Hi Venusians,
We have read and discussed all provided feedback. We hear your concerns regarding the Prime V2 update, and want to address them here.
1. Keep a small allocation to the XVS vault (5-10%)
This is one that has come up several times, and we’d like to address it directly. We hear this feedback as a concern regarding sell pressure during the transition to Prime V2, since a 5-10% residual allocation to the XVS vault will not change anyone’s holding decision in any meaningful way. Yield at that level isn’t large enough to retain someone who would otherwise sell, and it isn’t the reason a long-term holder is here in the first place. Getting straight to the heart of things, we want to make one thing clear: we have never been more bullish on XVS.
We believe strongly in the protocol’s trajectory, and holding XVS is that shared belief that Venus is going to continue being one of the top, if not the top, lending protocols in the industry. That belief has been the right call through previous cycles in this protocol, and we think it will be again. Prime V2 is one piece of a broader effort to make Venus structurally stronger and more competitive. As that work plays out, the protocol generates more revenue, captures more share, and the case for holding XVS is reinforced by the protocol’s success itself — not by a fixed yield line. We intend to earn that trust by executing, and we believe the returns will follow naturally.
2. Have a phased approach instead of doing it all at once (2-3 months)
Instead of a phased approach, which will delay the process and not allow us to see the full effect of the change, hence delaying further necessary adjustments down the line, we believe that providing ample lead time for users to reposition themselves is sufficient.
While we have the discussion on this forum, we will also prepare a snapshot vote, as this is a big change. While these things are happening, if you anticipate the vote passing, this should serve as lead time to reposition yourself should you disagree with the vote.
3. Rolling average to introduce stickiness
The Effective Stake formula tracks each XVS deposit individually, caps duration at 90 days, applies a loyalty multiplier that grows to 2.0x at 90+ days, and uses LIFO accounting on withdrawals so that pulling capital doesn’t immediately erase the score. That’s a per-deposit rolling commitment metric — it does exactly what a rolling average is meant to do: reward consistency and penalize snapshot gaming.
4. Tiered approach (allocate more to top 500, and a smaller allocation to next 250, for example)
Tiering is a useful mechanism when it’s tied to behaviour — you earn a higher tier by doing more for the protocol. We’re open to adjusting the number of Prime holders up or down depending on how Prime V2 is received and where demand sits. That’s a lever we can pull.
But tiering XVS holdings themselves still rewards the same underlying thing: holding a token. The most valuable users to the protocol aren’t necessarily the largest token holders — they’re the ones supplying deep liquidity and borrowing consistently. Prime V2 tiers around that activity, and that’s intentional.
5. Why not commit new capital from treasury / treasury allocation?
This is a fair question and we want to engage with it openly.
We recognise that many in this community have held XVS through significant hardship, and the instinct to protect their returns is understandable. But the treasury exists to keep the protocol operational — development, audits, risk management, and critically, the risk fund that protects all users in adverse conditions. Redirecting that capital into yield for passive holders would mean trading long-term protocol resilience for short-term token holder satisfaction. That’s not a trade we’re willing to make.
The broader point is this: if the protocol pays out more than it earns, it isn’t sustainable — regardless of where the capital comes from. Prime rewards need to be funded by real protocol revenue, generated by real protocol activity.
It’s also worth noting that governance tokens across major lending protocols don’t natively earn yield simply from being held. Holding XVS gives you a meaningful voice in the protocol’s direction. But yield needs to be earned.
We’re genuinely open to ideas that add real utility to XVS in ways that create value rather than extract it. If you have proposals, this forum is the right place to raise them.
6. What’s the value of holding XVS after Prime V2?
We’re adding this one because it’s the question several of the above implicitly raise, and it deserves a direct answer rather than being scattered across the others. Under Prime V2, XVS is not a passive yield instrument. It is:
- A governance asset. XVS holders direct protocol parameters, reward allocations, listings, and major upgrades — including the future of Prime itself. With $345K+/month flowing through Prime, governance over how that’s distributed is meaningful.
- The entry ticket to Prime rewards. Every dollar of Prime rewards continues to flow exclusively to XVS Vault stakers — but now to ones who also use the protocol. XVS staking is necessary for Prime; it’s just no longer sufficient.
- A claim on future utility design. We’re explicitly open to community proposals that add behavior-tied utility — fee discounts, borrow boosts, exclusive market access, etc.
What XVS is not, under V2: a synthetic yield-bearing asset that pays from protocol revenue regardless of whether the holder contributes to that revenue. We believe that’s the correct alignment — and we’d rather have an honest conversation about what XVS should be than maintain a mechanism the data shows isn’t working.
We hope that this allays some concerns, although the true effect of this will only be seen in time after it is implemented. If there are further concerns and questions, please feel free to continue replying to this post, we will be checking in regularly as this is a major update, and we want to ensure all voices are heard. Thank you again for your contributions to Venus.