Paribus veTokenomics. All You Should Know.
About veTokenomics.
Paribus is set to introduce a groundbreaking concept called veTokenomics. This concept involves freezing tokens for a specific period, encouraging long-term engagement and reducing the tokens' market supply. In exchange, users receive veTokens that cannot be sold or transferred. By participating in the governance mechanism and locking their tokens, users contribute to an organic increase in token price over time.
While locking tokens for protocol revenue is already possible in some DeFi initiatives, the veToken architecture offers a unique feature. Owners of locked tokens gain control over the emission flow, enhancing liquidity in specific pools. Emission refers to the creation and release rate of cryptocurrencies, which affects the economic model and inflation/deflation dynamics. This alignment between protocol success and tokenholder incentives prevents whales from manipulating token prices through voting power.
In light of a regulatory environment that poses challenges to new technologies, Paribus recognizes the need to expand decision-making and governance roles for the protocol's long-term health. The adoption of veTokenomics aligns with this vision, incentivizing long-term PBX holders and fostering a fair and open governance model. Drawing lessons from successful implementations and anticipating challenges, Paribus aims to create a governance framework that benefits the Paribus community.
VeTokenomics requires locking native tokens like PBX for a specific duration, granting users veTokens that cannot be traded or sold. The "ve" in veToken stands for "voting margin," as these tokens play a role in governance and staking rewards. While some veTokenomics models limit holders to submitting or voting on proposals, others provide a percentage of protocol fees based on locked token quantities. The veToken architecture ensures an improved alignment between protocol success and tokenholder incentives, curbing whale manipulation.
Although it is challenging to completely eliminate whale influence, the combination of veTokenomics and a second-order voting system proves effective in limiting their impact. As technology advances, veTokenomics has the potential to be a game-changer, and Paribus is dedicated to developing optimal solutions to address technical and ethical challenges. Prioritizing safety and balance, Paribus aims to implement the best available technology while providing solutions that benefit the community.
veTokenomics Benefits
In terms of benefits, veTokenomics rewards tokenholders for locking veTokens, reducing the supply of LP tokens and alleviating selling pressure. This prevents significant token holders from manipulating prices. Additionally, this popular tokenomics model encourages increased liquidity in pools, enhancing the stability and peg maintenance of stablecoins.
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