Understanding PLY & veNFTs
PLY is a fungible FA1.2 token and vePLY an NFT.
What can veNFT
holders do?
veNFT
holders do?Vote on the weekly
PLY
emission percentage split across the gauges of the different Plenty liquidity pools.Claim weekly trading fees from voted liquidity pools.
Boost
PLY
rewards APR for own LP stake.Claim weekly bribes from voted liquidity pools.
Advantages to locking PLY for vePLY
Similar to Curve’s veCRV
, vePLY
(and its associated voting power based on the duration of the lock) functions primarily around governance, gauge rewards, and gauge voting. It also serves as a reward booster, as liquidity providers (LPs) that hold vePLY
receive 40%-100% of the reward. Users receive more voting power the longer they lock their tokens, which helps keep value locked within the protocol.
So users that own PLY
that wish to participate in voting and receive a share of the revenue generated by the protocol can lock their PLY
for a given amount of time and receive a vePLY
NFT. This time lock can last as short as a week or as long as four years. Once a PLY
lock is created, a user can vote on different gauges to receive trading fees from the gauges that the user has voted for. The following is a general overview of the different time lock based voting rights:
Four Year Lock: 1
PLY
= 1 voteTwo Year Lock: 1
PLY
= 0.5 voteSix Month Lock: 1
PLY
= 0.125 vote
Similar to Curve’s vote-escrow token design, a user’s vePLY
voting power decays linearly over time and must be actively renewed to avoid decay. Although this is not a novel mechanism, it does help keep constant locking pressure on PLY
. Once the given time lock expires, the original PLY
deposit can be withdrawn from the lock.
Another iteration on existing vote escrow models is that the dilution of existing early PLY
locks is actively mitigated. A game theoretic application intended to keep PLY
staked for longer periods of time is applied through the provision of emissions. In short, PLY
locks also receive a share of PLY
emissions, based on the circulating supply. As more token holders lock, therefore, less PLY
rewards are distributed to LPs.
Three economic principles of Plenty's ve that deviate from the standard vote escrow rules from Curve
We have modified the math of the original first two principles of ve(3,3) to allow decent incentives for protocols that join later in the future.
Weekly
emissions
are adjusted as a percentage ofcirculating supply
The real emission
that the users receive is related mathematically to a base emission
as follows:
Meaning, if the weekly base emission
is set at 2,000,000. Then, if 0% of PLY
is locked for vePLY
, the entire 2,000,000 is emitted. If 50% of PLY
is locked for vePLY
, the weekly emission would be 1,500,000. If 100% of PLY
is locked for vePLY
, the weekly emission would be 1,000,000.
2. ve
locks increase their holdings proportional to the weekly emission
The locked PLY supply is inflated to prevent dilution as:
Assume a 1,500,000 PLY
weekly emission
, a total_supply
of 20,000,000 PLY
, and a locked_supply
of 10,000,000 PLY
. This would mean that 1,500,000 are minted and provided as incentives. Then, according to the math, total locked supply would be inflated by 3,75,000 PLY
.
3. vePLY
is transferable as an NFT
By tokenizing the lock position we allow a single address to own more than one lock. Lock balances are cumulative and each lock contributes to the overall voting power. This further allows locks to be traded on secondary markets, as well as to allow participants to borrow against their locks in future lending market places. By extending locks into NFTs, the capital inefficiency problem of ve assets, for example in DeFi protocols like Curve, is solved.
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