The CVE token can be converted to veCVE via the vote-escrow smart contract, which follows a modernized voting escrow model. CVE can be locked up for a period of time (12 months) to gain access to DAO voting and other benefits.
Locking mechanisms inside Curvance vary from conventional methods, allowing for only a single duration of one year. Like many other systems, token voting power decreases linearly as the lock matures. The issue of the necessity to constantly relock to maximize voting power has been addressed with the addition of a "Continuous Lock" mode. This mode allows a user to keep their veCVE position at a full-duration lock that can be enabled or disabled at any time and provides a modest boost to voting power, and a large boost to protocol fees.
By locking CVE as veCVE, a user can access platform fees, voting power for gauge emissions, and potentially even bribes.
Note: While on "Continuous Lock," a veCVE position will stay continuously at a full 12-month lock. This can be disabled anytime, allowing the lock timer and voting power to decrease linearly. It can also be re-enabled at any time, which will boost the lock duration back to full length and re-enable the boost to voting power. A user can do this an unlimited number of times.
Users can also opt into combining and condensing their locks; this re-extends the lock back to max duration and cleans up a user's UI/UX interface.
Rewards can be distributed proportionally to holders of veCVE. For example, if there are 10,000 veCVE in existence and you own 1,000 of those locked tokens, you would theoretically earn 10% of all fees generated on the platform.
The above scenario is a general guideline; the reward distribution depends on the number of token holders using continuous locks within Curvance.
Utilizing Wormhole, the protocol allows users to move their CVE and veCVE tokens from one chain to another.
This has multiple benefits:
Make use of lower TX fees.
Make use of faster block times.
Tokens will never be stuck on one chain.
Example: Timothy locked CVE for veCVE in the continuous lock on Ethereum. He did this at a time when gas prices were low; now gas prices are high.
Thanks to the versatility of Curvance, Timothy is able to use the migration service to move his locked veCVE from Ethereum to Arbitrum, where he is able to enjoy lower transaction fees and faster block times.
The migration service allows for flexibility and consistency. Users can choose where to store and use their veCVE based on their preferences, whether for lower transaction fees, better security, or deeper liquidity.
How does Curvance generate revenue for sustained development and growth?
The Curvance protocol generates revenue through various streams that can benefit both veCVE token holders and the DAO. Each revenue source is designed to enhance the protocol’s sustainability, incentivize participation, and reward stakeholders, creating a balanced ecosystem where both veCVE holders and the DAO contribute to and benefit from protocol growth.
veCVE holders can receive specific revenue streams that align their interests with the protocol's performance, incentivizing their ongoing support and governance participation. Some revenue streams can be distributed as USDC at each epoch, while others provide additional benefits tied to holding voting power in the CVE Gauge System or migrating locks to certain chains:
Fee on Underlying Yield from Deposits (15% currently): veCVE holders benefit from a share of the yield generated by deposits, aligning rewards with overall protocol growth.
Bribe Rewards: Revenue from external voting incentivizes that affect CVE Gauge emissions.
Partner Protocol Incentives: Partner protocols can contribute incentives that veCVE holders receive, fostering collaboration and enhancing yield within the Curvance ecosystem.
Chain/Network Incentives: veCVE holders can earn a portion of incentives provided by partner chains and networks, rewarding them for contributing to the protocol's multichain expansion and presence.
The DAO also benefits from revenue streams that support long-term protocol development, security work, and expansion. These streams help the DAO remain self-sustaining and responsive to the needs of the overall Curvance community:
Fee on Active Loan Interest Rates: The DAO can receive a fee on active loans, enhancing its revenue as lending activities grow.
Application-Specific Sequencing: Revenue from selling liquidation order flow will make liquidations in the Curvance protocol highly profitable for the DAO.
Fee Switches on Zapping Tools: A fee switch on native Zapping tools can provide a revenue stream for the DAO, supporting innovative tooling and improvements.
Partner Protocol Incentives: Additional incentives from partner protocols can also benefit the DAO, supporting the protocol’s collaborations and growth initiatives.
The direction of specific revenue streams to veCVE holders and/or the DAO is intended to foster sustainable growth and robust governance within Curvance. By balancing benefits between veCVE token holders and the DAO, an ecosystem where stakeholders are motivated to contribute to and support the protocol’s ongoing success is created.
Access one's CVE liquidity early, for a price
For users who have locked their CVE tokens as veCVE, they have access to the Emergency Unlock function. This function is available for users who need immediate access to their liquidity before the lock matures. The Emergency Unlock provides a way to unlock veCVE early, subject to a penalty that redistributes forfeited tokens to the DAO treasury.
When a user opts to unlock veCVE early, they incur a penalty on the underlying CVE amount (currently 80%), that gradually decreases as the lock nears maturity.
Examples:
If a user locks 1,000 CVE for veCVE and chooses to use the Emergency Unlock immediately, they would receive 200 CVE back while the remaining 800 CVE (80%) is redirected to the DAO treasury as the penalty.
As the lock duration progresses, the penalty decreases, reaching zero once the full 12-month lock period has completed.
Starting Penalty: The initial penalty rate is configured by the Curvance DAO (currently 80%).
Linear Reduction: The penalty rate decreases linearly as the lock approaches its 12-month term, incentivizing users to hold the lock as intended.
The Emergency Unlock function allows users flexibility while ensuring that early exits contribute to the DAO’s sustainability by replenishing the treasury. This design maintains protocol stability and aligns user incentives with long-term engagement, balancing flexibility with a commitment to the platform’s growth.
The Curvance Collective
The Curvance DAO is the governing entity of the Curvance protocol and is controlled by the holders of veCVE.
Voting power from veCVE is aggregated from all chains supporting the token and accumulates voting power of all locks across all supported chains. The more veCVE voting power a given user has, the stronger that user's voice will be within the DAO.
The goals are a democratic, transparent, decentralized, strategic decision-maker involving stakeholders and incentivizing participation and contribution.
The DAO can direct structural changes to the protocol through DAO proposals. Any member of the DAO can offer a proposal to improve the Curvance protocol. Proposals may be offered via a public forum to facilitate discussion between token holders and to collect feedback. Once a quorum is reached on the forum, an official proposal and voting process is initiated on Snapshot.
Here are some examples of topics that are related to governance proposals:
Expenditures
Treasury
Fees, features, and functionalities
Security
Protocol parameters
Other topics
Gauge Emissions allow approved Curvance pools to receive continuously streamed CVE rewards decided by the DAO.
We have explained this model in detail under Multichain Gauge System.