Sunday, February 25, 2024


. Hello ae, the dilemma in Defi protocols, typically AMMDex, always receives a lot of attention, in the previous article, I mentioned some current status of build projects in the usual way. token inflation becomes extremely large and over time always tends to be discharged and lose value, you can read back part 1 on your personal page. In this article, let’s learn about the **veToken ** model to see what advantages they have compared to the traditional model. Okay, let’s go let’s go!!! ***The most widely known and popular veToken model in DeFi is probably from last season’s “CRV War” event…*** **Curve Finance (CRV)** is an AMM like Uniswap , but mainly focus on building liquidity pools for stablecoins or Wrap tokens (eg renBTC, WBTC…) CRV is Curve Finance’s governance token. Like most other AMM protocols, Liquidity Providers when providing liquidity on Curve will receive the protocol’s governance token, here is CRV, this is completely normal… But the special thing The difference in the tokenomics design of CRV lies here, CRV holders can lock their CRVs in time to receive a token called veCRV with a lot of benefits that are: * Stake and Lock CRV to get veCRV back. When holding veCRV, you will receive a part of Curve Finance’s transaction fees and participate in project management (Governance). * veCRV is also used to Voting and decide how the CRV reward will be distributed to the Pools (The more veCRV votes, the more reward the pool has). * CRV is used as a reward for those who provide liquidity on Curve. ***This is Curve Finance’s famous veCRV model that went viral last season and is still useful this season with more improvements***. The minimum CRV lock time is 1 week, the longest is 4 years. The longer you lock CRV, the more veCRV you will get. Then, the 3 use cases mentioned above that you will receive more and more. However, the disadvantage of veToken is that it is not liquid, that is, it cannot be used for transactions, exchanges, trading and moreover, the lock time is too long (4 years) and you cannot handle it. like the market has strong volatility*** and at this time, the demand for liquidity settlement for veCRV is very large and projects like Yearn Finance and ConvexFinance were born to solve the problem of locking CRV => we have* * CRV War.** – Instead of sending CRV to Curve, users will choose to send it to Convex or Yearn Finance without the pressure of a 4-year lock period, and receive cvxCRV. – When sending CRV to Convex to receive cvxCRV back, you essentially send CRV to Convex Treasury, in return you receive a coin called cvxCRV, and still receive the financial benefits of an owner. own veCRV that Convex is earning, that is: * Get boosted CRV * Get Curve’s transaction fee. * In addition, staking cvxCRV at Convex also gives you an additional reward of CVX – Convex governance token. ConvexFinance Allows users to provide liquidity on Curve – but still receive Curve’s trading fees, and at the same time receive boosted CRV without having to lock CRV to veCRV (extremely beneficial for users) So if comparing in terms of benefits For the sake of mere interest, staking CRV on Convex will bring greater returns than staking CRV on Curve itself. Therefore, the number of CRVs staked at Convex accounts for a fairly large proportion of the total number of CRVs locked at Curve. So Convex has more veCRV voting power than anyone else at Gauge System. That voting power has allowed Convex to control which pools the CRV rewards are allocated to, while providing a significant productivity boost for everyone using the Convex platform to farm yeilds on Curve. Convex won with more than 50% of the CRV supply under control. And those who have the power to decide how to use the Convex Treasury’s CRV space, are none other than CVX holders. So, to control the Curve, you need veCRV. To control veCRV, you need CVX (because Convex has the overwhelming and largest market share) *Now the battle for control of CRV becomes a battle for control of CVX => The driving force for both CVX to increase in price , and of course the CRV goes up as well.* **Actually, there are many variations of the veToken model, for example:** * VeFXS (Frax Finance) * veBAL (Balancer) * Ve(3,3 ): The typical project is Velodrome Finance (**Velo**) – It is a combination model of the Vote Escrow mechanism of Curve Finance and the game theory model (3.3) of OlympusDAO. * veRBN (Ribbon Finance) Up until now, I find these veToken models still applied quite well in later versions with better improvements as we have seen recently with the extremely strong wave of LSDfi with **PENDLE War** (with Equilibriafi (EQB) and Penpie (PNP) competing against each other.) With its clever tokenomics design, Pendle created a battle between EQB and PNP, while pushing ahead increase prices for both Pendle and surrounding satellites like PNP, EQB => PENDLE WAR **And one more project is also trying to start a war of its own that not many people know about, which is Radiant (RDNT) , a lending/borrowing project with the latest updates in its V2 version and surrounding satellites like Radiate and Radpie vying for control of profits and market share**. I will have a detailed research article about the Radiant project as well as ***Radiant War*** for you to have an overview. Another interesting point is that RDNT is also a Layer0 item, and if this system issues tokens, it is likely that RDNT will also benefit. You should pay attention to this product in the near future. Have a good day! #leetuan, #research

Source: Collector



Please enter your comment!
Please enter your name here

Most Popular

Recent Comments