GoMining Launches Vote-Escrow (ve) Tokenomics
Last year, GoMining pioneered the Liquid Bitcoin Hashrate (LBH) concept, tokenizing Bitcoin hashrate and bringing ownership, usage, and yield generation based on Bitcoin mining on Ethereum and BNB chains. Their flagship product, the GoMining NFT, has a solid track record, paying out over 2,000 BTC to NFT owners over the past two years.
Most recently, GoMining announced a new update for their GoMining token: the introduction of vote-escrow (ve) tokenomics. Pioneered by the Curve DAO and adapted by GoMining, vote-escrow tokenomics is a token locking mechanism where users have the choice to lock tokens in exchange for future token emissions and more voting power.
“Governance plays a critically important role in blockchain systems to ensure the presence of proper incentives, foster growth and success, and significantly influence decentralization,” says GoMining founder, Zalan.
Let’s dig into the GoMining token, GOMINING, and what vote-escrow tokenomics means for the greater GoMining ecosystem.
The New GoMining Tokenomics
GoMining has three main mechanics powering its token:
- Discount Token Model: GoMining NFT holders can pay their mining fees (electricity and maintenance) using GOMINING with a 10% discount, saving on costs and increasing the amount of mined bitcoin.
- Burn & Mint Process: a distribution model that burns all tokens paid for the electricity and maintenance expenses algorithmically, re-distributing minted tokens to Service providers, Community rewards, veTokenomics stakers, and the GoMining team.
- Vote-Escrow (ve) Tokenomics: aimed on creating and maintaining incentivized community governance. Users can lock their GoMining tokens to the veGOMINING contract, acquire governance rights, and share of rewards allocated to the governance participants.
GOMINING as a Discount Token
GoMining NFT holders pay electricity and maintenance fees for covering mining fees. The protocol rewards loyal users and allows them to pay mining fees to Service Providers in GOMINING tokens with a 10% discount, saving more on mined BTC.
For example, if a user’s mining fees total up to $0.50 for one day, they can lower their cost to $0.45 ($0.50 * 0.9 = $0.45) by paying with GOMINING instead of BTC. This gives users the opportunity to save more on mining costs and earn more BTC.
Burn & Mint Process
All the GOMINING that is spent to pay for fees enters the Burn & Mint cycle. The tokens flows within the ecosystem are demonstrated below:
Let’s discuss the step-by-step processes related to Burn and Mint:
- Users (LBH owners) pay for the electricity and maintenance in GOMINING since it is more cost-effective than to pay with BTC earnings.
- All GOMINING spent on fees are sent to the Burn and Mint contract and are burned.
- Then, some new GOMINING are minted with a certain mint coefficient.
Specifically, after the burn is executed, a new, smaller amount of GOMINING is minted based on the equation m * X, where m is less than one (m<1). Because of this, the GOMINING burn is always bigger than mint. - All minted GOMINING is distributed across the ecosystem (to Service Providers, veGOMINING contract, GoMining rewards, and the GoMining team).
As of the time this was published, the mint coefficient is 0.80, and is expected to gradually rise up to 0.99 according to the following epoch schedule:
So if, for example, 1,000,000 GOMINING was spent in the first-ever “Epoch 0”, 800,000 GOMINING tokens would be distributed after.
Vote-Escrow Tokenomics
With the introduction of veGOMINING, users can lock their GOMINING in the vote-escrow contract and receive yield & voting power.
It is important to note that 30% of newly minted 800,000 GOMINING would be distributed to veGOMINING contract (20%) & GoMining rewards (10%).
veGOMINING yield
Users that deposit GOMINING into locks will receive a share of the 20% of newly minted GOMINING. The size of the rewards directly depends on GoMining’s token usage. If more users are spending GOMINING to pay mining fees, more GOMINING will be distributed. Thanks to the Burn & Mint cycle, rewards are not inflationary.
Let’s use the same above scenario with 800,000 GOMINING. In this scenario, 20% of GOMINING, or 160,000 GOMINING, would be distributed across veGOMINING locks.
veGOMINING Governance
GOMINING locks also receive voting power to engage in governance processes regarding GOMINING rewards distribution. Users will vote on how 10% of newly minted GOMINING should be distributed.
Governance votes will be limited to the adjustments of distribution for GOMINING rewards. Specifically, votes can determine the amount of GOMINING to distribute for:
- Rewards toward solo miners (e.g. extra discounts for fees)
- Rewards towards pool miners (e.g. increase the round multipliers)
- Increasing the computing power of the Greedy Machine NFTs
veGOMINING Yield
As stated in Figure 2, veGOMINING holders will earn a share of 20% of all newly minted GOMINING. The amount of newly minted GOMINING is directly dependent on GOMINING spent for GoMining NFT fees. The more total GOMINING spent on all NFTs’ fees, the more that will enter in circulation. Subsequently, the more GOMINING in circulation, the more GOMINING is distributed among veGOMINING holders.
Choosing the Lock Time
GOMINING lockers have a choice between locking their tokens from 7 days to 4 years, with voting power and staking yield increasing linearly as the lock time increases.
Lock a token for four years, and the ratio for veGOMINING/GOMINING is 1/1. Lock a token for one year, and the ratio for veGOMINING/GOMINING is 1/4.
- 1 GOMINING for four years = 1 veGOMINING
- 1 GOMINING for one year = 0.25 veGOMINING
Check out the latest docs to see how veGOMINING staking yield is determined and what rewards the governance process can vote on. If you have any questions about our new staking mechanisms, reach out to the team on our Discord, Telegram or Twitter!
Written by GoMining Content Creator Nima Cheraghi
