emission rewards
  5. vePHAR holders receive — bribes from the pools they voted for + trading fees from those pools

Gauge Types

  • Stable pools — low-slippage constant product for pegged assets (USDC/USDT, AVAX/sAVAX)
  • Volatile pools — standard AMM for uncorrelated assets
  • CLMM pools — concentrated liquidity market maker for efficient active LP strategies
  • Protocols may create NEW pools + gauges permissionlessly

Bribe Economics

The bribe system enables Avalanche protocols to procure and sustain liquidity without owning PHAR:

Example:

  • Protocol X wants deep AVAX/TOKEN liquidity on Avalanche
  • Protocol X deposits 10,000 USDC as bribes into the AVAX/TOKEN gauge
  • vePHAR voters direct votes to this pool (attracted by USDC bribe)
  • Pool receives PHAR emissions proportional to votes received
  • LPs earn PHAR; vePHAR voters earn USDC bribes

This creates a liquidity-as-a-service marketplace: protocols pay for liquidity in dollar terms, PHAR voters earn yield, and LPs earn PHAR. Efficiency improves vs direct LP incentives because the bribe system induces a market for vote allocation.

CLMM Pools

Pharaoh V2 introduced concentrated liquidity pools alongside its ve(3,3) emission system:

  • LPs can provide concentrated liquidity in defined price ranges (Uniswap V3 style)
  • CLMM pools can have gauges and receive PHAR emissions via gauge voting
  • Combines: capital efficiency of concentrated liquidity + ve(3,3) liquidity procurement
  • vePHAR voters can direct PHAR emissions to CLMM pools just as they would stable/volatile pools

Ecosystem Role on Avalanche

Pharaoh serves as the liquidity layer for Avalanche ecosystem protocols:

  • GoGoPool (ggAVAX) — bribed ggAVAX/AVAX gauge for liquid staking peg maintenance
  • Stablecoin issuers — bribe USDC/TOKEN gauges for stablecoin on-ramp liquidity
  • New project launches — bribe gauges as an alternative to direct liquidity mining programs
  • Protocol-owned vePHAR positions provide self-sustaining liquidity strategies

Sources

Related Terms