Proposal for Revision of Venus Protocol Tokenomics


It has been approximately one year since the last revision to Venus Tokenomics and given the continuing evolution of the market, it’s time to reevaluate an optimal distribution of income given the protocol’s current and future needs.

This proposal seeks to address the unequal distribution of income between rewards and treasury reserves. It lays out a comprehensive plan to optimize the income distribution, in order to better cater to the protocol’s needs and safeguard its sustainability.

The key highlights of the proposed changes are as follows:

  • Redistribute protocol reserve revenue allocation to:
    • 40% Risk Fund
    • 40% Treasury Reserve
    • 10% XVS Vault Rewards
    • 10% Venus Prime Token Program
  • Redistribute liquidation and other product development distribution to:
    • 50% Risk Fund
    • 40% Treasury Reserves
    • 10% XVS Vault Rewards
  • Make use of the savings from the two rounds of 50% XVS emission cuts to double the XVS vault legacy rewards currently set at 525 XVS/Day, with the aim of maintaining or even enhancing the vault rewards.
  • Adjust the Venus Prime program (Soulbound Token) rewards. Initial rewards for this program have been 20% of accumulated product revenues since Q4, 2022. These rewards currently exceed $750K, which are expected to significantly increase the APYs for eligible participants. We propose to reduce the program’s revenue allocation to 10% to balance rewards while preserving attractive APYs and incentivizing user participation.

The expected outcomes are an increase in treasury reserves, sustainable reward emission rates, sustainable Venus Prime (SBT) reward incentives, and maintenance of an attractive APR for XVS Vault stakers.

Methodology of Analysis

To bring forth these recommendations, the proposal has assessed the existing tokenomics of the Venus Protocol, considered the past changes and their impact on the ecosystem, and analyzed the market dynamics and trends. Currently, revenue distribution is as follows:

Protocol reserve revenue distribution:

  • 40% Risk Fund (including financing)
  • 20% XVS Vault Rewards
  • 20% DAO Operations & Funding
  • 20% Venus Prime Token Program

Liquidation and other product development distribution:

  • 48% Risk Fund (including financing)
  • 26% XVS Vault Rewards
  • 26% DAO Operations & Funding

The proposal is to change this distribution to the following:

Protocol reserve revenue distribution:

  • 40% Risk Fund (No change)
  • 40% Treasury Reserve (+20% change)
  • 10% XVS Vault Rewards (-10% change)
  • 10% Venus Prime Token Program (-10% change)

Liquidation and other product development distribution:

  • 50% Risk Fund (+2% change)
  • 40% Treasury Reserves (+14% change)
  • 10% XVS Vault Rewards (-16% change)

This change is possible if we consider the savings from the protocol’s October and February 50% XVS emission reduction, which accounted for an estimated amount of more than $2.7M. With this, we propose re-allocating these savings towards XVS vault stakers, enhancing rewards without compromising on the token emission rate.

Results and Conclusions

The proposed revisions in Venus Protocol Tokenomics are expected to yield positive results for the Venus ecosystem, ensuring a fairer distribution of income and enhancing the platform’s sustainability.

Figure 1: This graph represents the reduction in XVS emissions since October considering the execution of the reduction in Nov ‘22 followed by another 50% reduction in February.

Figure 2: This graph illustrates the savings from the emission reductions, estimated over $2.7 million.

Figure 3: This graph predicts the increase in treasury reserves with the proposed redistribution. The surplus will serve as a safety net for the protocol’s ongoing and future operations, audits, and development team financing.

Figure 4: This graph depicts the change in rewards for XVS vault stakers due to the reallocation of saved emissions and new legacy reward distribution. This approach is anticipated to maintain or even increase the current APR, thus keeping the vault attractive for stakers.

The introduction of these changes will bolster the long-term stability of the Venus Protocol. It will provide the necessary financial buffer for potential risks, support new product development, and assure reasonable rewards for stakers.

Ultimately, this proposal envisions a thriving and sustainable Venus Protocol, one that is prepared for more upcoming releases and all safety considerations with ample budget for audits and a dedicated development team.


don’t like this proposal, seems like this project still exists so that it can repay it’s debt to the binance, is that why binance has not shut you down by now ? these numbers are bad news for xvs holders

Mate, I don’t know if you read it carefully, but these adjustments mathematically according to the results of the last quarters mean that he would have a higher reward. So I don’t understand where he got the idea that they are ‘‘bad news’’ for XVS hodlers :upside_down_face:. Also, try to realize that for the following quarter we could already calculate with income from Isolated Markets, from VAI, Stable-rate products, etc. (Everything that is included in V4). I personally don’t see a problem with it, but of course everyone can see what they want to see in it. :wink:


Hi alexj,

I understand your concerns about the proposal, but it’s important to realize that these changes are designed to safeguard the future of Venus Protocol. This isn’t about repaying debts to Binance or any other party - it’s about ensuring Venus Protocol has the resilience and sustainability needed to thrive.

While it may seem as if the proposed changes disadvantage XVS holders, I assure you this is not the case. It’s about balancing short-term gains with long-term stability. The reallocation of funds to the Treasury Reserve and Risk Fund is intended to fortify the protocol against market volatility, ultimately creating a more secure investment environment for XVS holders.

Moreover, by strengthening the treasury reserves, we can fuel future developments and improvements to the Venus Protocol. This not only has the potential to increase the value and utility of the platform, but also enhance the appeal and demand for XVS.

I’d like to clarify a few points about the proposal:

  1. The proposal is focused on creating a balanced ecosystem for all stakeholders involved. It does not aim to prioritize any one party, but seeks to establish a stable, robust system that will be beneficial in the long run.
  2. Reducing the allocation to XVS Vault Rewards and the Venus Prime Token Program might seem like bad news for XVS holders at first glance. However, by allocating more to the Treasury Reserve and Risk Fund, we aim to make the Venus Protocol more sustainable and less susceptible to market volatility, which, in the long run, should benefit all holders.
  3. The increase in treasury reserves could support future developments and improvements to the Venus Protocol. This could increase the utility of the Venus platform, potentially leading to more demand for XVS, which could be positive for XVS holders.

This proposal is open for discussion and we welcome all feedback. I hope this addresses your concerns, and if you have more, feel free to share. We’re here to make Venus Protocol better for everyone involved.



The proposal recommends increasing the allocation for the risk fund, whose primary purpose is to cover the protocol’s bad debt.

The suggested additional distribution of revenue to the Treasury is aimed at safeguarding the protocol’s security and facilitating its evolution with new product developments.

Furthermore, while maintaining a cautious approach to token emissions, rewards for XVS holders are anticipated to remain stable, and they may even see a potential increase.


Análisis profundo de la economía sostenible del protocolo. Muy detallado el plan a aplicar en la distribución factible de los ingresos al ecosistema de Venus.
Cómo siempre, proyectando sus sostenibilidad y beneficios para todos los usuarios y las recompensas.

I wish to highlight an important change in the proposal for the revised tokenomics. After careful analysis and listening to community feedback, we have decided to modify the proposed income distribution for liquidations and other product developments.

The new proposal is to increase the allocation for the treasury reserve from 30% to 40%. At the same time, we’ll be reducing the XVS Vault rewards from 20% to 10%. However, we’re also planning to double the daily legacy rewards from 525 XVS to 1050 XVS per day.

The aim of this change is to enhance our protocol’s financial stability, making it more resilient against possible market fluctuations. We understand the importance of vault rewards to our community, and we have designed the redistribution to leverage the savings from the 50% XVS emission cuts to bolster these rewards. Our goal remains to maintain, if not enhance, the current APR for XVS Vault stakers while safeguarding the protocol’s longevity. We appreciate your understanding and continued support as we strive to make Venus Protocol more robust and sustainable for everyone.