Venus Tokenomics: v4

As mentioned on the previous a community call this week, we’re quickly approaching a year since the last major tokenomics revision was proposed. The time is ripe to hear from the community about improvements that should be worked into the next Venunomics :wink:

I’ve seen interesting ideas from other projects and I’ll be sure to include some that I find interesting. In the meantime how would you like to see the tokenomics evolve?

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veToken with lock like pancakeswap, convex etc
In this way, we were able to improve revenue share with burning mechanisms and also reduce sales pressure.

In addition, I think it is possible to boost the apy for those who lock it.

maybe something about bond and venus owning part of the liquidity to increase revenue.

all this based on increase in protocol revenue with new products

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Personally i like the new tokenomics that was proposed last year and has recently come into effect. I really like the buyback and burn features as it controls, if not reduces the xvs supply as well as giving the xvs token more value if you stake it in the vault.

There are however, two things that can perhaps be changed.

Maximum supply:

The Maximum supply should be reduced to 20 million instead of up to 29+ million. This means that once the 20th million xvs token is minted, there will be no more xvs. This cuts the circulating supply for xvs and can help out with increasing its price as there will be less of it.

Continued distributing xvs to both lenders and borrowers:

Once Venus mints its last xvs token, part of the income the protocol earns should be allocated to buy back xvs and distribute them to most or all lenders and borrowers. This way, users who want to buy xvs for whatever the reason can earn xvs by lending or borrowing ad infinitum. Additionally, this can incentivize users to continue to lend and/or borrow as the APR will be higher (interest rate plus xvs).

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  1. Cut down the supply to 12.5 million
  2. Remove the XVS emissions for supply/borrow for users who don’t hold XVS
  3. Build use cases for XVS. Currently there is none other than getting XVS interest.
  4. Introduce tiers based on XVS holdings.
    a. No XVS rewards for holders with XVS 0-250 in Vault
    b. 250+ XVS in vault - > additional interest of 0.125% (in XVS) for supply and discounted interest by 0.125% for borrow.
    c. 500+ XVS in vault → additional interest of 0.25% (in XVS) for supply and discounted interest by 0.25% for borrow.
    d. 1000+ XVS ->additional interest of 0.5% (in XVS) for supply and discounted interest by 0.5% for borrow.
    e. 3000+ XVS → additional interest of 0.75% (in XVS) for supply and discounted interest by 0.75% for borrow.
  5. Allow users to pay interest in XVS via lowered APY when paid in XVS
  6. More revenue sharing options from dex, liqudations

Lending, borrowing, and XVS Vault dividends to VAI.

Distributing XVS easily will only give you the opportunity to sell it.

XVS is stock in Venus Protocol.
An actual stock company would not distribute its own shares as dividends.

If the Venus service becomes attractive, there will be a natural demand to buy XVS for the following purposes

Distribution of Venus revenue.
Voting rights for listings and other services.

To stop or reduce XVS emissions as much as possible.
And increase the liquidity of VAI by distributing VAI.

I believe that credit creation through the issuance of stable coins will create great value as a financial service.

  1. Reduce supply to 10 million. This will immediately have an impact on Price
  2. Revise protocol Supply/Borrow rates slightly upwards (improves TVL by attracting new investors) and then remove the XVS emissions for supply/borrow for users who don’t hold XVS
  3. Find a way to pay Gas Fees if possible in XVS also
  4. Burning of XVS and Buyback does not impact Price in the market. Stop it. Let’s find useful ways to use those proceeds using an Economist or Treasurer to boost the price
  5. Now consider paying XVS Holders in BNB/VAI? after we reduce XVS emissions as proposed above. With this no need to sell XVS dividend. Selling XVS dividends/rewards tanks the XVS price

Transparency = Trust
All buyback should be bought from dex with designed strategies. e.g. Raise the buyback-period to prevent price volatility. Buy little bags per day. I know there will increase the costs (gas fee). But comparing the moeny using to buyback, who care about the “little cost”? Onchain data can’t lie, but who know cex?

It would be nice if we changed the view of investors on XVS. I mean the XVS hodlers in the vault should have VIP features available. We know that new UI is coming and it should include any features as liquidation calculator and we can also add liquidation warnings via telegram message and lottery and more tools as VIP primary for XVS vault users.

I personaly like idea to reduce Risk fund by 3%. 1% use for social media contest to build actively and quickly reach of our messages… 1% would be used for the lottery and 1% for charity.

Version1 - I know that lottery competitions are very popular and i also know that there was a lot of suggestions about it from community because they want to copy successful steps of other projects. It occurred to me to think about lottery based on venus protocol activity for users who supplied or borrowed something and would be qualified by it for the daily or weekly prizes. (It could be in a separate section where users would see if they are qualified and also the results and history of the lottery)
Version2 - is that it can be only VIP benefit for XVS vault stakers and because we need a VIP to withdraw the reserves so we can accumulate rewards in 1 quarter and these rewards distrubute in the next quarter so it can be included in 1 VIP together with buyback and burns etc. We can also use a lot of modification of it with locked periods of XVS etc.

Example :

If we will use 1% (can be a little bit more ofcourse) of protocol reserves (i mean protocol profits) where we had like $3.180.000 for Q1 so 1% = $31.800 / ±90days = $2,473.31 avg. weekly prize pool.

Positives:

V1:
-People love possibilities to get money for free so there can be tons of positive messages and stories
-New users
-Possible increase in TVL and liquidity
-Much greater reach of our messages on social media
-Larger volume on Venus protocol
-Larger volume and more transactions etc. on BNB chain (CZ can be happy about that :D)

V2:
-More vault users = more staked XVS = less XVS in circulation with others benefits

If we will talk about Charity it would be nice to have 1 designated person or team who would take care of it. It means he would choose individuals or organizations that would be suitable for a Donate from us and are able to accept the crypto. We could help people and this activity could get us more attention and many more users in the longer term.

About social media we need to be more active we need to use funds to promote our business and our name and brand! We need a designated person who will actively take care of the twitter account and communicate on it! This is one of the things I miss a lot here.

Last thing is about vTokens. We need as soon as possible usecases for vTokens to be able to work with them and primary be albe to use them to leverage capital and rewards.

I will be happy for your opinions. :wink:

Comment from a user in Venus Telegram group

What matters to talk about new tokenomics when you didn’t realise liquidations fee, vai, isolated lending, and others?

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I recommend xvs tokenomics:

  • Fixed supply: 12.5M XVS (I think this is the right amount for current).

  • Stop distribution of XVS for all. (focusing on better interest rates)

  • receive interest/pay interest with XVS (create XVS rotation)

  • The Vault interest rate increases based on holding time (loyal shareholders) (starting with 5% and up to 35% with time over 1 year).

  • compound interest in the Vault is activated when someone claims (like PCS).

  • 2% penalty when requesting a withdrawal 7 days before the last deposit (this fee is transferred to revenue).

  • revenue distribution: 20% risk fund, 20% XVS holders, 20% dev team,[ 20% endowment fund (adding Venus use cases for partners), 10% charity donations, 10% spending advertise fee.]
    (last 40% flexibly converts according to the times).

  • vtoken: equivalent to a check.
    eg: the lender loads into Venus and gets vtoken (proof of deposit). They send vtoken to a third party to farm. The third party pays them xtoken as proof of their deposit. This third party is allowed to use the lender’s vtoken to withdraw money at Venus. This third party does some exchange for the profit to pay the farmer. then the third party sends the money back to Venus and gets the vtoken to pay the farmer.

sad but nevertheless true

As an investor I am tired of losing money since I invest in this crypto. I’m not short-sighted, I trust the project, but every day that passes I see that you insist on fixing what works well instead of focusing on what needs to be solved so that the project is scalable.

Scalability is needed, like all crypto projects, if people don’t choose you, you won’t grow. And if, despite everything that has been done, the price continues to dilute for so many months, it means that all marketing strategies have failed.

In communication there’s also a lot to improve, how could it be that I got into the xvs vault with the interest rate at 50% and today it fell to 5% and the protocol didn’t issue a statement about it these days?? That’s the way you wanna attract investors? Better communication please, find a community manager to report all these things to the investor. All this lack of communication takes transparency away from the protocol, make it as simple and understandable as possible, if transparency returns and everything is clear, investors will begin to trust the project more.

As an investor I want higher interest rates and more stability about it. Incentive dividends are a good proposition in my opinion. Sincerely. One of the investors.

I am here day and night for that very same purpose but I can’t report to the community on the information I don’t have or simply not given due to lack of communication. I have been making the very same request to the Team for 2 month’s. I am working on improving this with them ASAP.

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Thanks for been working on that. I hope that the visibility on binance and coinmarketcap this days will attract users to the platform.

The vault was a great idea to target investors who want to bring liquidity to the protocol. In my opinion, these investors should be well catered for and lured with the most competitive rates possible. Dividends are a GREAT idea. It would be nice if, in addition to the rewards, dividends were paid in XVS or VAI with the protocol’s income for those who left it locked in the vault for definited periods of time, but it should be well explained.

I would not be so concerned at this stage of the project with generating greater deflation, the token is already quite scarce; prefer achieving massive adoption, adoption is going to make prices go up. A satisfactory user experience in this regard is essential. Keep Building! :muscle:

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Can the team please let the community known what thoughts they have. We all want to know the direction of the protocol if token changes are being suggested.

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Any update here? Has Venus decided yet