Over the past few months – juggling with Meter Network and ecosystem growth, Meter Passport V 1.5 and Sumer Money – the Meter Foundation is diligently working on the ve (3,3) deployment for Voltswap on Meter Network.
The primary rationale for evaluating a new design for Voltswap was to add more utility to VOLT token and more engaged community governance.
ve (3,3) is a novel design that stood out for multiple reasons:
Value accrual for VOLT due to design focused on fees (the real yield for protocol owners) instead of TVL.
Community driven incentive design based on the highly successful Curve model
Tested code base across multiple deployments and multiple networks (Some of the other deployments with the code base are Solidly - Fantom, Velodrome - Optimism, Dystopia - Polygon)
Ability of design to build a ecosystem around Voltswap - for e.g. yield optimizers
The ve (3,3) is the model envisioned by Andre Cronje while developing Solidly DEX on Fantom. The idea was to drive the synergy between 2 earlier successful models – ve (vote escrowed) model by Curve and (3,3) by OHM while removing the shortcomings of both.
The ve model of curve aimed to incentivize the liquidity providers on a DEX while getting as many users involved as possible in the governance of the protocol. The model requires users to vote lock CRV and acquire veCRV.
The spirit of (3,3) - is simply “how can the community work together to maximize benefit”.
The key differences from the current deployment are;
VOLT can now be vested (locked as veNFT) to receive 100% of the trading fees from Voltswap. In the current deployment, all trading fees were received by Liquidity Providers (LPs). LPs also earned the VOLT rewards from emission. With ve(3,3), VOLT holders receive 100% trading fees for the pools they voted for in proportion to their vote. Whereas, LPs earn rewards based on the weekly VOLT emission directed to their pool by veVOLT holders.
One of the main incentives for VOLT is the ability to boost your rewards on provided liquidity. Vote locking VOLT allows you to acquire voting power to participate in the VOTE and earn a boost of up to 2.5x on the liquidity you are providing on Voltswap. If the proportion of the users veVOLT in the Total Vote to direct emission to the pool is equal to their proportion of liquidity in the pool, the user could get the full boost.
Once VOLT holders vote-lock their veVOLT, they can start voting on the weekly emissions, governance proposals and pool parameters. Every voting epoch lasts for one week, users can vote at any time during the voting epoch. At the end of each epoch, rewards will begin to be distributed according to votes for one week.
With ve (3,3), the overall process is;
Weekly emissions are set by the team through governance proposals
VOLT holders vest the token over a chosen period (1 week to 4 years) to receive vote-escrowed VOLT (veVOLT). veVOLT received per VOLT depends on the duration of the vesting period. Longer vesting period means higher veVOLT per VOLT vested
veVOLT holders vote to direct the x% (90% to 100%) of VOLT emission to pools with potential to earn most fees
veVOLT vested receive (1-x)% VOLT emissions as supply expands through emission
veVOLT holders who vote on a particular gauge receive all protocol trading fees for that gauge, regardless they provide liquidity for the gauge. Thus the voters have incentive to vote on the gauge that generates more fees.
Liquidity providers receive VOLT emissions directed to pools they deposit into
Unlike current deployment, the new ve(3,3) deployment supports both stable and volatile pools ensuring better capital efficiency;
- stable pools - designed for assets which have little to no volatility
- They follow x3y+y3x=k curve with 0.04% trading fees enabling lower slippage
- Volatile Pools - designed for assets with high price volatility
- They follow uniswap like generic AMM curve x*y=k with 0.3% trading fees
The Meter Foundation aims to implement the ve (3,3) model on both Meter and Theta Networks.
Some of the novel design choices in the ve (3,3) design are;
- ve locks are NFTs
- By tokenizing the lock position this allows a single address to own more than one lock, lock balances are cumulative and each lock contributes to the overall ve balance.
Listing fee. For a new token to be considered in the weekly VOLT emission, the token has to be whitelisted first. Only accounts with a certain number of veVOLT voting power could whitelist tokens. The number is based on the amount of circulating supply and how many tokens were staked in the ve locker.
veToken rebasing - to maintain veNFT holdings non-dilutive
Some of the design choices mean that there are a lot of calculations around Total Supply, Circulating Supply, Locked Supply, and involvement of NFTs. The complexity of these calculations and veNFT locks on one network means that the ve (3,3) model would require a significant development effort in its current state to be deployed on multiple networks. The development would also be complex.
With the priorities of Meter Foundation on Meter Network and its ecosystem growth, Meter Passport and Sumer Money; it is prudent to not devote these significant development efforts on modifications to a tested ve (3,3) model to accommodate both Meter and Theta Networks in our non-core area of expertise.
Evaluating the available options, Meter Foundation suggests a new DEX deployment on Theta Network with its own incentive token.
We are keen on community feedback on this approach.
The outline of the deployment suggested is below;
- Deploy ve (3,3) model on Meter Network with a window to;
- Enables users on Theta Network to move VOLT, TFUEL, TDROP liquidity to Meter
Make ve (3,3) operational on Meter Mainnet
Extend current deployment incentives on Theta for another month until ve (3,3) deployment on Theta
Close Meter Passport Support for VOLT transfers between Meter and Theta
- All VOLT on Theta will be exchanged 1: 1.3 for the new DEX token
- Deploy new ve (3,3) DEX on Theta
- Provide window to enable users remove liquidity from current deployment, add initial liquidity on ve (3,3)and exchange VOLT for new DEX Token
- Add back VOLT exchanged to the supply available liquidity mining on Meter
Some of the nuances in this decision are below;
The material changes for Theta users are;
- Incentive token replaced from VOLT to the new DEX token with lower circulating supply
- A more robust incentive design in ve (3,3) with added utility to the dex token and more active governance
- Full control of more liquidity rewards dedicated to the Theta ecosystem.
Ability to move VOLT to Meter Network before ve (3,3) goes operational on Meter
- Meter Network will support Theta users who wish to maintain their VOLT position by whitelisting TFUEL and TDROP pools on Meter Network
- These users can move their current liquidity to Voltswap on Meter Network
Token Exchange for remaining VOLT holdings on Theta
- With an aim to support Theta users who wish to remain on Theta Network, a potential token exchange program between VOLT and new DEX token can be undertaken.
- A premium of 30% over VOLT token holdings can be reviewed - 1.3 New tokens for every 1 VOLT token held at the time of exchange
- All current Theta pools will be incentivized through the current governance process until the new deployment is operational.
Please note that cross-chain VOLT transfers between Meter and Theta are planned to be closed if this proposal passes and ve (3,3) goes live on Meter Network.
With the suggestion, the current pools and yield farming deployment will be operated until the new ve (3,3) model is deployed on Theta. Users will continue to receive VOLT yield farming rewards.
We are open to community suggestions on the name for the new DEX on Theta
The Tokenomics suggested are similar to VOLT on Meter Network
- 100 Million total supply
- Initial Circulating supply - Tokens exchanged with VOLT on Theta
The current supply of VOLT on Theta is 13 million
All the VOLT on the Theta network after bridge closure will be added back to the supply of VOLT available for emission on the Meter Network.
We look forward to a discussion on the way forward on the new ve (3,3) model on Theta Network from the community that will help smoothen the cross over to the new deployment.
- Yes, let’s go ahead as proposed
- Yes, let’s go ahead with modifications based on community feedback
- No, let us rework on the proposal based on community feedback