Sphere: The Big Picture
A Bird’s Eye View of Sphere Finance’s Yield & Governance
Hey, Sphereans! Welcome back to another deep dive.
A consistent challenge for the Sphere Content and Marketing teams is our attempt to simplify the often complex topics and innovations that Sphere is creating in the DeFi space, in order for our users to gain a deeper understanding without getting lost in the intricacies. Today, however, we are going to take the opposite approach: starting with a simple overview and analyzing its details in progressive depth. And with the launch of Preon imminent, it may be useful to take a step back and look at the big picture.
So join us, friends, as we view the trees, the forest, and the entire ecosystem of Sphere Finance.
Where Do We Begin?
Simply put, the big picture of Sphere boils down to two things: yield and governance.
Penrose, Unknown, Dyson, Preon, Covenant, SphereLend, and all upcoming ecosystem elements ultimately move in the direction of increasing yield and governance for Sphere.
The various ways that these ecosystem elements can integrate and work synergistically can admittedly become extremely complex at an increasingly rapid pace, especially to newcomers. Once again, however, every single connection ultimately leads towards the exact same end point. Having an entire suite of projects under one umbrella allows us to perform in an exceedingly capital-efficient manner, both for the protocol treasury and for Sphereans.
For example, rather than outsourcing treasury yield strategies and paying fees for doing so, it can simply be done completely internally; everything operates synergistically in a gear wheel-like action, and supports all other aspects of the ecosystem. The details of all the subsidiary projects, how they work, and how they can be used in isolation and together are entire realms within themselves, so it can be very easy — again especially as a newcomer — to get lost and overwhelmed in the extensive details and options available.
Which is where we return to the ultimate point of Sphere, which is to simplify all of this down into one token: $SPHERE.
One Token To Govern Them All
Now we are able to venture a layer deeper and talk about how that actually happens.
In order to earn ecosystem yield, users currently can yield-lock their $SPHERE in Dyson’s Sphere Earnings Pool for a period of 17 weeks.
This is essentially a single-sided staking of $SPHERE, with a 17-week time-lock on deposits. These “staking” rewards are not inflationary; rather they represent ‘real yield’ in blue-chip tokens from the ecosystem.
Soon these rewards will expand to include $vSPHERE or vested SPHERE, which can either be vested for liquid $SPHERE tokens or zapped into $ylSPHERE to compound. $vSPHERE also re-introduces a deflationary aspect of the token, but more on $vSPHERE once it all goes live.
Regardless, hopefully the wider concept is crystal clear: stake $SPHERE for 17 weeks at a time, earn real yield.
This is not the end-game for Sphere or $SPHERE, however. In time, the yield distribution of the Sphere ecosystem will transition to ve tokenomics, which is essentially a complex way of saying that, instead of single-sided staking $SPHERE, users will need to stake an 80–20 LP of $SPHERE.
Meta-Governance: A New Dimension of Governance
Here, Sphereans will have two options:
- Vote-escrow their LP into $veSPHERE for a maximum of 1 year,
- Stake their LP as $spSPHERE, the liquid wrapper of $veSPHERE.
Both $veSPHERE and $spSPHERE will still earn yield from the entire ecosystem. The difference is that vote-escrowed SPHERE, as the name implies, will be a governance token that will be able to vote to direct the governance of the Sphere treasury, making $veSPHERE eligible to earn bribes for those votes.
This is known as “meta-governance,” since $veSPHERE will control the governance of many other tokens.
$spSPHERE, on the other hand, is the liquid-wrapper of $veSPHERE, so $spSPHERE will forfeit its voting rights to $veSPHERE, but will still earn yield and maintain the convenience of being a liquid token. This creates “concentrated meta-governance” for $veSPHERE, where $veSPHERE holds its own voting power plus the voting power of $spSPHERE.
Final Points
If this is becoming too confusing, not to worry. A step back will clarify the situation once again. This all still leads to the same end point: yield and governance. The more the ecosystem grows, the more yield becomes available for Sphereans. The more governance the treasury accumulates, the more potent the meta-governance voting power of Sphere.
One of Sphere’s objectives is to lower and/or remove all the entry barriers to DeFi, making it as accessible as possible. Having so many ecosystem components and integrations can be overwhelming, but it allows us to cater to all different DeFi user bases and to a wide variety of risk appetites. It also allows us to simplify all of that complexity down into one token with an increasingly diversified yield and an increasingly concentrated meta-governance.
To learn more about everything the Sphere Ecosystem is developing and stay up to date on our future plans, join our community Discord server:
Thank you for reading, Sphereans! Until next time, Sphere over and out.
