Vetoken model has become a trend in 2022, and community has been asking for more utility for OMM, so thought it was a good time to have discussions about veOMM (name TBD). This has been previously discussed on the forum (Protocol Fee for Protocol Owned Liquidity - #18 by Rook5677), so early contributors have taken a look at the scope of work for the past few weeks. Based on the current estimates, it is expected to require a fair amount of work and take a few months to implement the token economics enhancement.
Let’s understand what the ve token model is about. It originated from https://curve.fi/ initially as they tried to align long term stake holders of CRV with additional incentives from the protocol (such as getting up to 2.5x emission of CRV and more governance power). Since the launch of Curve 1+ year ago, it has proven out to be a great token economics model, and many protocols are following the path as seen by the latest Maker’s governance proposal.
In simple words, users can lock up their OMM tokens up to 4 years, and users will have more governance power and qualify for additional OMM distribution from the protocol ( up to 2.5x) as they lock up more OMM tokens for a longer period of time. They will also have more meta governance influence on ICON P-reps and may receive more relevant airdrops (eg: GG, IAM). Those who are locking OMM tokens for a shorter period of time or not locking any tokens will be diluted in terms of how many OMM tokens they receive. As a result, this token economics enhancement will lead more OMM to be in the hands of those who are long term aligned with the protocol.
Locked up OMM tokens will not be transferrable, so they are committing to a long term alignment with the protocol while being rewarded for it. Weight of locked OMM tokens will decay linearly to 0 based on the amount of time one has staked. Below is an example:
- 1 week = 0.0048 veOMM per 1 OMM staked
- 1 month = 0.0208333 veOMM per 1 OMM staked
- 3 months = 0.0625 veOMM per 1 OMM staked
- 6 months lockup = 0.125 veOMM per 1 OMM staked
- 1 year lockup = 0.25 veOMM per 1 OMM staked
- 2 year lockup = 0.5 veOMM per 1 OMM staked
- 4 year lockup = 1 veOMM per 1 OMM staked
Earning Weight = min((dollarProvided * 40 / 100) + (totalLiquidity * votingBalance / votingTotal * (100 - 40) / 100), dollarProvided)
@benny_options has provided a great example on BALN token economics enhancement: bBALN - WIP: BIP - Balanced.