[DIP-007] Implement “ve” token system.

This is a proposal to adopt the “ve” model and evolve usage of the DFX token with veDFX!

Motivation:

The “ve” model was pioneered by Curve’s veCRV mechanism and quickly became a DeFi standard allowing composability across many protocols. We believe that in the adoption of this standard we will be able to attract more protocols and more users to take part in the DFX ecosystem. We are adopting a widely successful and battle-tested model of tokenomics for DFX.

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Specifications:

“veDFX” stands for “Vote Escrowed DFX.” veDFX will allow the holder to both vote on proposals within the DFX ecosystem and earn a multiplier on rewards based on their lock-up period. This is done through a system of gauges. The more veDFX you own, the more voting power you have and the higher APY boost you can achieve!

If the image didn't show above, here is a simple layout of the locking time frames on how much veDFX you will accrue/percentage within that time frame if you locked 1000 DFX.

Note: Non-veDFX holders will always have a weight of 1. However, for the full lockup users, their weight will be 1 + (veDFX/DFX locked) - which depends on their lockup time remaining.

1 Week - 4.81 veDFX = 0.48% 1 Month - 20.83 veDFX = 2.08% 6 Month - 125 veDFX = 12.5% 1 Year - 250 veDFX = 25% 2 Year - 500 veDFX = 50% 3 Year - 750 veDFX = 75% 4 Year - 1000 veDFX = 100%

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Proposed Changes:

1. Provide a system to allow users to lock DFX and receive veDFX in return.

2. Provide boosted rewards (i.e. APY) based on ownership of veDFX, by way of a ve-style gauge system.

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Pros:

• Compatibility with other ve- ecosystems. By embracing the same mechanisms, it makes it simple for protocols like Yearn, Element, Convex, Pickle or any others to integrate with DFX.

• Motivation for other DAOs to take a position in DFX By having protocols aligned with DFX’s long vision, we expect utility and usage of DFX to increase as well.

• Incentivizes liquidity providers to hold and stake their earned DFX tokens versus selling on the open market.

• Incentivizes providing liquidity to liquidity pools due to increased rewards.

• Through the multiplier decay, stakers who to continue to lock additional DFX will gain the most rewards.

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Against:

• It can be a difficult system to understand.

We will provide all the information needed to make this a smooth process as we get closer to a full roll out.

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Proposed Incentives:

• Create a system to reward veDFX to individuals who “lock” their DFX.

• Give benefits to those holding veDFX, including voting rights and a multiplier on their LP rewards.

• Pay for the increased rewards by reallocating existing rewards, at the expense of Liquidity Providers who choose not to “lock” DFX and own no veDFX.

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Additional References:

Understanding Gauges - https://resources.curve.fi/reward-gauges/understanding-gauges

How Boosting Works - https://resources.curve.fi/reward-gauges/boosting-your-crv-rewards