veSYNTH: Vote Escrowed Token
The ve-model involves token-holders taking on the risk of locking their tokens in exchange for specific rights, such as governance power, within a protocol. Vote-escrowed tokenomics helps align the focus of all stakeholders on the long-term performance of the protocol.
The following formula represents time-weighted voting of vote-locked tokens in voting escrow:
Instead of voting with a token amount a , tokens are lockable in a voting escrow for a selectable lock time t1 where t1≤tmax and tmax=4 years. After locking, the time left to unlock is t≤t1.
Where w, represents weight.
Vote escrowed tokenomics allows the token holders to select a lock-up period for their tokens. The longer you elect to lock-up your tokens, the more weight your tokens may get in the following:
- Governance voting power
- Boosted staking rewards
SYNTHR will have a model where different weights will be assigned to tokens proportional to their lock-in periods. For example, a user will be able to earn up to a 2.5x reward boost if he/she chooses to lock his/her tokens for a long time.
The veTOKEN model has many benefits, such as:
- Encouraging long-term-oriented decision making.
- Greater incentive alignment across protocol participants.
- Improved supply and demand dynamics.