Venus Protocol
DRAFT (VIP-XX)
XVS-VRT-VAI
Use case proposal
The community has expressed and recommended the following through consensus.
Abstract: VRT token is a reward mechanism designed to become part of the liquidity mining distribution on Venus Protocol for suppliers, borrowers and stakers. The purpose of VRT is to complement the current reward mechanism on Venus while in tandem reducing the emissions and inflation of the protocol’s governance token: XVS.
Venus community suggest to implement the following use cases for VRT token:
- Users that supply assets to the protocol will receive an additional APY in VRT to decrease inflation of XVS. The community suggests the distribution to be as follows: 30% XVS / 70% VRT.
- VRT will be used to offset fees in the Protocol. (Withdrawal Fees)
- Create a VRT Vault with variable APY where users can deposit their VRT to earn interest.
(Every user’s VRT APY is to be determined by the amount of XVS Tokens supplied to the Protocol). We suggest creating a incentive reward model where users earn a higher percentage of APY based on the different tiers of XVS staked in the protocol:
- Tier 1 = 10 to 50 XVS staked for additional 2% APY
- Tier 2 = 51 to 499 XVS staked for additional 4% APY
- Tier 3 = 500 to 999 XVS staked for additional 6% APY.
- Tier 4 = 1,000 to 9,999 XVS staked for additional 8% APY.
- Tier 5 = 10,000 and up XVS staked for an additional 10% APY.
The rationale behind this is to increase XVS demand and reduce selling pressure.
- A weekly VRT lottery will be created for users to stake their VRT tokens for the chance to win the jackpot. The chances of winning the jackpot increase in proportion to the amount of VRT staked using a fair algorithm. For example, a user staking 100000 VRT will have 10x more chance to win the lottery than a user staking 10000 VRT.
Percentage of winnings will be split as follows:
- 75%: For the winner
- 15% towards VRT buyback & burn
- 10% for the treasury.
- We will be adding a prediction based game similar to PancakeSwap. Winnings will be split as follow:
- 60% for the winner
- 20% to next round pool
- 10% towards a XVS buyback & Burn pool.
- 10% for the treasury
As a community, we faced short term selling pressure from traders and bad players speculating on events and opportunities to dump their tokens. The community has suggested implementing a locked-in mechanism for XVS to reduce speculation and selling pressure. This will benefit XVS holders in the long run by ensuring commitment to the protocol and reducing negative fluctuations of the price of XVS.
-
XVS holders must supply XVS to the protocol for at least 30 days to be eligible for higher VRT APY.
-
XVS holders must have supplied XVS to the protocol for at least 30 days to be eligible to vote on a VIP with their vXVS tokens. This will be retroactive for users that already have supplied their XVS tokens before this proposal.
-
To receive regular distribution rewards of VRT, XVS holders must have supplied and held their XVS on the protocol for at least 15 days. The VRT distribution rewards will be vested and unlocked partially each day for 15 days (1/15 unlocked every day).
-
VRT/VAI: VRT should be used to bear the risk and benefits of VAI minting (to be discussed further with the team). For example, VRT could be used as a stability fee (dividends + minting profit ) and also to offset liquidation instead of the original collateral deposited, acting as a safety net to protect users’ original assets. A borderless stablecoin like VAI will be integral in the BSC ecosystem and be promoted by Venus to be used as the de facto stablecoin in the BSC ecosystem.
In summary:
-
VRT holders will share part of the economic benefits of the protocol.
-
VRT is important vertically to the protocol to maintain ecological operations, such as donating to support the Venus platform ecology of developers and partners, DAO governance and development team budgets, etc
-
The advantage of this proposal is to clarify the risk-takers of the lending and minting system of the protocol by attributing some of the risk to VRT so as to protect the sovereignty of XVS and its holders.
-
The design purpose of this dual economic model is to maximize the long term development of the protocol which the community believes will benefit both holders of XVS and VRT. More Incentives will be proposed further down in the roadmap to increase
-
the economic incentives of both XVS and VRT . We will propose to reserve a portion of VRT and publicly incentivize good projects that adopt VAI mining on a regular basis by way of community voting.
-
In the second half of 2021, our priority is to improve the market protocol and make Venus the best community run decentralized market protocol in the ecosystem. When the developers are ready, the peripheral ecological products around Venus, such as leveraged mining and flash loans can allow VRT to participate and play a bigger role in Venus protocol while keeping XVS deflationary and high in demand.
