VCX Value Accrual
VaultCraft’s Incentive Flywheel
I’m going to break down the VCX Value Accrual Flywheel diagram above in an instructional manner so that you can see how you are accruing value just by holding VCX.
VCX IS ON BALANCER FOR SWAPPING AND PROVIDING LIQUIDITY:
https://app.balancer.fi/#/ethereum/pool/0x577a7f7ee659aa14dc16fd384b3f8078e23f1920000200000000000000000633
VCX
VCX is governance/liquidity incentive token that aligns incentives across all VaultCraft stakeholders and is designed to further optimize the following:
- Protocol revenue
- Smart Vault yield
- VaultCraft utility
- Liquidity
- Velocity
VaultCraft incentivizes liquidity using a liquidity incentive token VCX via an improved vetokenomics system. The improvements disincentivize farming-and-dumping and encourage long-term liquidity provision by aligning the interests between LPs and VCX holders.
- Vote-locked VCX is a Balancer LP token — VaultCraft uses the Balancer 80VCX-20WETH LP token as the lock token for obtaining veVCX.
- Smart Vault Gauges — Staking contract where users stake assets and are rewarded pro-rata depending on veVCX distribution.
- Reward token is a call-option for VCX — Reward tokens are call options on VCX (oVCX), enabling the protocol to accumulate much more in ETH reserves regardless of market conditions, as well as letting loyal VCX holders buy VCX at a discounted price.
- Max boost enabled for Smart Vaults — VaultCraft gives a 5X max boost to LPs who have veVCX, increasing the advantage of holding veVCX.
Lock VCX/WETH LP for veVCX
By locking your VCX with WETH in the 20 WETH 80 VCX Balancer pool, you receive vote-escrowed VCX, allowing you to vote on which Smart Vault gauges you want to distribute oVCX rewards every epoch on https://app.vaultcraft.io/boost.
Since VaultCraftDAO seeding liquidity, deposits have organically increased to $1.2M, improving overall liquidity and trading for all VCX stakeholders.
Read more about veVCX utility here: https://docs.vaultcraft.io/tokenomics/vcx/vevcx
Vote on oVCX distributions per Smart Vault
Smart Vault depositors are incentivized to LP the 20 WETH 80 VCX Balancer pool to use veVCX to direct oVCX rewards to their respective Smart Vault gauges in which they’ve automatically staked by depositing into the Smart Vault.
IMPORTANT NOTE: You do not need to LP the 20 WETH 80 VCX Balancer pool to earn oVCX rewards. You only need to deposit into the Smart Vault where you receive pro-rata rewards.
Imagine you only have 1 deposit in the rsETH Smart Vault and you LP’d the 20 WETH 80 VCX Balancer pool, logically you would use all of your voting power to vote on the rsETH Smart Vault to receive oVCX rewards, thus boosting your yield.
Smart Vault depositors earn oVCX
Every epoch, or starting every Thursday, Smart Vault distributors receive pro-rata oVCX rewards. oVCX is a perpetual call option on VCX where you can exercise the option at any time for a 25% discount on VCX. This means oVCX holders redeem their oVCX for VCX by paying the protocol at the strike price, or 75% of VCX market value. The VCX an then be immediately sold on Balancer.
Protocol uses WETH from oVCX redemptions to buyback VCX
WETH is used to buyback VCX from the 20 WETH 80 VCX Balancer pool at the end of every month. The first buyback and burn resulted in the following:
- 33.81 ETH (tx link) in VaultCraft revenue used to buyback 2,570,750 VCX
- 0.3% of the total supply, a $124,549.81 equivalent, has been burned
- 0.85% of total minted has been burned
- VCX in 80/20 BAL pool increased to $1,059,409
- WETH in 80/20 BAL pool increased to $267,400
- Total VCX burned is now 7,321,210 (Etherscan)
In addition, VaultCraftDAO burns the VCX treasury 1:1 each time oVCX is redeemed for VCX. Please read our docs for more detail here: https://docs.vaultcraft.io/tokenomics/vcx/treasury-burn
Conclusion
The stats dashboard https://app.vaultcraft.io/stats is a great place to monitor VCX, oVCX, protocol revenue, and Smart Vault deposits. Monthly buyback and burn reports will continue to be released as well.
https://medium.com/vaultcraft/1st-buyback-burn-c82a3e80fe44
