# Plenty V2 Introduction {% hint style="info" %} Existing Automated Market Makers (AMMs) are primarily designed for individual Liquidity Providers (LP's), and incentivize liquidity in exchange for an emission of free tokens. While today, AMMs are often used by other protocols, either through token incentives, bootstrapping liquidity, or protocol owned liquidity. {% endhint %} The goal of the new Plenty is to better align emission of tokens to beneficial actions and solve the problem with current AMM designs where liquidity provision is temporarily subsidized while fee generation -the more sustainable incentives-generating mechanism- is not. The Plenty DEX requires modifications to make it easy for other protocols to leverage them: * Must be able to easily add token incentives to liquidity. * Must be able to easily bribe token emissions onto liquidity. * Must be able to accrue fees from incentivized liquidity. * Must be able to permissionlessly deploy liquidity. > With the above in place, any protocol, DAO, or project on Tezos can easily incentivize its own liquidity, be it for its token, its stable coin, or even other derivatives, and while doing so, fully accrue trading fees. {% content-ref url="../faq/what-are-the-differences-between-the-ve-models-of-curve-and-plenty-v2" %} [what-are-the-differences-between-the-ve-models-of-curve-and-plenty-v2](https://docs.plenty.network/faq/what-are-the-differences-between-the-ve-models-of-curve-and-plenty-v2) {% endcontent-ref %} ## Introducing a "ve" model {% hint style="info" %} Vote escrow (ve), a DeFi primitive pioneered largely by [Curve](https://resources.curve.fi/crv-token/understanding-crv) with `CRV` and `veCRV`. {% endhint %} #### A vote escrow (ve) model with two tokens is introduced to align rewards to beneficial actions: 1. `PLY`: a standard FA1.2 token used as a reward for LP token stakers. 2. `veNFT`: a non-fungible token (NFT) based on [a new ve model](https://docs.plenty.network/faq/what-are-the-differences-between-the-ve-models-of-curve-and-plenty-v2). {% content-ref url="../faq/what-are-the-differences-between-the-ve-models-of-curve-and-plenty-v2" %} [what-are-the-differences-between-the-ve-models-of-curve-and-plenty-v2](https://docs.plenty.network/faq/what-are-the-differences-between-the-ve-models-of-curve-and-plenty-v2) {% endcontent-ref %} Users can mint a `veNFT` by locking `PLY` in a vote escrow (ve) lock for a specified duration. `veNFTs` are used for voting. By voting a `veNFT` holder can claim the trading fees and bribes attached to the liquidity pool for the epoch (one week). In the next epoch (one week) `PLY` emissions are distributed based on the vote weight of each gauge. {% hint style="info" %} `veNFTs`can be traded on secondary markets like [objkt.com](https://objkt.com/), and have their own intrinsic value. {% endhint %} ### Voting for trading fees One important innovation here is that `veNFT` holders receive trading fees ONLY from the gauges they have voted for. This is a modification to [the ve model of Curve](https://resources.curve.fi/crv-token/understanding-crv) in which `veCRV` holders receive fees from the entire protocol itself. In the case of `veNFT` voting, users will vote for pools which generate the most trading fees. That should have the positive effect of attracting more liquidity in that liquidity pool, potentially leading to an increase in volume and trading fees. ### Inflation protection Another innovation is that `veNFT` holders also receive a share of `PLY` emissions based on the circulating supply. Anytime the circulating supply increases through inflation, a proportional increase will be attributed to `veNFT` holders. This makes the value proposition of locking very attractive as your lock does not get diluted by new `PLY` emissions. As `veNFT` can be traded, a different user from the one who created the vote lock in the first place can hold them to benefit. If this user is a protocol, it could use `veNFT` to direct `PLY` emissions to its own liquidity pools and earn its trading fees. {% content-ref url="plenty-v2-introduction/understanding-bribes" %} [understanding-bribes](https://docs.plenty.network/v2-docs/plenty-v2-introduction/understanding-bribes) {% endcontent-ref %} ### Different scenarios for different users

Alice, Bob, and Carol use different strategies.

* **Alice:** By providing liquidity and staking LP tokens Alice earns `PLY` rewards. Alice doesn't vote, so she won't earn any trading fees and bribes. The gauge weight of `Liquidity Pool 1` is lowered at the start of the next epoch, unlike `Liquidity Pool 2` and `Liquidity Pool 3.` Their gauge weights are increased at the start of the next epoch thanks to the voting activity of Bob and Carol. * **Bob:** By voting Bob earns trading fees and bribes related to `Liquidity Pool 2`. Voting for the gauge attached to `Liquidity Pool 2` increases the gauge weight at the start of the next epoch. * **Carol:** By providing liquidity, staking LP tokens, AND voting for a gauge, Carol earns `PLY` rewards, trading fees, and bribes. Voting for the gauge attached to Liquidity Pool 3 increases the `PLY` gauge weight at the start of the next epoch.