Curve Finance was the first to implement the voting-escrow (ve) token model in 2021. Since then, many protocols have followed. This has revolutionized user perception of tokenomics in the DeFi space. For the benefit of our users, AshSwap has adopted the veToken model with additional flexibility and earning opportunities.
The problem
A majority of DeFi tokenomic models encounter the following issue: after initially bootstrapping protocol usage, the incentives eventually dry up, and interest fades. It can be bled dry by a small group of whales, who can also supply a lot of liquidity, seize the majority of token emissions, and then sell the tokens on the open market to make quick money.
The fact that user incentives are not in line with the underlying protocol’s long-term vision is another issue. The one token — one vote model is vulnerable to abuse by whales looking for quick gains because it only necessitates holding tokens in order to vote without committing to projects long-term. They have the ability to pass protocol-changing proposals, either for their own benefit or to thwart a project, and then sell the tokens afterward.
Clearly, governance tokens that only grant the right to vote need to be updated and have yet to prove to be the best model for DeFi projects. There are few incentives for anyone to invest themselves fully in a project when “governance” is the only factor driving demand.
However, the vemodel is one tokenomics model that does stand out.
What are veTokens and what are their benefits?
As mentioned above, ve stands for Voting Escrow, a system for temporarily locking up tokens (such as veCRV for Curve; or veASH for AshSwap). Take veASH as an example, the veToken serves the following purposes:
- Governance Voting
- Earn 50% trading fee; the amount of reward based on the ratio between your veASH and Total veASH
- Farm Boost
The lock duration of tokens theoretically represents the users’ dedication to the protocol. In exchange, users who time-lock their tokens for a longer period of time are likely to receive higher staking rewards and enjoy greater voting and future emission distribution power (gauge weight). A situation where users and stakeholders all win.
The veToken model also aids in supply and demand, which is a crucial component of token price. It also reduces the circulating supply and selling pressure.
Stakers will continue to earn passive income for the foreseeable future as long as the protocol continues to expand, eliminating the desire to leave a protocol for another with uncertainty.
The Reward Mechanism of AshSwap’s VeToken model
Taking advantage of veTokens’ revolutionary implementation, we adopted the veToken model and incorporated upgrades while keeping our users’ inclusivity in mind.
AshSwap offers better flexibility and earning power with the following:
- We offer up to 4-year locking period. In case you want to stake more, AshSwap provides an easy-to-use interface to add in more ASH. You can also extend the locking period at any time.
- Revenue sharing: By owning veASH, 50% of trading fees from all pools will be distributed to veASH holders in the form of stablecoins (actually, the LP tokens of the stablecoin pool).
- Emission Voting: The more veASH used to vote for a pool, the more ASH rewards that pool will get. So if you have veASH and happen to be an LP, you can vote for the pool you’re in to get more rewards.
- Yield boosting: When staking your LP tokens in the pools & having veASH, that veASH can be used for boosting your farm up to 250% and your yields accordingly, which means more income generated.
- Bribing: Apart from all the above benefits, our bribing feature allows anyone to bribe veASH holders to vote for their farms; thus you can earn more with their bribes.
More examples of how to maximize your earnings by veASH can be found in this medium.
How to get veASH?
Recently, we launched a Staking Reward Pool in which veASH stakers will share a prize pool of 2,000,000 ASH. The event will end at 04 PM UTC — on February 17th, 2023. We recommend you learn more about the event here.
🎈 You can buy ASH tokens directly on https://xexchange.com/swap
Guide on how to stake ASH to mint veASH:
Step 1: Visit the event site at https://app.ashswap.io/reward-pool/
Step 2: Connect your wallet.
We have four different options for you to choose from:
- MultiversX DeFi Wallet Extension (for desktop)
- xPortal DeFi Wallet (currently Maiar app — for mobile)
- Ledger Wallet
- MultiversX Web Wallet
Step 3: Select the amount of ASH tokens to stake in Governance Staking after clicking the Stake button.
Input the Amount of ASH you want to stake
Choose Lock Period: You will have four options to choose from (1 year — 2 years — 3 years — 4 years) with the equivalent rate as below:
- 1 ASH locked for 4 years = 1 veASH
- 1 ASH locked for 3 years = 0.75 veASH
- 1 ASH locked for 2 years = 0.5 veASH
- 1 ASH locked for 1 year = 0.25 veASH
Check the Estimate Staking board on the right side to review the veASH amount you will have, then click “STAKE”.
In case you want to stake more:
To claim your reward after you have staked:
Your reward will be updated every 30 minutes on AshSwap devnet.
After claiming the rewards, you can choose to “Stake for farming”, which means you will continue to add the LP-tokens reward to the pools for having more ASH at Liquid Staking, or you can “Withdraw immediately”. In this case, you will be transferred to the Pools and now you can withdraw your token at Add/Remove Liquidity.
About Ashswap
AshSwap is the first decentralized exchange built on the MultiversX blockchain that allows users to trade between stable assets with high volume and small slippage. As Elrond grows to become the infrastructure of DeFi, more types of stablecoins will flow in, and users will need a place to swap them.
