Venus Tokenomics Phase II — Prime Rewards Redesign

[0xshyu]

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TL;DR

This proposal moves the XVS Vault’s revenue allocation into Prime, and replaces lifetime Prime NFTs with a monthly leaderboard. Based on 2026 year-to-date BSC revenue, the change would have produced a Prime reward pool ~4.8x larger than today ($668K vs $139K, Jan–Apr 2026), directing more revenue to genuinely active users while freeing up Prime slots currently held by inactive users.

Summary

1. Redirect XVS Vault allocation (20%) to Prime rewards. Reserve revenue’s Prime share rises from 20% to 40%; liquidation revenue’s Prime share rises from 0% to 20%. XVS Vault’s direct revenue allocation goes to 0%.
2. Replace lifetime Prime NFTs with a monthly leaderboard. Each month, the top 500 stakers (by time-weighted Effective Stake) hold Prime for that month and claim the rewards the following month.
3. Remove both entry barriers. The current 1,000 XVS minimum and 90-day minimum staking period are removed. Anyone with stake can compete in the leader board.

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Motivation

Prime was introduced in 2022 to reward long-term, engaged users with a share of reserve revenue. Under the current design, Prime NFTs are held indefinitely unless voluntarily burned. Two issues with the current design make a redesign necessary:

1. Most stakers and Prime holders are dormant. Of 5,723 current XVS stakers, 77% have not interacted with any Venus market in the past 6 months — they hold 47.7% of all staked XVS. Of the 499 active Prime NFT holders, 60% had zero protocol interaction in the past 30 days, while 45% of staked XVS sits with inactive holders.
2. Due to the 500 Prime NFT lifetime cap, active users may not be able to get a spot. Under the current design, a Prime NFT is held until voluntarily burned. Thus when new active users would qualify, they would have to wait a long time for a chance to become a Prime NFT holder.

The redesign addresses both: monthly re-evaluation automatically clears inactive slots, and a larger pool gives active users a real reason to compete.

Current vs Proposed

Parameter	Current	Proposed
Prime NFT Cap	500	500 (unchanged)
Eligibility Mechanism	Lifetime NFT (held until burn)	Monthly top 500
Min XVS Staked	1,000 XVS	No minimum
Min Staking Period	90 days	No minimum
Reserve Revenue → Prime	20%	40%
Liquidation Revenue → Prime	0%	20%
Reserve Revenue → XVS Vault	20%	0%
Liquidation Revenue → XVS Vault	20%	0%
Reward Distribution Formula	Score-based, requires active position in eligible markets	Unchanged

ℹ️

Note on XVS Vault: The Vault remains the staking mechanism for Prime eligibility. While direct revenue distribution to the Vault is removed, all Prime rewards continue to flow to Vault stakers who qualify under the new rules.

Proposed Changes

1. Revenue Reallocation

Revenue Type	XVS Vault	Prime
Reserve Revenue	20% → 0%	20% → 40%
Liquidation Revenue	20% → 0%	0% → 20%

Treasury and Risk Fund allocations are unchanged.

Estimated impact (2026 YTD BSC Core revenue, Jan 1 – Apr 28):

Basis	Reserve	Liquidation	Current Prime (20%×R)	New Prime (40%×R + 20%×L)	Multiplier
2026 YTD total	$696K	$1.95M	$139K	$668K	4.8x
Annualized	$2.16M	$6.04M	~$431K	~$2.07M	—

Detailed calculation: see Section 2 (New reward pool size) below.

2. Monthly Leaderboard with Real-Time Scoring

The new system runs as a monthly cycle:

1. Real-time scoring throughout the month — Effective Stake updates continuously based on each user’s deposits and withdrawals. Users see their live ranking at any time.
2. Lock-in on the last day — Top 500 are finalized; the month’s accumulated revenue pool is fixed alongside.
3. Enjoy reward the next month — The locked-in 500 begin claiming the previous month’s reward from day 1 of the next month in the selected market. New competition starts at the same time.
4. At launch, all duration clocks reset to day 0. Pre-existing stake history does not carry over; the new system starts everyone on equal footing.

Effective Stake formula:

Effective Stake = Sum_of(deposit_amount * deposit_duration * multiplier )

• deposit_duration is capped at 90 days
• multiplier is determined by each individual deposit’s holding duration (see Loyalty Multipliers below)

How deposits are tracked:

• Each XVS deposit is recorded as a separate stack entry with its amount and deposit date.
• Each deposit’s multiplier grows independently based on how long that specific deposit has been held.

Withdrawals:

When a user withdraws XVS, the system deducts from the newest deposit first. Even after withdrawal, the deducted portion will not count toward the current epoch’s score, locked at the multiplier at the time of withdrawal.

Example — a user makes the following actions:

• Day 0: Deposit 1,000 XVS
• Day 35: Deposit 300 XVS
• Day 40: Withdraw 500 XVS

Withdrawal at Day 40 consumes deposits LIFO:

1. Deduct 300 XVS from Day-35 deposit (fully consumed — contributes nothing to score)
2. Deduct 200 XVS from Day-0 deposit (also dropped from score)

Remaining: 800 XVS from Day 0 (held 40 days → 1.3x multiplier)

Total Effective Stake = 800 × 40 × 1.3 = 41,600

Higher Effective Stake = higher leaderboard rank = better chance of holding Prime.

3. Loyalty Multipliers

Holding Duration	Multiplier
< 30 days	1.0x
30 – 60 days	1.3x
60 – 90 days	1.6x
90+ days	2.0x

4. Reward Distribution (Unchanged)

Users must maintain active supply or borrow positions in eligible markets to claim Prime rewards. The existing score-based reward allocation formula remains unchanged.

💡

Mechanism summary: Make the leaderboard by staking commitment. Earn rewards by Supply / Borrow in the eligible markets.

Cross-Chain Revenue Allocation (Post-VIP)

Prime rewards remain BSC-exclusive; all other chains direct 100% of revenue to Treasury.

Chain	Income Type	Treasury	Prime	Risk Fund
BSC	Reserve	40%	40%	20%
BSC	Liquidation	60%	20%	20%
Ethereum	All	100%	—	—
Arbitrum	All	100%	—	—
Base	All	100%	—	—
ZKsync	All	100%	—	—

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1. Why we propose this change

All numbers below as of 29 April 2026.

1.1 XVS Holder behavior

(a) Growth has stopped

The XVS Vault grew steadily for ~3 years before plateauing in mid-2024. Active staker count peaked at 5,669 in August 2024 and has been flat-to-declining ever since. Total XVS staked has continued to grow (+22% over 20 months) but entirely from existing users adding to their positions — there has been no net new user acquisition for 24 months.

Date	Active Stakers	Total Staked (XVS)
2021-12 (launch)	1,501	1.54M
2022-12	3,808	5.72M
2023-12	5,049	6.27M
2024-08 (peak)	5,669	6.96M
2025-12	5,572	7.79M
2026-04 (today)	5,612	8.48M

(b) Most stakers don’t interact with Venus

Of 5,723 current XVS stakers on BSC:

Activity Level	Stakers	% of stakers	XVS Held	% of stake
No interaction with any Venus market in past 6 months	4,426	77.3%	4.16M	47.7%
Never had any supply/borrow/repay/redeem activity	1,141	19.9%	2.41M	27.7%

The pattern is most visible at the top. The 9 largest stakers hold 3M XVS combined (~35% of all stake), and 8 of them have either never interacted with Venus markets or not in the past 180+ days:

Rank	XVS	Last Market Action	In Eligible Markets Now?
1	745,058	Never	No
2	478,051	> 180 days ago	Yes
3	373,883	Never	No
4	307,000	Never	No
5	282,259	Never	No
6	270,000	> 180 days ago	No
7	235,005	Never	No
8	193,000	Never	No
9	178,862	> 180 days ago	No

The XVS Vault has effectively become a passive yield product, with limited connection to Venus’s lending business.

1.2 Inactive holders monopolize Prime slots

(a) Most NFT holders are inactive

Direct query of the Prime contract 0xBbCD...71FC (Mint − Burn events) confirms 499 NFTs are currently outstanding (cap is 500). Of these holders:

Activity Definition	Inactive Count	% of Prime holders
No supply/borrow/repay/redeem transaction in past 30 days	302	60.5%
No transaction in past 90 days	187	37.5%
No supply/borrow position in eligible markets today	129	25.9%

These 302 inactive holders hold 2.45M XVS — 45.4% of all XVS held by Prime holders — without engaging with the protocol.

(b) Active candidates can’t get in

Although dormant Prime holders do not directly dilute reward distribution (their score is 0), they take up ranking slots that could otherwise be filled by active users. In the past 30 days alone, 12 new users each deposited ~100,000 XVS into the Vault — all 12 have active positions in eligible markets:

New entrant rank	Stake (XVS)	Last Market Action	In Eligible Markets?
14–25 (12 addresses)	~100,000 each	< 30 days	Yes (all 12)

These are exactly the kind of users the new design aims to reward. But under the lifetime-NFT design, their entry options are limited — the cap is full, and existing holders rarely burn theirs voluntarily.

The 500-cap doesn’t respond to changes in user activity. Monthly re-evaluation closes this loop.

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2. New reward pool size — 4.8x larger

Using 2026 year-to-date BSC Core revenue (Jan 1 – Apr 29, 119 days):

Month	Reserve Revenue	Liquidation Revenue	Old Prime (20%×R)	New Prime (40%×R + 20%×L)	Multiplier
2026-01	$272K	$621K	$54K	$233K	4.3x
2026-02	$140K	$451K	$28K	$146K	5.2x
2026-03	$158K	$872K	$32K	$237K	7.5x
2026-04 (28 days)	$127K	$4K	$25K	$51K	2.0x
YTD total	$696K	$1.95M	$139K	$668K	4.80x

💰

Headline figures (2026 YTD)

• Old Prime allocation: $139K total over 4 months (~$35K/month)
• New Prime allocation: $668K total over 4 months (~$170K/month)
• Annualized: $431K → $2.07M
• Pool increases ~4.8x

Even in the quietest month observed (April 2026, near-zero liquidations), the new pool would have been 2.0x the old. This 2x is effectively a hard floor.

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Appendix: Data sources

• Staker data: venus_multichain.xvsvault_evt_deposit and venus_multichain.xvsvault_evt_executedwithdrawal on Dune (BSC, pid=0)
• Market activity: dune.xvslove_team.all_user_transactions (actions: supply / borrow / repay / redeem)
• Position balances: dune.xvslove_team.daily_user_stats (snapshot 2026-04-28)
• BSC revenue: dune.xvslove_team.daily_market_stats (BSC core pool)
• Prime NFT supply: derived from bnb.logs Mint/Burn events on Prime contract 0xBbCD063efE506c3D42a0Fa2dB5C08430288C71FC

On-chain verification. All staker counts and balances were cross-checked against the XVS Vault contract directly via BSC RPC. Total XVS in the vault (balanceOf(0x0511...9204)) matches the Dune-derived sum to <1 XVS; per-user getUserInfo() calls match Dune-derived balances to <1 XVS for sampled top stakers (ranks 1, 2, 3, 10, and a recent 100k-XVS depositor). Pending withdrawals = 0 for all sampled users.

Snapshot date for all current-state metrics: 29 April 2026.

References

• Venus Prime Documentation
• VIP-201: Tokenomics Phase I
• Tokenomics v3.0 Discussion

We invite all community members to participate in this discussion and would like to hear feedback on this new system from all.

[Danny]

Overall, I believe this is a strong and well thought-out evolution of Prime, and a clear step in the right direction toward aligning incentives with real protocol usage.

The introduction of a dynamic monthly leaderboard and the removal of inactive Prime slots are particularly important improvements. The current design is outdated and inefficient, with a significant portion of capital sitting idle while still capturing rewards. Addressing this is a necessary first step.

Key Consideration: Shift in Demand Model

One important point to highlight is the reallocation of revenue currently flowing to the XVS Vault.

Today, the Vault plays a critical role in maintaining baseline demand for XVS through passive yield and consistent buy pressure. Moving toward a fully Prime-driven model shifts this dynamic from passive holding to active participation, which has strong upside, but is not without risk.

If successful, this model could create a much healthier and more sustainable demand structure, where users are incentivized not just to hold XVS but to actively engage with the protocol. However, this outcome depends entirely on sustained participation and real competition for Prime.

From an investor perspective, there is a key question:

Would users be comfortable deploying significant capital into XVS for rewards that reset every 30 days with no guarantee of retention?

This introduces uncertainty and may create hesitation, especially compared to predictable passive yield.

Transition Risk & Suggested Improvements

A full shift from passive to fully competitive rewards in one step is a significant behavioral change. To reduce friction and avoid potential capital flight, a smoother transition could help:

1. Maintain a baseline demand layer

• Keep a small allocation to the Vault (5–10%)
• Preserves a floor for demand and retention
• Allows Prime to grow without breaking existing dynamics

2. Introduce “stickiness” to Prime

• Rolling averages instead of full monthly resets
• Soft landing mechanisms (e.g. partial rewards beyond cutoff)
• Reduce the binary “in or out” nature of the system

3. Improve predictability for users

• Clearer visibility on expected returns
• Estimated APY ranges or reward bands
• Helps justify larger capital deployment into XVS

Right now, the main friction point is that users may feel they are “renting yield for 30 days,” rather than building a lasting position or status.

Prime Markets: Where Incentives Matter Most

Based on usage and market gaps on BNB Chain, the most impactful markets to prioritize would be:

• USDT (Core Anchor Market)
  Stable, simple, and accessible , should remain the primary reward driver.

• BTCB (High Opportunity)
  Very limited native yield options on BNB Chain. Strong potential to attract sticky capital from BTC holders.

• ETH (Same Thesis as BTCB)
  Large user base with limited “clean yield” opportunities unless aping in LST’s.

• BNB (Strategic Addition)
  Aligns with ecosystem incentives and could strengthen BNB Chain support and visibility.

Final Thoughts

I really like the direction of Prime v2. It’s a more active, efficient, and forward-looking model.

That said, its success will ultimately depend on:

• How smooth the transition is from passive to active demand
• How predictable and understandable the reward system feels
• Whether incentivized markets align with real user demand

If these elements are executed well, Prime v2 could become a very strong evolution for Venus and significantly improve the long-term demand profile of XVS.

[TMT_BNB]

I love the idea of a leaderboard…

I my self have 2 prime slots (use both)… I can merge them together…

I have a few questions tho…

1. DO XVS vault holders still get APY for putting XVS in Vault??
2. IF you are #1 on the leaderboard do you get more share of the rewards… for example if pool is 10$ does number holder get higher % based on him holding more xvs… (5$ goes to the bigger holder and rest share $5.
3. will more coins be added in the future for prime (before we had eth, btc, usdc, usdt)

I personally work as a private bank for smaller investors ( they provide me funds and I invest for them… most of them I help them earn HIGHER APYs via prime… they are happy they give me commission because they can not earn those fees elsewhere … me as a prime holder can provide higher then banks at times…

Also I DO NOT want to unstake from one wallet and wait 7 days to send to the other wallet… is there a way we can send LOCKED XVS from Wallet A to Wallet B

[lich]

The team has no sincerity this time. You didn’t provide any additional rewards, just switch left hand to right hand.
Anyway, the changes to primeV2 are great, but I think the vault rewards are also very important. The vault cannot only serve 500 people, and the other 90% of people in the vault also need to stay. So I think the team needs to allocate 5% each from the treasury and risk fund to the vault.
If the team takes out some extra money （5% or 10%）from the treasury and risk fund to the vault, it can demonstrate the team’s sincerity. The community will be happy.

[Omar.bnb]

Thanks for sharing this with us, Cheryl. I agree with others that the proposed changes feel less like an upgrade and more like a drawback for XVS holders. As it stands, we’re effectively asking them to take on more effort for the same level of rewards they previously received.

While Prime has needed a meaningful upgrade for a long time, and the new mechanisms are directionally positive, they don’t fully reflect a strong commitment to the XVS community. After five years since XVS launched, it feels reasonable for the community to receive a larger share of the value created. Redirecting funds from buybacks to Prime removes a key source of buying pressure from the protocol, which could further weaken token dynamics.

More broadly, the team appears too passive at a time that calls for a more proactive approach. There is a clear opportunity to adopt a more aggressive growth strategy by increasing Prime rewards allocation. Boosting Prime incentives would directly encourage user participation and protocol activity, positioning it as the primary driver of growth. At the same time, maintaining a 20% allocation toward XVS buybacks would help preserve a baseline level of buying pressure, ensuring the token continues to have structural support while we push for expansion.

Given the strength of the treasury and risk funds, both of which can sustain operations for years without additional top ups, I suggest revisiting the tokenomics and revenue allocation model. Allocating 20% Treasury 60% to Prime rewards to drive growth and 20% to XVS buybacks strikes a more deliberate balance between aggressive user acquisition and maintaining token stability.

There is also room to refine this further. Setting a cap such as $1M per month on Prime rewards could ensure sustainability, with any excess revenue flowing back into the treasury or risk funds during stronger periods. Additionally, Prime could be used more strategically to support new market launches through targeted incentive campaigns. Platforms like Merkl already enable this level of precision, for example incentivizing specific actions such as using XAUM to borrow USDT on Venus. This type of targeted approach is likely to be far more effective than launching new pools that struggle to attract meaningful liquidity.

Ultimately, being overly cautious with change may be holding the protocol back. This could be the right moment to lean into the strength of the DeFi community, experiment with more impactful incentives, and create a model that genuinely aligns with user growth and long term value creation.

I will continue refining these thoughts, but I am interested to hear how others in the community feel about the proposed direction.

[Minhanh2021]

As a long-term holder with a significant XVS stake, I fully support the vision of shifting towards active liquidity. However, I strongly agree with the counter-proposal above. Dropping the buyback to 0% overnight is an extreme move that removes the structural price support for XVS.

We shouldn’t punish the long-term holders who built the foundation of this protocol. The 60% Prime / 20% Buyback / 20% Treasury model is the perfect ‘soft landing’. It turbocharges growth while maintaining a safety net for the token price. I will gladly vote for a 60/20/20 split, but I am highly skeptical of a 0% buyback model.

[AJSon]

As an XVS holder for the past 5 years since the very beginning, if this proposal gets approved today, I will lose a significant portion of my staking APY from XVS. However, I am extremely happy with this proposal.

Six months ago, during an AMA with our CEO, Iris, she said: “A $1M buyback will not provide us with long-term value.” Whether XVS is strong in the long term depends on growing the Venus business itself. And today, with this proposal, she has shown that her actions match her words.

Just like in traditional businesses, simply holding shares or trading on the secondary market does not generate profit for the company. Real revenue only comes when users actually use the product and pay for the company’s services. So even though everyone (including myself) will lose some staking yield from XVS, that portion of revenue is now being redirected back into the business for those who actually use the product.

This is similar to growth tech companies like Amazon and Tesla, which reinvest most of their after-tax profits back into the business instead of paying dividends in cash or stock. Tesla, in particular, has not used its profits for dividends or buybacks; instead, it reinvests heavily into infrastructure, AI, building factories, and expanding operations — a classic long-term strategy led by Elon Musk.

And now, we are seeing that Venus and our CEO are quickly restructuring toward Prime to further upgrade the protocol.

Our CEO is exceptionally capable — a true business leader. I believe we are on the right path. As a stakeholder, I will continue to stay involved, follow closely, and contribute my opinions. At this moment, I fully support this direction.