DEFI

The long-awaited Fantom new protocol developed by AC is about to be released. What is ve3.3? What are the details?

2022/1/12

Yearn founder Andre Cronje recently announced on Twitter that Fantom is about to launch a new project and shared a new token distribution mechanism - ve3,3. He also revealed more details about the new protocol on Twitter recently, indicating that the official launch is not far away.

https://twitter.com/AndreCronjeTech/status/1480555590883622913

Table of Contents

Introduction to ve3,3 Mechanism

ve3,3 is a new token distribution mechanism designed to balance participants in an ecosystem. Here are three key points of this mechanism: Assuming the initial token issuance is 20 million tokens, with a weekly token issuance of 2 million tokens.

1. Weekly token issuance adjusts based on locked tokens

This means that if 0% of tokens are locked as ve voting escrow, the weekly token issuance is 2 million. If 50% of tokens are locked as ve, the weekly token issuance is 1 million. If 100% of tokens are locked as ve, then the weekly token issuance will be 0.

Additionally, as more tokens are unlocked, the impact on the issuance will decrease.

2. Proportion of ve tokens held by lockers increases with the weekly issuance

Assuming a total token issuance of 20 million tokens, with 10 million tokens locked, and a weekly token issuance of 1 million tokens. When 1 million tokens are used as incentive rewards, the supply increases by 5% (100/2,000).

Simultaneously, the proportion of ve tokens held by lockers will also increase by 5% to ensure their holding is not diluted.

3. Locker positions can be converted into NFTs and traded on secondary markets

By tokenizing locker positions, it allows individual addresses to hold multiple positions that can accumulate. This further enables the trading of positions on secondary markets or lending out positions in future lending markets.

Through the form of NFTs, this solves the inefficiency of ve asset capital and addresses concerns about future liquidity.

About the New AC Protocol

Andre Cronje recently outlined more details about this protocol, which is related to AMM Automated Market Makers. Here are the details:

Support for exchanging closely related assets through new curves (stable exchanges)
Support for exchanging unrelated assets
0.01% transaction fee
Fees paid in base assets without conversion
Uniswap v2 compatible interface supporting all existing analytics tools and interfaces
No permission required to create liquidity pools
Support for Gauges metrics and Bribe vote buying features
Incentive fees issued rather than liquidity
Support for adding third-party tokens and incentives
Ve token holders can accumulate all fees for pools they vote for
No DAO

Improvements Needed for AMM Protocol

Current AMMs are primarily designed around liquidity pools, which is normal as most AMMs were launched without token incentives. These AMMs are widely used for providing incentives, guiding liquidity, or holding liquidity within the protocol.

However, these AMMs need some modifications to make them easier for protocols to use:

Easily provide incentive rewards for liquidity provided by users
Easily distribute token emission to users for providing liquidity
Generate fees from incentivized liquidity
Deploy liquidity without permission

With these conditions, any protocol or project can easily increase liquidity through incentive mechanisms, whether it's their tokens, stablecoins, or other derivatives. Additionally, this can generate fees in the process.

Lastly, Andre Cronje mentioned that the current AMM race is quite saturated and does not intend to launch an AMM protocol for competition. The newly introduced protocol will serve as infrastructure between protocols, allowing existing AMMs to integrate with new ones while still accounting for their ecosystem's fees, without losing any fees, quantity, or liquidity.