ve(3,3)

Background

First theorized by Andre Cronje and later implemented in Solidly, the ve(3,3) concept dictates that weekly token emissions are adjusted to a percentage of the circulating supply. ve(3,3) is delivered as a non-fungible token for enhanced capital efficiency.

Governance

Dystopia's governance and tokenomics model follows the standards set by ve(3,3). DYST holders can lock their tokens for up to four years in return for veDYST, an NFT that grants boosted voting power on gauge weights to decide which Dystopia liquidity pools get directed the most DYST emissions. veDYST holders will receive all the trading fees from the gauge they voted for, as well as 10% of total DYST emissions.

Dynamics

All the effects of ve(3,3) act in confluence to create a system in which swap fee performance is incentivized rather than total liquidity. Because veDYST holders dictate which liquidity pools get more emissions and receive swap fees as a reward, liquidity providers are encouraged to compete for generating the most swap fees. Dystopia also provides a bribe market to aid in rewarding specific veDYST voting activity. The act of cooperation in common interests by participants with different objectives is manifested through veDYST voting for concentrating emissions in gauges that generates more swap fees, while liquidity providers aim to receive most of DYST emissions by depositing liquidity in these highly incentivized gauges. This is the spirit of ve(3,3).

ve(3,3) in a nutshell

• DYST tokens can be locked for 6 months, 2 years or 4 years.

• The amount of veDYST emitted decreases linearly with time, providing reduced DYST rewards for lockers.

• veDYST governs Dystopia and drives DYST emissions with their votes for gauges. 90% of the DYST supply will be distributed to Liquidity Providers, and veDYST votes decide which gauges will receive the incentives.

• veDYST holders receive all trading fees from the gauge they voted for; trading fees are 0.05%

• Liquidity providers in gauges receive the emissions directed to the gauge but do not receive swap fees.

• The amount of DYST locked in relation to circulating supply directly affects the rate of emissions so the more DYST tokens locked in veDYST, the slower the emissions.

• veDYST can down-vote gauges from receiving emissions to prevent spam.

• veDYST can boost any amount of gauges and receive up to 2.5x more DYST rewards by providing liquidity in the boosted gauge.

• veDYST can receive bribes attached to a gauge by protocols when voting on the bribe interest gauge.