ve(3,3): Curves, Initial distribution, Competition, & Building a protocol for protocols

Curves

By now, most are probably curious what the new protocol is, while this article will not go into depth (that is reserved for a later article closer to launch) we will simply list some of the core features;

New AMM

  • Natively supports swaps between closely correlated assets via a new curve (stable swaps)
  • Natively supports swaps between uncorrelated assets
  • 0.01% fee
  • Fees are paid out in base assets, not converted
  • Uniswap v2 compatible interfaces (allows support for all existing analytics tools and interfaces)
  • Permissionlessly create pools
  • Permissionless support for Gauges & Bribes
  • Emission incentivizes fees instead of liquidity
  • Native support for adding third party tokens and incentives
  • ve(3,3) lockers accumulate all fees for pools they vote emission on
  • ve(3,3) lockers increase holdings proportional to emission, no dilution
  • ve(3,3) lockers vote on emissions with circulating supply decay, read more
  • ve(3,3) natively supports delegation
  • ve(3,3) locks are represented as non-fungible tokens to allow capital efficiency of locks
  • No DAO

Building for protocols

Current AMMs are primarily for LPs, this is natural because when most AMMs launched, token incentives did not exist. Today, AMMs are primarily for projects, either through token incentives, bootstrapping liquidity, or even protocol owned liquidity. Other protocols are the new AMM users.

Current AMMs need a few modifications to make it easy for protocols to leverage them;

  • Must be able to easily add token incentives to your liquidity
  • Must be able to easily bribe token emissions onto your liquidity
  • Must be able to accrue fees from liquidity you incentivize
  • Must be able to permissionlessly deploy your liquidity

All the above is doable without ever needing to message someone on telegram, discord, or twitter, and will never under any circumstance require a zoom call.

With the above in place, any protocol or project can easily incentivize their own liquidity, be it for their token, their stable coin, or even other derivatives, and while doing so, they fully accrue fees.

Competition

The AMM arena is quite saturated, we did not want to launch an AMM to compete with existing projects, for that reason it was designed with protocol 2 protocol architecture in mind. Existing AMMs can integrate the new AMM into their own design, still accruing all fees to their own systems without losing out any fees, volume, or liquidity.

Initial Distribution

Every week, a potential new 2,000,000 tokens are available as incentives on pools. These 2,000,000 tokens are distributed based on the current voting weights for pools. With an initial distribution of 0, that means no one can vote, which means no distribution can occur.

To kickstart the system, there has to be an initial distribution, we went through a few options;

  1. Auction / LBP, the primary issue here was we don’t want to raise funds nor sell any tokens.
  2. Create FTM/token pool and burn the LP tokens, this favors bots and whomever happens to be awake during that timeframe, this is not a fair distribution.
  3. We simply decide the first pools and votes, not very decentralized
  4. Airdrop, but for an airdrop to be successful, it needs to go to the correct participants, as we can see from CRV and CVX distribution, those participants are predominantly protocols

We ended up deciding on an ecosystem distribution, before launch, we will take a TVL snapshot off of defillama

Locked ve(3,3) tokens will be given to each project in the top 20, it is then up to each project to create their pools and vote for their initial distribution or have their communities vote for their initial distribution. It is up to them to decide what they will incentivize, be it their own token, stable coin, or other liquidity. The timeline for this will thus be 2 weeks post protocol launch until distribution starts.