oVCX Burn Mechanics

VCX, a deflationary token economy

TL;DR

• [PIP-30] approved implementing a burn mechanism that matches oVCX redemptions every 3 epochs (1 epoch = 7 days)
• VCX, Popcorn’s new token to support the VaultCraft tokenomics, can be minted using POP at a 1:10 ratio
• The burn will incentivize participation in VaultCraft tokenomics and create a ~10%+ deflationary effect over the first 4 years

Mechanics

VaultCraft will set the max oVCX reward emissions to be 100 million, or approximately 10% of the max total supply of VCX if 100% of POP were to be converted (1 POP = 10 VCX). This oVCX budget will be funded via the DAO treasury.

For the first 13 epochs, 2,000,000 oVCX will be emitted through gauges. After this period, the amount of oVCX emitted per epoch will decrease by ~2.71% relative to the previous period.

E.g., 2M… 2.M, 1.947M, 1.895M, 1.845M…

or

lastRate * 1.0271e18 / 1e18

oVCX emissions will continue into perpetuity, depleting nearly the entire 100M budget within the first 10 years. VaultCraftDAO governance can vote to modify this system in the future.

Visually, the emission curve looks like this:

Illustrative

Assuming 100% of oVCX is redeemed for VCX, prompting the burn mechanism, the net deflation and total supply look like this:

Illustrative, actual figures depend on oVCX redemption rate and VCX market price

VCX Token Distribution

VCX is pre-allocated to both the burn mechanism and oVCX emissions in the new VCX tokeconomy. Please see our docs for a more detailed explanation on VCX: https://docs.vaultcraft.io/tokenomics/vcx.

Conclusion

So, who wins? Everyone

• Early adopters receive the highest emission rates, boosting their yields on Smart Vaults
• Token holders see deflationary tokenomics
• The market gets deeper liquidity since oVCX incentivizes LPing the Balancer 80/20 pool
• DeFi protocols get more TVL since they can boost the yield on vaults using their strategies

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