veCVG & ysCVG

Convergence enhances governance, redistributes treasury yield and makes novel use of NFT tokens. This article discusses locking, NFTs, treasury yield, and key takeaways.

I. Tokenized Positions

NFTs, also known as ERC-721 Tokens, play a vital role within the Convergence protocol. When you hold CVG, you have the option to lock it within the protocol for a period of up to 1.8 years. This lock-up period grants you the ability to actively participate in the protocol through voting and/or claim the yield generated by the treasury every three months. To initiate this process, you need to lock your CVG tokens, which not only enables you to exercise your voting rights and/or access treasury rewards, but also entitles you to receive a unique NFT that symbolizes your locked position.

This NFT contains all the essential details of your locked position, including the lock duration, the amount locked, and the chosen ratio between veCVG and ysCVG. It acts as a comprehensive record, providing transparency and flexibility for users to optimize their participation in the Convergence protocol. It also enables you to exit your locked position, if you manage to find a buyer for your NFT.

II. veCVG, ysCVG

As mentioned earlier, when you lock CVG, you can choose a ratio between veCVG and ysCVG. You can freely allocate your locking between veCVG and ysCVG in any proportion you prefer (e.g., 50 - 50, 0 - 100, 80 - 20…), but the entitlements will not be the same.

Owning ysCVG entitles you to a share of the treasury yield every quarter. The more ysCVG you own, the higher your share of the generated yield will be. On the other hand, veCVG grants you voting power within the Convergence protocol. Specifically, you can vote each week on how CVG inflation should be distributed. Directing CVG inflation towards a pool where you're farming can be pretty profitable, enhancing the overall yield you receive from the pool. Additionally, there is the possibility of getting bribed by a third party in exchange for your vote.

More on ysCVG: https://medium.com/cvgfinance/real-yield-on-sagittarius-0x-event-horizon-63de5500d8a9

III. mgCVG

mgCVG is the third synthetic token that you can receive by locking CVG on Convergence. It enables you to vote on every underlying protocol integrated by Convergence using the accumulated governance tokens. The voting power of mgCVG is not diluted over time. mgCVG is created only if you choose to lock your CVGfor veCVG, and the amount received is equivalent to the initial amount of veCVG.

More on mgCVG: https://medium.com/cvgfinance/sagittarius-0x-metagovernance-approach-ccb5b3e21f33

And thus, we delved into the ballet of synthetic tokens in Convergence. Their variety may be confusing initially, but they each allow flexibility, modularity, and many potential optimization strategies.

If you wish to dig deeper into the topic, you can consult the Gitbook: https://docs.cvg.finance/

That’s it for now, anon. Stay tuned for what’s coming next!