How Does Pharaoh V3 Work?
Pharaoh V3 is the leading decentralized exchange on Avalanche, using concentrated liquidity (similar to Uniswap V3) combined with a ve(3,3) governance model. Users can provide liquidity in specific price ranges to earn trading fees, or lock PHAR tokens into xPHAR to vote on which pools receive emission rewards and earn a 50% share of all trading fees. With approximately $28M in TVL and $9.55M in annualized fees, Pharaoh serves as Avalanche's central liquidity hub. The V3 upgrade introduces xPHAR with a notable 50% token burn penalty for exiting governance positions — designed to create long-term alignment but also creating strong lock-in. As a fork of RAMSES, it inherits battle-tested concentrated liquidity code but also the known risks of ve(3,3) governance models including bribery market dynamics.
TVL
$35M
Sector
DEX
Risk Grade
C+
Value Grade
B-
Core Mechanisms
4.1.2
Concentrated liquidity AMM based on Uniswap V3 with custom incentive engine on Avalanche C-Chain
Forked from RAMSES, which implements concentrated liquidity ve(3,3). Uniswap V3-style tick-based liquidity provision.
5.1.3
ve(3,3) governance with PHAR lock into vePHAR/xPHAR for voting power and fee share
Vote-escrow model where locked PHAR earns 50% of trading fees via gauge voting. V3 introduces xPHAR with 50% exit burn.
7.1.2
Gauge-weighted emission system directing PHAR rewards to pools based on vePHAR/xPHAR votes
Standard Solidly-style gauge voting. Voters direct emissions to preferred pools and earn fee share from those pools.
2.2.4
Fee split: 45% to LPs, 50% to vePHAR voters, 5% to protocol treasury
Differentiated fee split rewarding both LPs and governance participants. Higher LP share than most ve(3,3) protocols.
1.3.3
Novel50% token burn on xPHAR exit creating deflationary pressure and exit penalty
xPHAR exit burn is novel: converting back from governance position destroys 50% of tokens. Creates strong lock-in and deflationary mechanism but also governance rigidity.
1.1.3
Dynamic PHAR emissions adjusted based on epoch and gauge voting results
Standard dynamic emission schedule for ve(3,3) protocol. Emissions decay over time with gauge-directed distribution.
2.1.2
Percentage-based swap fees across concentrated and standard liquidity pools
Standard swap fee model. Multiple fee tiers for different pool types. ~$9.55M annualized fees as of early 2026.
How the Pieces Interact
Bribery protocols (similar to Votium for Curve) can emerge to buy vePHAR/xPHAR votes, directing emissions to inefficient pools. Governance extractable value exceeds protocol benefit, creating extractive dynamics.
The 50% exit burn creates a 'roach motel' for governance capital — easy to enter, expensive to leave. During crisis, governance participants cannot exit without massive loss, potentially preventing necessary governance responses.
Emissions attract liquidity to gauges but concentrated positions require active management. Passive farmers who collect emissions without managing positions create dead liquidity outside active ranges.
Forked code with custom modifications may introduce bugs not present in the original RAMSES implementation. Security audit coverage may not fully cover Avalanche-specific changes.
What Could Go Wrong
- Pharaoh V3's xPHAR transition (replacing vePHAR) introduces a 50% exit burn penalty, creating lock-in dynamics that could trap governance participants and reduce market liquidity during stress events.
- As a RAMSES fork on Avalanche, Pharaoh inherits both the benefits and risks of the concentrated liquidity ve(3,3) model — bribery markets and governance extractable value are well-documented failure modes of ve(3,3) protocols.
- Avalanche C-Chain DEX concentration in Pharaoh creates single-point-of-failure risk. If Pharaoh's liquidity is compromised, Avalanche traders face significantly degraded trading conditions across many pairs.
Governance Capture via Bribery Market and Emission Drain
ModerateTrigger: Bribery protocols accumulate majority of vePHAR/xPHAR voting power and redirect all emissions to low-quality or extractive pools
- 1.Bribery market accumulates majority of xPHAR voting power at low cost — Gauge votes redirected to pools with extractive rather than productive liquidity
- 2.PHAR emissions flow to pools where bribers extract more value than they contribute — Protocol revenue declines as productive liquidity migrates to competing DEXs
- 3.LP yields decline on important trading pairs as emissions go elsewhere — Active liquidity providers leave, slippage increases for traders
- 4.PHAR token price declines as emission value extraction becomes apparent — 50% exit burn traps governance participants who cannot affordably exit
- 5.Pharaoh's position as Avalanche liquidity hub erodes — Avalanche DeFi ecosystem fragments as liquidity disperses to alternatives
Risk Profile at a Glance
Overall: C+ (39/100)
Lower score = safer