veBAL Is Live!
BAL holders and Balancer Liquidity Providers now receive a host of benefits with veBAL
TL;DR: veBAL is finally here. This means that:
- BAL holders should lock their BAL into veBAL to get a host of benefits in the new vote-escrowed (ve) system.
- Balancer LPs should stake their LP Tokens (BPTs, Balancer Pool Tokens) to continue to receive liquidity mining incentives.
With the veBAL Activation Proposal being approved by the Balancer community, the new veBAL governance system is kicking off. As described in the original veBAL tokenomics proposal, the new architecture has many advantages such as:
- Long-term alignment: By locking BPT, token holders will be encouraged to support Balancer over the long-term instead of speculating short-term.
- Predictability: Fully automated BAL minting and inflation schedule locked forever.
- Protocol revenue distribution: 75% of all fees generated by the protocol are proportionally distributed to veBAL holders.
- Plug&play compatibility with Curve’s ecosystem: it's expected that many protocols and products built on top of Curve's ve system will also launch on top of veBAL given the contracts have been kept the same.
This amazing new journey for Balancer Protocol requires action by both BAL holders and liquidity providers on Balancer (LP Token holders).
Vote Escrow is the mechanism of time locking tokens for a set period. The VE model aligns users’ incentives and focuses on long-term Protocol performance. The belief is users who timelock tokens the longest believe in the Protocol the most and should have the greatest influence in the direction of the Protocol. If you are new to this revolutionary tokenomics revamp, read our full recap here.
Let's break down all you need to know.
BAL holders
With the new ve system, just holding BAL does not give you any voting rights or any of the other benefits of the ve-system like liquidity mining boosting and Protocol revenue distribution.
To have these, you now need to hold veBAL, which you can get by locking LP Tokens (BPTs) of the 80/20 BAL/WETH pool. We encourage adding liquidity proportionally (80% in BAL, 20% in WETH) to avoid price impact which means you'd get less BPTs than you could for the same value added.
See the below a visual explanation of the simple process:
The longest duration you can lock your LP Tokens (BPTs) for is one year. The closer to one year you lock it up for, the more veBAL you get. As time goes by, voting power linearly decreases going to zero when your lockup end date comes.
At any time you can extend your lockup again for up to 1 year in the future which will again increase your veBAL balance.
An important reminder of an extra incentive:
In addition to 75% of protocol revenues, veBAL holders will also get 10% of all BAL minted weekly.
Don't forget to vote for your favorite pool
Once you hold veBAL you can actively steer the distribution of BAL for liquidity mining by voting on your favorite pools. The more veBAL a pool gets voted, the more BAL its LPs will receive from liquidity mining every week.
Balancer Liquidity Providers
On Thursday, April 7th at 0:00 UTC the on-chain liquidity mining system will kick off for Ethereum Mainnet.
From March 28, 2022 until April 7, 2022, Ethereum Mainnet Liquidity Providers on Balancer have to stake their LP Tokens (BPTs) to continue receiving liquidity mining incentives. If you don't do so, you will not get any further BAL from April 7th onwards.
Remember that you can also boost by up to 2.5x your liquidity mining APR by simply holding veBAL.
Polygon and Arbitrum LPs will only have to stake their BPT in the near future, once the on-chain bridges have been set up. This will be widely communicated so hang on tight for now!
Claiming BAL from On-chain Liquidity Mining
After April 7th, if you have staked BPTs from pools that got voted by veBAL holders to get liquidity mining, you will be able to easily claim your BAL incentives at any time.
Everyone in the Balancer Ecosystem is thrilled to see how far veBAL transforms Balancer Protocol. Special thank you to all of the developers and Balancer community members who worked so diligently to make this happen.
Head to https://app.balancer.fi/#/vebal now to get started.
Communications from Balancer Labs OU are intended solely for informational purposes, and should not be construed as investment or trading advice and are not meant to be a solicitation or recommendation to buy, sell, or hold any tokens mentioned. All figures are estimated and unaudited unless otherwise noted. As a technology company, Balancer Labs OU provides access to software.
