ve(3,3)

Quick article to explain how a “potential future” (wink wink) emission based token could balance ecosystem participants.

Standard vested escrow rules apply, if you are not familiar with this terminology you can read more here;

  • ~ transferable, used for incentives via emission
  • ~ non-transferable, locked up by depositing base into the voting escrow contract, period from 1 week to 4 years
  • lockers vote which should be incentivized
  • lockers accumulate all protocol fees
  • =
  • =
  • =

For purposes of this example, assume an initial supply of 20 million (20,000,000) and assume a decaying emission of 2 million (2,000,000) tokens per week decaying towards some future cap, after which low percentage based tail emissions take over.

Here come three important deviations from the standard;

  1. Weekly are adjusted as a percentage of

Meaning, if 0% of the is locked for , the weekly would be 2,000,000. If 50% of the is locked for , the weekly emission would be 1,000,000. If 100% of the is locked for , the weekly emission would be 0.

As more tokens are vested, the impact of emission is decreased.

2. lockers increase their holdings proportional to the weekly

Assume 1,000,000 weekly , a of 20,000,000, and a of 10,000,000. This would mean that 1,000,000 new tokens are minted and provided as incentives, a 5% supply increase. Our goal is to ensure that lockers are never diluted, as such, lockers have their holdings increased by 5%.

3. locks are NFTs

By tokenizing the lock position this allows a single address to own more than one lock, locks balances are cumulative and each lock contributes to the overall balance.

This further allows locks to be traded on secondary markets, as well as to allow participants to borrow against their locks in future lending market places.

By extending locks into Non Fungible Tokens, it addresses the capital inefficiency problem of assets, as well as addresses concerns over future liquidity (should it ever be required).

Conclusion

If all participants lock, emission decreases to 0, if only 50% of participants lock, emission is 50%, however lockers increase proportionally to emission.

Thus; ve(3,3)

Credits

Curve Finance & Michael Egorov for their design

OlympusDAO & Zeus (3,3) for popularizing the Nash equilibrium design in crypto

And sincerely, Tetranode for their input, review, and feedback

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