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Tokenomics

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Overview

The Venus Protocol tokenomics have been reevaluated to optimize income distribution and cater to the protocol's present and future needs. Version 4.1arrow-up-right of the Venus Protocol revenue distribution model optimizes the allocation between rewards, treasury reserves, and a risk fund. Following the cessation of the BNB Burn program (VIP-585arrow-up-right), the previous 25% BNB Burn allocation has been redistributed to the Treasury.

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XVS Vault Base Rewards

The XVS Staking Vault is an integral component of the Venus ecosystem. It enables governance voting participation and is a prerequisite for Venus Prime eligibility. To incentivize XVS staking, additional rewards will be offered in the form of Base Rewards (previously referred to as Legacy Rewards).

These rewards will be transferred every six months from the XVS Distributorarrow-up-right to the XVS Vault Storearrow-up-right, where they will be emitted at a rate of 308.7 XVS per day.

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Revenue Distribution from Protocol Reserves

Protocol reserves are mainly composed of accumulated borrow fees. The model for revenue allocation from these reserves divides income into four segments:

  • Treasury Reserve (40%): The treasury reserve is used to fund community-driven initiatives and essential protocol expenses for its ongoing operations.

  • XVS Vault Rewards (20%): This allocation is designated for the buyback of XVS, which is then distributed via vault rewards.

  • Venus Prime Token Program (20%): Used to boost select market APYs with organic rewards for users that qualify.

  • Risk Fund (20%): This fund is established to address potential shortfalls in the protocol, particularly in situations of ineffective or delayed liquidations.

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Allocation for Additional Revenue Streams

Other revenue streams include liquidation penalties and potential income generated from future product releases. The revenue distribution for these streams is as follows:

  • Treasury Reserves (60%)

  • XVS Vault Rewards (20%)

  • Risk Fund (20%)

This dual allocation model accounts for the diverse revenue sources within the Venus Protocol ecosystem, ensuring robust and responsive financial management. As the protocol evolves and introduces new products, these models may further be adjusted to optimally serve the Venus community.

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Chain Eligibility

Revenue distribution to XVS Vault Rewards and Venus Prime is subject to a chain eligibility threshold: a chain must generate at least $50,000 in average monthly revenue over a rolling 6-month period to qualify. Chains that do not meet this threshold send 100% of their revenue to the Treasury.

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