Proposal: XVS Emission Reduction

Summary:

DeFi lending protocols often use rewards in the form of token emissions to boost supply and borrow APYs, in hopes of attracting new users. Nonetheless, high emissions rates increase the protocol’s token circulating supply, affecting the price negatively, especially in a bear market.

When market conditions are not favorable cutting emissions may have a positive effect on the protocol token price and could also create an opportunity for growth if used as an investment.

Lastly, the previously proposed and ratified prime token program is intended to serve as the strategic solution for boosted supply APY and borrow rate subsidies, ensuring that any valued integrators and protocol participants will continue to reap competitive rates.

For this reason, we are proposing the following:

  • Reduce XVS emissions on supply and borrow markets by 50% of their current rate.
  • Remove XVS emissions of supply and borrow for SXP

*XVS Vault Rewards will remain the same.

Methodology of the Analysis:

The reduction of emissions is only possible if market conditions allow for staying competitive in the lending market. For this, a comparative analysis was compiled to evaluate the impact of XVS emission reductions in contrast to the top DeFi protocols in the market.

Results

*The following values account for the tokens responsible for +90% of the protocol TVL:

30-day average supply APYs:

  • Venus has the highest APY offering for BNB, BTC, USDT, BUSD, and USDC. Even when reducing the XVS emissions by 50%.
  • ETH has a more competitive market with a competitor offering a higher APY. Nonetheless even when reducing emissions, Venus is still in a competitive position.

The following are the results for the borrowing market:

30-day average borrow APYs:

  • BNB and BUSD borrowing is not available for other competitive protocols. Other DeFi protocols offer these assets but are not considered in the analysis due to their low participation, accounting for less than 10% of Venus total TVL.
  • For USDT and USDC the difference between base APYs and emissions-incentivized APYs is relatively low when compared to ETH and BTC. Reduction in emissions is expected to have a low impact as it doesn’t drastically change the protocol’s competitive profile.
  • ETH and BTC have a big change in APY when reducing emissions, nonetheless remaining in a competitive range when compared to other protocols.

Reduction in emissions will have a significant impact on the circulating supply of the XVS token. The following results show the potential amount saved, on circulating supply if the proposal is implemented:

It is important to consider that the prime token proposal will drastically boost APYs for users that qualify (Prime Token Proposal).

Conclusion:

The results of the analysis suggest that cutting emissions will have a minimal impact on user participation and protocol TVL.

Venus Protocol has a dominant position in the BNB Chain lending ecosystem, holding more than 80% of the total TVL. Moreover, even when decreasing emissions, it still offers competitive APYs when compared to the top protocols. For this reason, a reduction of emissions and the reinvestment of a portion of this value in protocol initiatives would be more beneficial as it allows for more growth opportunities and an increase in XVS price long-term.

14 Likes

A very important and long overdue first step. Venus has cleared a path to do this safely with the introduction of Venus Prime so that value goes to rewarding loyal users rather than a constant emission across the board. Much wiser use of precious XVS.

5 Likes

Definitely a must! Thanks Team! Finally… Now I AM BULLISH :wink:

6 Likes

Will VAI vault emissions be affected ?

The post only mentions supply and borrow but doesn’t mention VAI vault emissions

In that case the Apr will change significantly since there is no supply Apy , only emissions Apy

Thanks!

1 Like

i hope you will make it very close time. i am telling that who invested xvs, the emissions is much to the supply and borrow market. nobody is coming for xvs distribution.i am using protocol because of the lending. i never care about how much i will get daily xvs for my supplying snd borrowing

I am happy that we take the challenge to reduce the XVS emmision. It is a must for XVS.

At the moment despite a heavy amount of XVS being locked we still face heavy amount of XVS being sold by non XVS holders. Parties that supply BTC, BNB etc and sell/dump the XVS.

With the forthcoming off the prime token and the planned APY boost, this sell pressure will only increase from this parties. For me personally I think this is a major concern, espacially if you see how much effect the selling has today.

It should really be required that these parties should have more pressure to buy/hold XVS. Or else the dump by these parties will continue. Correct me if I am wrong please.

2 Likes

Vote on it as soon as possible

anyone knows if VAI vault emissions will be reduced to half ?

I think the real problem here is that there are a handful of people making a nice APY on this, so they dont want to reduce inflation. This is such a glaring and obvious situation, pointed out many months ago, only to have the XVS APY RAISED to 30%.

If the smart money is quietly making money selling xvs, why would there be any incentive for them to lower emissions?

If we were to extrapolate on this, why do we not know the full finances of Venus team? We all should know how much is on venuses balance sheet. How much XVS are they staking and how much have they been selling from the rewards? You have to understand the reason we dont know any of this, is because it is very profitable for them. It would be very easy to prove this theory wrong by exposing the full balance sheet of binance and venus, and whoever is directly involved with the project. But its been a windfall of daily profitability so… This post will be shot down as conspiracy, etc.

2 Likes

No changes for the VAI vault at this time.

1 Like

Seems like you are not very informed about Venus. The team has NO allocation, the team has NO XVS to sell lol. The only XVS staked are the Governance XVS (Necessary to launch VIP Proposals) and the address is Public. The rewards accumulated are claimed periodically and re-sent to the XVS Vault rewards distribution Contract. Everything is on-chain. Do better research before talking non-sense.

And no, no need for us to delete your post as it clearly shows how wrong you are.

FYI: Governance address and holdings are public… Have a look for yourself.

1 Like

We would all like to see the venus balance sheet to see if that is accurate. From the outside, the vault, in a bear market with a 65m dollar shortfall increased to over 6 million staked.

What you are effectively telling the community is that venus team or binance owns not one of those XVS in the vault. On top of that you are saying that Venus, nor Binance is selling any of those rewards.

Is that accurate? Can you show everyone the venus balance sheet as proof of funds. As an open source project, wouldnt it be decentralized to have everyone see the finances?

2 Likes

Danny I somewhat agree with XVShodler. And the part I agree is how is it possible that XVS still has quite some selling pressure despite the fact amazing amount xvs in the vault and also this big isolated wallet which is accumulating approx 1000 xvs a day if I am correct. Team needs to have insight and I stated above that with Soulbound a possible easy apy increase could be possible for these wallets only srlling their xvs rewards.

This proposal here however is a very fine start to reduce the emissions, but we need to do more in my opinion.

2 Likes

Having an open and transparent balance sheet of all expenses, liabilities and assets would go a long way in investors confidence.

It’s really not a lot to ask. All truely decentralized organizations have this.

These really is no honest reason to not back this.

I completely agree on that one. I have been advocating this with the team for months and it is coming. It’s a big part of why Messari’s services have been retained as well.

The Team Operations and marketing wallets will all be On-chain in the weeks to come and Messari will produce Quarterly reports that will include all balance sheets.

I am 100% FOR Transparency. It’s extremely important.

10 Likes

It’s a step in the right direction.

2 Likes

It is one of the first proposals that I support 100% and I plan to vote for.

Let me please also suggest to considerate improving the interest rates of the XVS vault for small investors whenever possible. An always thriving rate will encourage massive adoption and attract more users and capital to the protocol, as well as being an excellent marketing strategy (intrinsic motivation is worth more than extrinsic motivation). It will also help to stabilize better the market volatility in the future. Just a suggestion, thanks for all the team’s work and paying attention to all of us here. Excellent crypto, keep building.

4 Likes

small impact on apy and a major fundamental move towards long term sustainability and increasing the value of the XVS to the holder. great proposal

I think it is a great proposal, this will bring great benefits to all, I totally agree with everything that is proposed

Excellent suggestion.
It is important for the protocol that XVS be attractive.
This will also improve the XVS brand.

1 Like