What is the ve(3,3) that AC is desperately promoting?
Overall, ve(3,3) is more like a group AMM, but it is not controlled by liquidity providers (LPs); instead, it is managed by the protocol, allowing the protocol to better control the inflation and emission rate of its own tokens.Author: 0x137, Rhythm BlockBeats
Recently, Yearn Finance and Keep3r Network founder Andre Cronje has been vigorously promoting a mysterious new project on social media—ve(3,3). However, so far, despite AC revealing many details about the project, its true nature remains shrouded in mystery. After gathering relevant information, the Rhythm editor has compiled the following article content.
AC's project will collaborate with Daniele, who has created popular projects like Abracadabra.money, Popsicle Finance, and Wonderland Finance. ve(3,3) will be built on a protocol-to-protocol service architecture and will not compete with existing projects. Overall, ve(3,3) resembles a group version of Curve, but it is not controlled by liquidity providers; instead, it is governed by the protocol, allowing the protocol to better manage the inflation and emission rates of its tokens.
The project's token is currently referred to as ve(3,3), but from the review chart below, it can be inferred that it will be called "SOLID."
How Does the Token Economy of ve(3,3) Work?
ve(3,3) will combine the "ve" voting escrow mechanism of protocols like Curve with the (3,3) rebasing mechanism of DeFi 2.0 protocols like OlympusDAO. Users will receive higher incentives and greater weight in protocol governance by locking their tokens for a longer period.
Like OHM, the actual value of the ve(3,3) protocol is less than its treasury book value, but the total price during token trading is higher than the treasury value. The higher the trading price, the higher the protocol's APY. The number of tokens staked by holders will increase over time due to rebasing, but the value of the tokens will also be somewhat diluted. Additionally, the fees generated by the protocol will be added to the treasury.
However, compared to Curve and OHM, ve(3,3) has a very interesting unique mechanism.
For Curve holders, the locked veCurve cannot be sold; they are mostly "trapped" in users' wallets. However, the "veToken" of ve(3,3) can be converted into NFTs, meaning holders can trade them, thus creating a secondary market for locked governance tokens and providing a way to sell voting rights.
In summary, the value of the native token of ve(3,3) is primarily driven by the following factors:
Locked tokens will grant voting rights for guiding the distribution of mining pool incentives.
The weekly emission of tokens will be adjusted based on the proportion of circulating supply; as tokens are continuously distributed, the pressure from emissions will gradually decrease.
The number of locked tokens will increase in proportion to the weekly emission.
Locked tokens can be converted into NFTs.
The smaller the proportion of locked tokens to circulating supply, the less emission distribution received, incentivizing more holders to lock their tokens.
Longer lock periods will also yield higher APR, thus incentivizing long-term locking.
KP3R: A Heavyweight Ally for ve(3,3)
In a previous introductory article, AC mentioned that ve(3,3) would not distribute fees in the form of native tokens or stablecoins, but rather distribute "fee assets" that can continuously convey fee value, thereby reducing the selling pressure on the native token.
KP3R (Keep3r Network) is currently the "fee asset" that accumulates fee value for Andre Cronje's project. It is a dual-function ERC-20 token, and its stakers have two sources of income:
FixedForex platform fees: FixedForex is similar to Curve but primarily targets the foreign exchange market, which has a potential scale of nearly a trillion dollars. In 2022, as more international participants enter the crypto world, the demand for trading various currencies pegged to stablecoins will increase, bringing more platform fees to FixedForex.
Keep3r Network platform revenue sharing: Keep3r Network primarily provides payment services for different protocols to help them delegate third parties to complete specific tasks.
Soon, KP3R will be transformed and built on the ve(3,3) model. AC has confirmed that ve(3,3) is testing KP3R and will be released as early as this week.
Under the new ve(3,3) model, the number of vKP3R will no longer decrease over time; instead, it will incentivize more holders to continue locking up their tokens. Users who want to receive fee distributions must lock KP3R and receive vKP3R in return.
In Rhythm's “Curve War Upgrade CVX Battle, the Exciting Power Struggle Continues”, it was mentioned that Convex transformed the Curve War into a battle over Convex by offering higher liquidity incentives, attracting protocols like Frax Share to join. Based on its unique revenue model and the new token economics of ve(3,3), KP3R is also likely to join and win this battle.
Driving Traffic for FTM and KP3R
According to AC's latest article, the native token of ve(3,3) will not be available for purchase on the open market; it will be distributed to the top 20 protocols based on the TVL on the Fantom blockchain.
As a result, ordinary users who want to capture the value generated by ve(3,3) have only two options:
Hold FTM and tokens from the top 20 protocols on FTM.
Hold KP3R.
As Miles Deutscher said, when all the top projects in a public chain ecosystem start competing for governance rights, the TVL will soar. New projects will be attracted by this, further bringing more liquidity to the ecosystem. Undoubtedly, the token distribution strategy set by ve(3,3) will bring higher attention to FTM and KP3R, and the future performance of the Fantom ecosystem is certainly worth watching.
