Building upon the new tokenomics from [PIP-29], this proposal aims to implement a token burn that matches oVCX redemptions. I.e., if user redeems 1000 oVCX, they will receive 1000 VCX and an additional 1000 VCX will be burned.
The purpose of this burn is to incentivize oVCX redemptions by creating a deflationary effect from participating in the full token lifecycle. When users redeem their oVCX, they are reducing the total supply (through the burn) which applies a positive tailwind for price action. Additionally, they are receiving liquid VCX at a built-in discount to market prices (through oVCX redemption). This acts as a dual incentive for users to participate in the VCX token system e.g., Balancer LP, veVCX, oVCX, gauges, and Smart Vaults.
- Calculate oVCX redemption every 3 epochs and burn the equivalent amount of VCX to the amount of redeemed oVCX
To support a strong tokenomics model by providing additional incentives for participation. See below for token holder actions and their resulting effects:
- LP into 80VCX20BAL Balancer pool
- Vote escrow their Balancer LP token for veVCX
- Deposit into a Smart Vault
- Use veVCX to direct oVCX emissions to their gauge (Smart Vault)
- Earn and redeem oVCX
- Earn yield from the Balancer pool’s trading fees + provide token liquidity
- Earn voting rights on oVCX emissions using veVCX for gauge voting
- Earn yield from Smart Vault strategy
- Boost yield through oVCX emissions on their Smart Vault deposit and receive bribes
- Reduce token circulating supply while claiming liquid VCX at market discount