Venus Tokenomics Phase II — Prime Rewards Redesign

0xshyu · May 5, 2026, 3:05pm

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

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%.
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.
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.

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:

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.
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

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:

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.
Lock-in on the last day — Top 500 are finalized; the month’s accumulated revenue pool is fixed alongside.
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.
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:

Deduct 300 XVS from Day-35 deposit (fully consumed — contributes nothing to score)
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.

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%	—	—

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.

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

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.

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

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

Danny · May 5, 2026, 3:27pm

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 · May 5, 2026, 4:13pm

(post deleted by author)

lich · May 5, 2026, 11:27pm

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 · May 6, 2026, 12:49am

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 · May 6, 2026, 8:05am

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 · May 6, 2026, 9:36am

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.

theeupr · May 6, 2026, 1:40pm

This is exactly the kind of change that can give Prime a second life. I fully support the direction of this redesign — aligning rewards more tightly with actual capital usage is the right move and addresses one of the core inefficiencies in the current model.

As a follow-up, I’d suggest extending this direction by building on the concept of efficiency more explicitly.

In a previous proposal, I introduced the idea of a Prime Efficiency Ratio (PER). Measuring How Effectively Prime Tokens Are Used as a way to measure how effectively Prime is being used relative to capital activity. I think this redesign creates the perfect foundation to make that concept truly useful in practice.

The idea would be to:

keep the redesigned reward function as the source of truth
and expose an explicit efficiency metric derived from it (i.e. how well a user balances stake vs borrow/supply)

This would add a missing layer to the system:

Clarity — users understand why their rewards look the way they do
Actionability — clear signals on how to improve efficiency instead of trial and error
Better alignment — users are guided toward optimal behavior without additional protocol complexity

Importantly, this metric should remain non-invasive :

no direct impact on rewards
no added complexity in the core logic
purely a derived, analytical layer (UI / dashboards)

This creates a clean separation:

the redesign defines how rewards are distributed
PER defines how efficiently a user is participating in that system

I believe combining these two layers would significantly improve both the usability and the effectiveness of Prime.

DrDuckQuack · May 6, 2026, 7:04pm

After reading the details of the “Tokenomics Phase II – Prime Rewards Redesign,” I’m convinced it would do more harm than good to the Venus Protocol ecosystem.

At present, every staker of XVS earns a share of the protocol’s reserve and liquidation fees simply by keeping tokens in the Vault. That broad-based yield is what turns XVS from a speculative chip into a productive asset: it encourages people to lock their tokens, stay involved in governance and, crucially, hold through market swings. The redesign would cut off that income stream for roughly nine out of ten stakers by redirecting the entire 40 % revenue share to a monthly “Prime” leaderboard restricted to only 500 addresses. In other words, most participants would go from earning something to earning nothing overnight.

When you take away rewards but leave the unlock button one click away, the rational move for many holders—especially the 77 % the team itself labels “inactive”—is to withdraw and sell. Add in the removal of the 1 000 XVS minimum stake and the 90-day lock-up, and the Vault becomes a revolving door: big wallets can swoop in near month-end, split their tokens across multiple addresses to dominate the leaderboard, claim the prizes, then exit again. The result is a surge of inflows and outflows that turns XVS into a short-term trading vehicle rather than a long-term governance stake, pushing price volatility higher and liquidity lower.

Supporters point to the larger reward pool—Prime payouts could triple or quadruple in dollar terms—but concentrating that extra value in just 500 wallets doesn’t strengthen the token. It simply turns the Prime programme into a zero-sum contest whose winners are paid with revenue that previously belonged to everyone. Meanwhile, the proposal offers no counterweights: no buy-back-and-burn to offset the selling pressure, no longer vesting schedule for Prime rewards, and no alternative yield for excluded stakers. That asymmetry undermines both the economic appeal of holding XVS and the decentralisation of protocol governance.

For those reasons I’ll be voting No. What we need instead is an updated plan that keeps a guaranteed slice of revenue flowing to all stakers, pairs any increased Prime rewards with deflationary mechanisms, and restores meaningful lock-ups so monthly leaderboard games don’t eclipse genuine, long-term commitment. Only then will Venus strike the balance between rewarding active users and preserving the healthy token economics that brought many of us here in the first place.

Danny I clicked “Reply” on your comment by mistake instead of on @0xShyu’s. I’m unable to delete it and repost the same message, so Danny please ignore my reply to your comment

ede · May 7, 2026, 7:29pm

The proposal is correct and necessary. I support it fully. Three constructive additions: reconsider the community share of total revenue, plan a gradual transition away from buybacks, and communicate the organic flywheel effect as a long-term price strategy.

The Problem is Real
The numbers speak for themselves. 77% of XVS stakers are inactive, and 60% of Prime NFT holders had zero protocol interaction in the past 30 days. The current system structurally rewards inactivity — inactive users extract capital from the protocol without contributing anything in return. This is not sustainable long-term.

Why the Double Filter is the Right Solution
The proposal solves the problem on two levels simultaneously — and this is not highlighted enough in the original proposal.
Filter 1 — Leaderboard: Only the top 500 by Effective Stake hold Prime status each month. Inactive users are automatically removed without any manual intervention.
Filter 2 — Claiming: Even users who qualify for the leaderboard only receive rewards if they maintain an active supply or borrow position in the eligible markets. No market engagement, no rewards. Even large stakers with significant XVS holdings are forced to actively use the protocol — or they forfeit their rewards entirely.
This is the decisive difference from the current system: inactivity is penalized on both levels.

Reconsidering the Community Share
One point that has received too little attention in this discussion:
Active Prime users are double-capitalized. They must not only stake XVS to qualify for the leaderboard — they must simultaneously deploy additional capital into Venus markets to be able to claim rewards at all. This is a significantly higher requirement than simple staking.
A Prime user commits capital in two places at once — in the Vault and in the market. It is precisely this capital that generates the revenue from which all stakeholders benefit, including the Treasury and Risk Fund.
It would therefore be legitimate to discuss whether the community share of total revenue should be increased slightly — not to weaken the protocol, but to make the incentive strong enough that the double capital commitment is genuinely worthwhile.
A higher yield for active users means:
• More capital flows into the markets
• More liquidity for the protocol
• More revenue for all stakeholders
This is not a zero-sum game — a more attractive Prime yield pays off for everyone through increased protocol activity in the long run. The specific percentages should be discussed collectively by the community. But the underlying principle should be: those who actively contribute to the protocol deserve a return that justifies that commitment.

Why No Artificial Price Mechanism is Needed
Competition for 500 spots with a reward pool of ~$170K per month creates organic buying pressure on XVS — without any buybacks.
Rewards are deliberately paid out in native assets, not in XVS. This is the right approach: users can take profits without touching their XVS position. This gives them a natural incentive to keep their XVS staked in order to maintain their leaderboard position.
The flywheel emerges on its own:
More active users → more protocol revenue → larger reward pool → more incentive to buy and hold XVS → more competition for the 500 spots → even more market activity → even more revenue
This creates more sustainable price pressure than any buyback mechanism.

Constructive Addition: Gradual Transition
The only real risk of the proposal is the hard cut on buybacks. Even if they provide limited long-term price support — they are a well-known mechanism in the market. An abrupt removal could create short-term psychological selling pressure before the new organic buying pressure from the leaderboard becomes tangible.
I therefore propose a gradual transition:
• Months 1–2: Halve the Vault allocation (10% instead of 20%) while the leaderboard is already running
• From Month 3 onward: Full transition to the new system
This gives the market time to understand and build confidence in the new mechanism before the old one disappears entirely.

Long-Term Thought: Phase 2
Once the protocol generates significantly more revenue through this mechanism, a buyback and burn funded from surpluses would make sense at a later stage — as a deflationary mechanism on top. But that is Phase 2, when the numbers justify it. For now: implement the proposal, observe the results, then decide.

Xvs_Believer · May 7, 2026, 9:11pm

First of all. Thank You Cheryl and the Labs Team to Open discussion over tokenomic and primev2 proposal , and letting us the time to review and propose our point of view.

As a begining, I totally agree with the proposal and the need to change PRIME, because it’s a huge necessity.

To clear things up, Prime reward is being less due to Protocols activities and the cessation of a lots of Binance Campaign. That’s something we can’t change.

About Prime v2 , I believe the approach is very good and idea is great :
No more Delay to be eligible
Leaderboard being trackable, that’s very good idea and I love it !
Time weighted and Xvs Size based distribution is the best.

But there is some point I think we can make it even better for Primev2 and Xvs overall, because after All Every prime User is XVS HOLDER. That mean we care about Xvs Price and its tokenomic

leaderboard should be point systems, with 1 Xvs earn 1 point per day ( exemple ), that should be the base. But if people’s add liquidity in specific market then thing get interesting with multiplier. So for highest point efficiency, people would have max period time stacked with large amount of xvs and at same time supplying the market.
I believe we shouldn’t leave only Xvs Stacker out of the game. They should be eligible to participate. That why I believe only Xvs is base, adding supply would have multipliers.

We need more than 500 spot, and believe it’s way too few , I don’t exactly have data but I wish that we could attract the most of user, that means pushing up to 1000 SPOT

Prime reward Should be exclusively in XVS THESE XVS IS ONLY FROM BUYBACK ONLY ONLY BUYBACK NO EMISSION that’s idea is because of psychological attitude. It’s very important to have buyback in Xvs then give back to users. That would keep high buyback pressure. People tend to keep what being given. For Xvs holder and xvs interest we should put everything to safeguard Xvs price with great buyback pressure. That also would tend to make xvs price higher hence higher apy for prime user since reward is xvs. At same time would sustain xvs price by the APY of prime.

Since reward is in XVS. WE need Reward VESTING TIME 30D. Vesting is a very interesting feature that support price.

Market should be flexible and dependant of team strategy for Xvs and Protocols benefits.

ADD multipliers for different market ( Exemple : x10 point for USDT , X2 point of btc , like classic point farming system ) , so team could adjust based on strategic focus or Partnership Launch, that would add flexibility and adaptivity for better efficiency.

Higher prime Reward with more allocation to PRIMEV2

That mean we should completely review our current tokenomic.

Reminder :
Currently our tokenomic is

Protocol Reserves
• 20% Risk Fund
• 20% Venus Prime
• 20% Buyback Xvs for Venus Vault
• 40% Treasury ( 25% from BNB after burn goes to treasury)

I won’t remind liquidation fees.

But I always find it weird that both have different tokenomic.

So for me we should have a news tokenomic that would push more for Xvs Holder interest.

So to me :

Protocols Reserves and Liquidation Fees share the SAME Tokenomic.

New allocations should be now be something like that

• 15% Risk Fund ( it’s very important to keep a very good risk fund that also guarantee our asset Incase of exploit )

• 50% PrimeV2 , I believe it’s very important to boost prime reward that’s very strategic for team and also very very beneficial for Xvs holder. It’s a win-win for so many field. It should be emphasized. And push for more. We need to make prime interesting, but at same time maximum people should be eligible but the biggest share should be go to people who contributed the most (top 500 representing let say 80% and 500 left 20% )

•15 % Treasury, we need for protocols being run and paid salary audit etc that classical. I beliebe 15% is enough because it was already 15 % in the past. But I would like to add that Team MEMBER should be paid partially in XVS like 30% Xvs ( no lock down no vesting ) 70% in USDT , I think it’s very good signal launch to Community that team DOES care about Xvs , even tho I believe team has already some bag of Xvs , but I believe it’s more something to be meaningful.

•20 % WAR TREASURY
buyback of Xvs as a store of value , and as an Emergency Usecase. I think it’s time to have this now. We need to create value for Xvs and that permanent buyback that would keep in locked in UNTIL something very dramatic need. Otherwise it would be some kind of BURNT token. But it has the flexibility to be still available if something drastic happen and NEED these Xvs ( that also can include if TREASURY has no more money ) . Also it can be build for later use , when Xvs is totally stopped from Emission.
We can consider it as permanent buyback pressure and semi burnt mechanisms, and strategic reserve.

• current emission of Xvs ( Free Minting ) should be used essentially to support Vault Base reward. That means Xvs Market in core Pool should yield 0% and these Xvs should be redistribute to vault. There is no need to give incentive to supply xvs. Xvs being available in the core is already an advantage. Less Xvs in core market would means also less liquidation for gambler.

- 10% Diminish Max Supply of Xvs , that a very big signal launch to Every Xvs holder, that what being done by Pancakeswap and I believe it’s very good move and bring a lot of confiance in the Token.

I hope team really read it and consider my point of view

Jackc.

Fico · May 8, 2026, 8:01am

Before voting on Phase II, I’d like the community to consider a few on-chain facts that this proposal doesn’t mention.

The governance problem hasn’t been solved — it’s been upgraded

In October 2025, a group of Venus OGs published a detailed post identifying that 0x60277… (745k XVS, currently the largest staker) holds bootstrapped tokens that were never returned to the protocol — and that 0xD183F2… (478k XVS, rank #2) is widely known to be managed by the BNB Chain team. Together with rank #3, these three wallets hold ~1.6M XVS. Quorum to pass a VIP is 600,000.

That post was ignored. Nothing changed.

VIP-607, executed April 15, 2026 was approved by a single address (0x34…bc6e) casting 1.63M XVS. Zero votes against. Zero abstentions. One wallet decided three protocol actions, including the OTC transfer of 2.43M THE tokens to the Finance Team with no price floor and no external oversight.

Phase II converts free XVS into real USDT

The wallets identified in the October 2025 post didn’t pay for their XVS. Under the current model, they earn more XVS on top — circular, self-referential, and ultimately harmless to anyone outside the protocol. Under Phase II, they will earn USDT generated by real users who deposit and borrow. The pool is 4.8x larger, now including liquidation revenue.

This is not a technical improvement. It’s a structural shift from token inflation to hard cash flows — funded by retail participants.

The “active user” filter doesn’t apply to them

Yes, Prime requires active market positions. But depositing XVS as collateral, borrowing a nominal USDT, and qualifying for Prime costs these wallets nothing relative to the rewards they’ll capture. Their own deposits contribute to the reserve revenue that funds those same rewards.

The clock reset eliminates the only retail advantage

Long-term stakers lose years of accumulated duration on Day 0. The only participants unaffected are those with enough raw XVS to top the leaderboard from block one — regardless of history.

Conveniently, the proposal highlights 12 new wallets that each deposited ~100k XVS in the weeks immediately before publication. On-chain data (Dune: xvslove_team/xvs) confirms wallets #4 and #8 in the staker rankings deposited 307k and 193k XVS respectively on March 27, 2026 — weeks before the proposal went live.

The October 2025 community post asked for transparency and return of the bootstrapped XVS. The answer, seven months later, is a proposal that multiplies the benefits flowing to those same wallets.

I’m not saying Venus has no value. I’m saying the community deserves to acknowledge what the on-chain record shows before voting For.

TMT_BNB · May 10, 2026, 2:08am

I am not okay with vault rewards going to 0. We need the Vault to continue to reward (long term holder believers). Some of us have been in the vault from $20 XVS to $2.40 XVS. Getting rewarded for being loyal is a huge plus… even tho the reward Value is on the decline…

Even if we decrease the APY of the vault to give to prime its fine… but just making it 0 is a huge NO!!

As far as prime goes, I am all for changing it as the Current method sucks…

We also need to including something that would burn XVS. even if its prime users burning 1 token a month to qualify for the leader board (entry fee into leader boards). But burns need to be incorporated somehow… doesn’t have to be 500 max cap… even if was have 1000 people or 2000 people trying to Get a share of prime they must burn 1 xvs token to qualify for the leaderboard… then based on the amount of xvs token they hold in vault they will get that much share of prime based on weighted average. then this process starts again next month… and if this picks up and lets say 10k people want a share of prime we get 10k xvs burned a month

Diablo · May 10, 2026, 4:23am

I support the overall direction of this proposal — Venus should reward real protocol usage more heavily than passive holding — but I do not think it should do so by shifting so much value away from existing XVS holders. The direction is right, but the transition needs to be more balanced, with broader reward coverage, a phased rollout, and at least some incremental incentives rather than mostly reallocating existing Vault value into Prime.

The data in the proposal makes a strong case for change. A large share of XVS stakers have not interacted with Venus markets recently, and many Prime slots are effectively locked by inactive holders. That clearly suggests the current system leaves too much value with inactive capital and does not sufficiently reward real protocol usage.

That said, I think the current design is too aggressive in how it shifts value away from XVS holders. Under the proposal, the XVS Vault’s direct revenue allocation goes to zero, while Prime receives a much larger share of reserve and liquidation revenue, with the Prime pool estimated at about 4.8x the current level based on 2026 YTD BSC revenue. Prime also remains capped at 500 users, while rewards still require active supply or borrow positions in eligible markets.

My concern is not with the goal, but with the balance of the transition.

Long-term XVS holders have already taken meaningful risk to support the protocol. Many entered at much higher prices than today and effectively funded Venus through volatility, time, and locked capital. Now, instead of receiving additional incentives to become more active users, they are being asked to stake XVS, compete for a top-500 slot, and also deploy capital into lending/borrowing markets — while the proposal mainly funds this by removing the value they already had in the Vault. In other words, this feels less like adding new incentives and more like moving rewards from one pocket to another.

I think Venus should keep the same strategic direction, but implement it in a more balanced way:

Do not reduce Vault / buyback-style support to zero immediately.
A phased transition would be healthier for governance, market confidence, and XVS holder alignment. If the protocol wants to shift incentives toward active users, that is reasonable — but it should not fully remove the passive holder layer overnight.
Reconsider the fixed 500-user cap if the goal is to maximize lending activity.
A top-500 leaderboard is good for competition, but it does not necessarily maximize total participation. It may instead create a tournament dynamic where only the largest or most aggressive players have a real chance. If the true objective is broader lending growth, Venus should consider a tiered or partially uncapped design, where top users receive the largest rewards but other qualified active users still receive some share.
Add incremental incentives instead of relying only on redistribution.
If Venus wants users to commit capital in two ways — by staking XVS and by actively supplying or borrowing — the reward structure should reflect that added commitment. The protocol should consider a temporary boost funded from treasury or another source, rather than asking existing holders alone to finance the entire shift.
Preserve a basic value layer for long-term XVS holders.
Even if most rewards should go to active protocol users, there should still be some base-level reason to hold and stake XVS over time. Otherwise, XVS risks becoming only a competitive access ticket for Prime rather than a token that also rewards long-term alignment.
Use a trial period with clear evaluation metrics.
This is a major tokenomics change. Venus should define success in advance — for example, growth in active borrowers/suppliers, net XVS staking, Prime participation depth, and protocol revenue — and commit to reviewing the design after a fixed period instead of treating it as final from day one.