Venus Protocol Tokenomics Aims to Reward Loyal Users, Slash Token Supply

Highlights include the Soulbound Token Venus Prime and major reductions to XVS emissions.

Venus Prime to Juice APY on XVS Staking

An updated Tokenomics 3.0 presentation by Venus Protocol contains details on the new Venus Prime Soulbound Token, as well as other aspects of the project, such as shrinking the supply of the core XVS token, minimum requirements to access liquidation.

“The intended effect/outcome of [the Prime Token] is to give XVS holders a lot more economic benefits,” Danny, Business Development & Community Lead of Venus Protocol told BSC News.

The new Tokenomics presentation contains hypothetical examples illustrating the benefits of holding the non-transferable Prime Token. In one case, a user staking 40,000 $XVS (currently worth about $258,000) could increase their annual earnings from $5,800 to $51,000 by claiming the Prime Token – or even, by borrowing and staking additional funds, up to $77,200 per year.

Danny said, “This will encourage users to hold XVS in order to gain extra APY on Venus Money Markets. You can clearly see the examples in our presentation.”

BSC News reported on an earlier version of the Tokenomics proposal, which was released to the Venus community on June 29. In addition to the Prime Token, the key points of the proposal include keeping $XVS as the project’s core token, reducing $XVS emissions, and stipulating requirements for users to access liquidation.


Venus Prime Token Program

As detailed in the new presentation, there will be two versions of the Prime Token, initially with a limited supply:

Irrevocable “OG” Prime Token: This category of Prime Tokens will be made available to users who have consistently used the protocol within a 12-month period and have staked XVS tokens. A cap of 100 users will be selected for initial distribution.

Revocable Prime Token: Distributed on a “first come, first serve” basis, these Prime Tokens can be claimed by users who have staked a minimum of 1,000 XVS in the Venus vault for at least 90 days.

According to the proposal, 20% of Venus revenue will be allocated to the Prime Token program, replacing the protocol’s current buyback and burn program.

Danny clarified that only the buyback and burn program will be ended – the separate XVS buyback (also accounting for 20% of protocol income) will remain in place.

“Obviously, buying back so many XVS tokens from the market for our Quarterly distributions is something quite positive for XVS Holders and will definitely have a positive impact on price,” he said.

The Prime Token model is projected to quadruple the number of users staking at least 1,000 XVS tokens, and to increase the Total Value Locked in the protocol’s Supply and Borrow markets by 5% and 25%, respectively, according to the presentation.

Although Soulbound Tokens (SBTs) are a relatively novel concept, Danny said the Venus team has done the research and has no reservations about putting Venus Prime at the forefront of the project’s updated Tokenomics.

“We definitely have no uncertainties about the SBT. Our Data and expected results come from carefully analysed historical data on Venus. Mathematics never fails,” Danny said.

XVS Emissions

The protocol aims to reduce XVS emissions by 10 million tokens and reduce the timeline by two years. According to the proposal, this will reduce the total supply of its XVS tokens to 19,745,109. There are currently about 12.2 million XVS tokens in circulation, according to CoinMarketCap.

Liquidation Requirements

The earlier Tokenomics proposal called for users to have staked a minimum of $1 million in XVS token to participate in liquidations. The new presentation adjusts that requirement to a minimum of 200,000 XVS tokens (current value $1.3 million).

WhatiIs Venus Protocol:

Venus Protocol is a decentralized marketplace for lenders and borrowers with borderless stablecoin. Venus is one of the largest algorithmic money market and synthetic stablecoin protocols on BNB Chain. The Binance-backed protocol became famous around the DeFi following their hint of a massive incoming burn by founder Joselito and its Venus Reward Token VRT rewards for XVS token holders.

Where to find Venus Protocol:

Website | Twitter | Telegram | Medium

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