The ideas presented here can be considered incremental and complementary to each other.
Initially, this proposal looks to frame previous proposals from just a locked Orca (xOrca) to vote token (vOrca), while providing a new outcome as a fusion of previously proven and successful vote dynamics veOrca.
The more simple form to provide more value to the Orca token is by reducing the liquidity of the token in the market, generating appreciation for the token. This can be achieved in the form of “staking”. The locked Orca (xORCA), would reduce the amount of Orca liquidity in the market, and will provide a natural appreciation. Users that locked Orca in form of xOrca within the protocol would accumulate system fees over time in the form of additional Orca.
Considerations: Because of the Orca volume, the APR could face low values that may not incentivize users to lock within the protocol as expected. Additionally to this, the current low utility of Orca could also generate larger sell pressure instead of driving users to lock it. Finally, driving incentives to locked tokens instead of liquidity pools and Whirlpools would discourage the participation of a broader audience.
A vOrca token (vote Orca) would drive a higher value to the orca token by generating intrinsic value on itself. vOrca grants token holders governance power over the Orca protocol. Locking it within the protocol safeguards voting power for the user and the protocol. At the same time, the stakes/lockers could receive on top of the governance power the same system fees that the xOrca token mentions before.
Considerations: The main considerations on top of the previously mentioned ones for xOrca, would be the strategy to drive intrinsic value by governance. If the protocol does not have a higher participation rate on governance or the governance benefit is not enticing enough for the community, the token will depreciate equally.
The best alternative to both mentioned dynamics would be to adopt the dynamics of a xOrca token as a “liquid” alternative to staked Orca tokens, where a vxOrca token would become a locked Orca token that provides yield and higher voting power. And opens the opportunity of increasing the value of the Orca token even more of its constantly increasing intrinsic value. This is explained next as veOrca:
A veOrca token (vote-escrowed Orca) would drive a higher intrinsic value for Orca tokens, by incentivizing Orca holders for the long term.
Introduce vote-escrowed locking of Orca as a replacement for staked Orca, where a longer locked duration grants a greater share of voting power and boosted ORCA emissions. Orca would be locked up for up to 4 years in a contract to mint veOrca.
veORCA will replace ORCA in governance voting. Aiming to introduce gauges that dictate ORCA emissions directed towards each Orca pool as an ongoing governance topic.
Orca incentivizes certain liquidity pools (LPs) with Orca tokens to those who provide liquidity on those pools. If Orca enables a voting token, an additional layer on top that could allow anyone (even other protocols) to vote for those emissions on specific pools. This would provide more intrinsic value to Orca, and would increase demand for it. These votes, as other protocols that have implemented similar dynamics, could haven for a two-week period. This can also create other dynamics like vOrca/veORca holders receiving “bribes” every two weeks from the protocols that want to incentivize their own LPs.
Beethoven, a DEX in the Fantom ecosystem,announced that they’d be implementing their gauged voting + bribing system in late December 2021 ($BEETS = $0.15). It was fully implemented in February 2022. Since then, the token increased to a high of $1.30. The price increase was despite FTM token going down in value by about 50% from mid-January to present.
One of the beets.fi community members keeps a spreadsheet showing how the past voting rounds & bribes have played out.
(See Beetoven Bribes). On the last round of votes ( “Vote 2” tab) these were the main results:
One protocol offered $6,350 in $USDC stablecoins for every 1% of the vote that went to their LP. This protocol ended up capturing 4.66% of the vote, meaning that they paid out $34,735.
Additionally, most of the protocols that participate in “bribe wars” see an increase in their own tokens price since by acquiring a lot of votes, then their LP ends up having a higher APR (due to more dex’s emissions), which encourages people to buy that protocol’s token in order to farm those high APRs.
- The bribing system can be owned by Orca or other new protocols.
- The number of emissions would need to be revised as also the number of pools that can participate in those votes.
- Introduce vote-escrowed locking of Orca(veOrca) as a method for Orca staking, where a longer locked duration grants a more significant share of the voting power. Orca could be locked up for up to 4 years in a contract to mint veOrca.
- veOrca will replace Orca in emissions voting. Introduce gauges that dictate Orca emissions directed towards each Orca pool participating.
- Voting period: Each voting period lasts for 2 weeks. Users can vote for multiple pools with different weights for each pool.
- At the end of each voting period, votes are tallied and the weights for the upcoming two weeks are assigned to each pool in proportion to the votes cast in favor of such pool during that voting period.
- Once a user votes on a certain weighting for a certain period, that vote will remain ‘active’ from that point onwards. This means a user who wishes to keep voting the same way doesn’t need to repeat the process every 2 weeks (and, conversely, that a user who wishes to vote a different way, or abstain from voting, must proactively change their vote from the current default).
- Incentivize Long Term Supporters: veOrca holders will support the protocol over a longer-term horizon rather than speculate on price fluctuations in the short term. Those with strong conviction are rewarded the most over time.
- Ecosystem Growth: veOrca creates a flywheel effect where emissions drive higher TVL, in turn generates more fees, and leads to greater value accrual to the Orca token. This better aligns incentives between Orca holders and the core stakeholders for the Hubble protocol.
- Increase incentives for 3rd parties to accumulate Orca: Protocols will be incentivized to lock up Orca to vote and support the base borrow rate for their preferred pool. Directing Orca emissions can often be a more efficient use of funds for 3rd parties than native incentive programs.
- Locking Orca Supply: Longer lockups of Orca contribute to a lower Orca supply (less is available on the open market to sell). Orca will maintain a more stable price as a result of the new design.
- Improved Security: If governance is enabled Orca would be susceptible to attacks via borrowing Orca, and voting with Orca to make adverse changes to the protocol.
- Lacking Incentives: Orca may not generate enough fees or governance value may not be enough to motivate Orca holders to lock into veOrca.
Any feedback is welcome, and this aims for the community to discuss. Ideas will be incorporated as needed before a poll is introduced.