The most advanced and sustainable tokenomics ve(3,3) has ever seen
Dystopia is an application with a different view of Decentralized Exchanges. To gain greater insight into how the Dystopian future will look, here are some breakdowns of the governance, locking, token distribution, and bribe mechanisms.
Governance
Dystopia realized that one of the most important challenges for DeFi protocols is a coherent and efficient governance model.
Dystopia decided to solve this problem through the veModel, popularized by Curve. Moreover, DYST tokens are the liquid and tradable version, while veDYST are the locked tokens participating in the governance process. Important to note, veDYST balance decreases linearly over time.
- 4 years lock 1 DYST= 1 veDYST
- 2 years lock 1 DYST= 0.5 veDYST
- Six months lock 1 DYST= 0.125 veDYST
Locking Benefits
veDYST holders receive trading fees from the gauges they have voted for, in addition to voting power for allocating DYST emissions.
Lockers’ DYST holdings will increase proportionally to the weekly emissions, creating a reduced-dilution effect for early lockers.
This reduced-dilution approach initially ensures that for every 1 DYST minted as emissions for liquidity providers, approximately 0.1 DYST goes to veDYST holders. The veDYST emissions rewards relative to liquidity providers emissions rewards begin at approximately 10% but decrease at a small rate determined by the amount of circulating tokens and amount of tokens locked. A higher lock percentage will keep the ratio of rewards closer to the initial 10% ratio. Less locking will lead to a lower ratio of DYST rewards for veDYST holders relative to liquidity providers.
Weekly Emissions
Weekly emissions are dependent upon the ratio of veDYST to total DYST circulating supply:
veDYST.totalSupply() / DYST.totalSupply()
The result is that the more users that lock in, the smaller the rewards distributed to Liquidity Providers.
Token Distribution:
Dystopia aims to have a fair launch, so that all users can feel confident in the protocol. 10 million DYST will be given to Polygon Ecosystem DAO as a locked NFT. While another 10 million will be split amongst Frax, QiDao, Terra and 26 other Polygon native protocols. Based on simulations, we expect the total supply to converge near 100 million DYST, meaning that this will be around 20% of the future supply, but this is all dependent on the amount of DYST locked.
After a two week warming period to decide the first gauge weights, emissions will begin for the liquidity providers. There is no set DYST cap, but initially there will be a release of 20 million DYST. Through predictive modeling, the total DYST supply will likely be in the range of 100–200 million. This is entirely dependent on the ratio of locked veDYST to total circulating supply of DYST. Given an expected 80–90% locked ratio, there is expected to be 100 million DYST released over the next 4 years.
Important to note, if the lock ratio is close to 70% the total supply will be closer to 300 million, and under an extreme case of 30% locked the total supply will near 1 billion.
The first 2 months will see high emissions levels so that the community can accumulate DYST in a fair and equitable manner before the emissions are expected to stabilize and heavily decrease.
Emissions Schedule:
Under assumption that 90% DYST lock
Under assumption that 70% DYST Lock
Boosting
Just like Curve, on top of deciding where DYST emissions should go, lockers can also boost their DYST rewards. Individuals who provide liquidity may be able to receive up to 2.5x more DYST rewards. Each gauge has a working balance which can be calculated as per the formula below:
This means that if all the liquidity deposited is farming without any veDYST locked, they would all receive the boosted rewards. A user who stakes liquidity along with veDYST, however, will receive boosted rewards, meaning users who do not have veDYST staked are no longer receiving the boost.
To use veDYST power in a gauge you must attach your veDYST NFT into the selected gauge in the moment of staking.
Bribes
Protocols can increase the depth of their liquidity pools by bribing veDYST holders to vote for their pools. On Dystopia, it’s possible for anyone to attach bribes onto a gauge and those who vote for it are instantly able to claim them.
It is also possible to downvote which prevents emissions from being distributed to a pool.
