Venus token economic model proposal (single coin version)
Model purpose
The design purpose of the token economic model is not to maximize the personal benefits of any one of the many protocol participants (including the holder of the project token or the founding team), but to put the long-term development of the protocol first. Only when the Protocol achieves rapid and stable growth and no security incidents occur. Thus, from a long-term perspective, for all participants, especially coin holders, the benefits gained will be maximized.
So I think the goal of the Venus New Economic Model is to create a selling Point where the protocol’s growth, sustainability and safety take priority over individual stakeholder objectives.
Precisely, the design of the economic model should follow two principles:
First, the long-term stability of the protocol takes precedence over any stakeholder, including currency holders.
Any participant, the power and benefits he enjoys, must be as equal as possible to the contribution he made to the protocol.
Key points of the model
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Return to simplicity: Venus returns to the single coin model and uses XVS repurchase to destroy VRT;
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Equivalence of risks and benefits: The newly built Venus risk vault will guarantee funds in the existing deposit market of Venus. Only the XVS that joins the vault will have the voting rights of the Venus protocol and the dividends of the Venus protocol;
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Income repurchase XVS to dividends: the income of the protocol, part of the inflow of the project’s ecological fund is used to support the budget of DAO and the development team, and part of the XVS is regularly repurchased in the secondary market. The repurchased XVS is distributed periodically to the XVS holders in the vault according to the ratio;
Model specific content
1. Back to simplicity, keep a single coin
The following explains the concept of destroying VRT.
The specific operation is divided into the following steps:
- Based on the average exchange rate of XVS\VRT in the past 20 days, support VRT users to use VRT to exchange for XVS through smart contracts. The exchanged XVS will be locked in the Venus risk vault for 90 days. During the lock-up period, the XVS that supports this part of the protocol will be obtained. Dividend calculation;
- According to the exchange rate benchmark and the number of VRT circulating on the market, unlock the XVS used for the repurchase amount from the XVS that has never been unlocked in advance to deal with the exchange of VRT
Example: Assuming that there are currently 10 billion VRT in the market (10 million XVS*1:1000 airdrops = 10 billion), and the average exchange rate of XVS/VRT in the past 20 days is 1XVS=9000VRT, then 10 billion VRT requires 1.111 million About XVS is exchanged, which is equivalent to about 10% of the current circulation in the market.
To explain, although this approach requires unlocking XVS in advance and increasing the market circulation of XVS, this scheme destroys the already circulating VRT. Moreover, it returns all the rights and interests that may be granted to VRT to XVS, so this part of XVS empowers The return to basics can hedge the new market circulation of XVS.
2.Establish a dividend distribution mechanism for the Venus vault
For the interests of XVS token holders\protocol governors to be deeply tied to the long-term development of Venus, a risk vault should be established in Venus, specifically:
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The vault only supports the deposit of XVS or XVS\bnb LP. One of its functions is to use the XVS or LP deposited in it to provide a guarantee for Venus, and to add a protective net for the safety of depositors’ funds, thereby improving The security of Venus attracts more depositors to deposit with confidence;
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Only the XVS in the vault has the right to govern and vote to ensure the unity of the long-term benefits of the voting XVS and the Venus;
3.Only the XVS in the vault can capture the profits of Venus. The protocol will distribute the XVS regularly repurchased using the profits of the Venus platform to the XVS users in the vault according to the ratio;
4.When the protocol has a shortfall due to extreme market conditions or security incidents, a certain percentage of the funds in the vault (such as 50% of XVS) need to be paid for it;
- it is necessary to allocate a part of the XVS produced and subsidize the deposited XVS for insurance mining until the Venus` dividend is higher and the subsidy can be gradually withdrawn;
6.If the XVS deposited in the vault wants to withdraw, it will take seven days to unlock after the application is initiated. This is to ensure that the XVS that enter the vault is willing to accompany the long-term development of the project;
Summarize the benefits of the vault:
- It can improve the anti-risk ability of Venus and make TVL bigger
- Further bind the long-term interests of XVS holders and Venus
- Improve the liquidity of XVS on dex (support XVS\BNB LP deposit)
- Increase the amount of XVS lockup
3. Start the repurchase dividend mechanism
Every two weeks, a certain percentage of the funds in the treasury (for example, 70% at the beginning) is used to repurchase XVS in the secondary market. According to the ratio, the repurchased XVS will be distributed to the users in the insurance inventory. It should be noted that the allocated XVS is in the vault, and the withdrawal also requires an unlock operation.
Therefore, the more XVS users deposit in the vault, the more XVS they will receive, which is somewhat similar to the POS, except that under the POS, token holders obtain rewards by providing block verification services. In addition, XVS in the vault accepts rewards by offering insurance to Venus.
The other part of Venus profit is used to maintain ecological operations, such as donating to support the Venus platform ecology of developers and partners, DAO governance and development team budgets, etc.