Wombex Bribe market: explained
Wombex uses close ties… it’s time for bribes!
Defi’s first rule says: never underestimate the power of Bribes.
Bribes in Defi are legendary since the most considerable stablecoin exchange — Curve finance became a powerhouse bribes host buzzing widely in Defi.
Stablecoin projects rushed in a queue to secure a spot in the $CRV rewards distribution, paying dozens of USD millions in bribes for veCRV, vlCVX (vote-locked token of first-ever veToken yield aggregator, Convex finance), and token holders of another DAOs which heavily accumulated veCRV.
Now it’s the turn of the BNB chain and Wombat to get fully fueled by bribes spreading in the ecosystem. Wombex is in the house and ready to deliver the best and most powerful bribe market.
What is necessary to know to be early on Bribes in Wombat?
The bribe is paid to owners of voting power to reach a desired outcome in voting. Every bribe includes two participating sides:
- The briber — a person or a project that aims to get some amount of $WOM rewards to its pool on Wombat without directly buying and owning veWOM voting power.
- The bribe takers — a community of veWOM position holders willing to trade their voting power in current voting for some valuable assets (such as stablecoins or other tokens)
Wombat governance is centered around pool rewards decision-making. In simple words — if veWOM holders are willing to allocate more rewards to some pool (for example, hypothetical $XUSD stablecoin), they can vote, and $WOM rewards will be allocated to this pool.
Protocols and DAOs behind stablecoins or BNB LSDs can directly own veWOM to vote on their pools. However, in most cases, renting voting power in a particular vote is much more efficient than building a veWOM position and holding it for years, being exposed to volatility.
You could ask — protocols and DAOs could allocate their tokens for rewards using Wombat (like Wombex gives some amount of $WMX tokens for rewards in wmxWOM/WOM pools), why wouldn’t they do it?
The answer is simple — cost efficiency.
Why should someone allocate $1000 for rewards if it is possible to bribe veWOM holders for $500 and receive the same $1000 as rewards?
Below we share vlCVX bribe efficiency chart:
Bribes allow the bribers to set up rewards for their pools by paying only pennies on the dollar. This multiplier is one of the essential metrics of the bribe market.
To bribe veWOM token holders, the briber should find veWOM whales and negotiate with them.
The Wombex is the largest veWOM token holder in the ecosystem, with more than 36% of the voting power
However, this voting power doesn’t belong to some narrow group of people. It’s a community-owned stake belonging to all vlWMX token holders. So, the briber should negotiate with the vlWMX community.
Note that the Wombex community also owns ~66% (or ⅔) of Wombat TVL at the same time and is the only project in the Wombat ecosystem that continuously acquired more and more veWOM for the protocol (>200k WOM last month).
The Wombex bribe market is a tool where bribers can buy voting power directly by paying vlWMX token holders for voting on their pools:
The bribe market works as follows:
- There is a list of all pools available for bribing in the Wombat ecosystem.
- Anyone can add rewards for voting on any pool using the “Add Bribe” function. The total amount of rewards is indicated in the table.
- vlWMX holders can vote at any pool they want and split rewards among all voters for this pool.
- When the bribing round ends, vlWMX holders can claim rewards weighted on their stake in voting for a particular pool.
So, vlWMX holders can “rent out” their stake every bribing round and receive streamlined rewards.
Is owning vlWMX more cost-efficient than owning veWOM?
Yes!
Owning vlWMX is more efficient for users, protocols, and DAOs than owning veWOM directly.
Voting using vlWMX is 2.4x more efficient than voting using veWOM since every vlWMX owns 2.4 veWOM tokens locked in the Wombex contract. In addition to that, vlWMX holders receive a share of protocol fees that now is around 50% APR.
What about other bribe markets and whales with solid veWOM positions?
The academic research behind the theory of voting demonstrated that the size of the stake is critically important. One of the core theories we want to mention is Banzaf Power Index. According to the Banzaf concept, the chance of the stake to pivot the voting is the most critical metric.
In simple words, the power of a token stake in voting grows non-linearly with the stake size. The 2% stake is >2x more potent than the 1% stake since it has a much greater chance of pivoting the voting. The 10% stake has more than 10x power vs. 1%.
So, the 36% is much more significant in vote pivoting than the 36 1% stakes since they need a high level of coordination and interaction to vote on the same option in a model stochastic-style voting experiment. Even 25% + 11% is much less potent than one 36% stake since both stakes should vote on the same option and the probability of such an event is far from 100%.
It is why Wombex’s 36% really matters.
Our research of Convex and Aura confirms the Banzaf Power Index theory for more than one year, and dozens of votings occurred in Curve and Balancer ecosystems, respectively.
It is much easier to allocate bribes to one solid platform like Wombex, which has a very high probability of achieving a desired voting outcome than to bribe small whales and other bribe market projects with much lesser stakes. To get 36% from 25% and 11% bribe markets, the project or a DAO should successfully bribe communities of these two projects, which is a tough job without any guarantees.
What is better — to pay one guy who probably will “solve the question” or to pay two less powerful guys who will do “everything they can” without any guarantee?
Historical bribe markets stats and vlToken DAO ownership
Since there were no bribes in the Wombat ecosystem yet, we propose to analyse stats of historically-successful bribe markets built around Convex and Aura vlCVX and vlAURA tokens.
Bribes for vlCVX holders are around $0.05 per single vote now, peaked at $0.64 at the top of the recent bull market:
There is no such dashboard for $AURA. The historical price per one vlAURA vote is in the $0.05–0.10 range. Aura finance is a fork of Convex with similar token metrics.
Since vlToken ownership is often much more efficient for protocols and DAOs that own veTokens directly, vlCVX and vlAURA are in portfolios of tier-1 Defi DAOs:
Convex’s vlCVX is owned by FRAX, Olympus, Redacted Cartel, KeeperDAO, BadgerDAO, and even Terraform Labs, the company behind the infamous Terra blockchain.
Aura.finance’s vlAURA is owned by GnosisDAO, BadgerDAO (including Barger’s GraviAura product), Inverse, and TempleDAO.
In the case of Wombex, we expect that DAOs will add vlWMX to their portfolios to grow their stake, influence, and future yield extraction flow in the Wombat ecosystem.
How to be early to the Wombat bribes? The ultimate guide
First, subscribe to Wombex socials and catch all of it!
While waiting for the bribe market release, it’s time to build your vlWMX position for bribes and check out all future unlocks (the very first of them will occur in early February). It would allow you to not miss your voting power if the portion of your vlWMX stake will unlock over time.
When the bribe market launches, you need to access the Wombex bribe market section that will appear on the wombex.finance website and vote every round.
Note — if you own vlWMX but don’t participate in voting, you wouldn’t receive any rewards.
You should be active and vote on time to receive all rewards that you could with vlWMX. It’s simple, and you don’t need to do anything else.
Just prepare your vlWMX, and don’t miss a vote!
See you on the Wombex bribe market!
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