[ExIP-01] ExtraFi Tokenomics V2

Voting ended about 2 years agoSucceeded

Background

In 2023, Extra Finance experienced significant growth and received numerous constructive suggestions from our community. As the protocol continues to evolve, we propose an update to our tokenomics to better align with the protocol’s growth and community feedback.

Keywords

1. Disinflation & Quarterly burn mechanism

2. Team lock extension (6 months)

3. Staking APR Optimization

4. Token flywheel in ExtraFi

Details of Extra Finance Tokenomics V2

1. Mitigation of Emission:

To address the community's main concern, we propose reducing each token unlock to 50% of the current rate. This adjustment will primarily focus on the Community Fund and Ecosystem Fund.

(Current allocation & emission https://docs.extrafi.io/extra_finance/tokenomics/allocation-and-emission)

2. Quarterly Burn of Unused Tokens:

We will implement a community-driven approach to burning a specific percentage of the remaining tokens each quarter. The exact percentage will be determined by the community on Snapshot every quarter.

For 2023 Q4, of the monthly emissions $EXTRA allocated to the community, we will burn 30% and allocate the remaining 70% to the treasury, which is the proportion decided by the community vote. (https://discord.com/channels/1009330898967212063/1186612128417857576/1186612128417857576)

3. The team extends the lock-up period by 6 months.

4. Optimization of Distribution and Allocation:

veEXTRA Staking APR Improvement: We plan to modify the veEXTRA staking APR by introducing a matching coefficient that aligns emissions with the protocol's fee income buyback. This approach is designed to enhance the predictability and stability of the veEXTRA staking APR, providing a more consistent and reliable return for veEXTRA holders.

For the initial coefficient, we'll match 30% of the fee buyback. This will be reviewed on a quarterly basis in the future. Whether adjustments are necessary will be determined by governance.
Fee Income Allocation: We propose allocating 15% of the protocol fee income buyback for EXTRA burning, with the remaining 85% of the protocol fee distributed to veEXTRA holders.
Continued Incentives:

Incentives for lending and veEXTRA staking will persist in Tokenomics V2. Distribute EXTRA to achieve higher returns for veEXTRA holders or EXTRA LP users, such as rewards on Velodrome/Aerodrome.

5. Protocol & EXTRA Token Flywheel:

Token in ExtraFi X: In the upcoming ExtraFi X version, increase more utility of veEXTRA within the product.
Normalized Governance: veEXTRA holder governance will become a standard practice. For instance, following a Discord discussion on current issues, veEXTRA holders will vote on Snapshot for decision-making.

Off-Chain Vote

Approve

401.96K veEXTRA16.2%

Reject

2.06M veEXTRA83.4%

Abstain

10.06K veEXTRA0.4%

Quorum:4953%

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Timeline

Jan 05, 2024Proposal created

Jan 06, 2024Proposal vote started

Jan 13, 2024Proposal vote ended

Jan 13, 2024Proposal updated

Details of Extra Finance Tokenomics V2

1. Mitigation of Emission:

To address the community's main concern, we propose reducing each token unlock to 50% of the current rate. This adjustment will primarily focus on the Community Fund and Ecosystem Fund.

2. Quarterly Burn of Unused Tokens:

3. The team extends the lock-up period by 6 months.

4. Optimization of Distribution and Allocation:

veEXTRA Staking APR Improvement: We plan to modify the veEXTRA staking APR by introducing a matching coefficient that aligns emissions with the protocol's fee income buyback. This approach is designed to enhance the predictability and stability of the veEXTRA staking APR, providing a more consistent and reliable return for veEXTRA holders.

For the initial coefficient, we'll match 30% of the fee buyback. This will be reviewed on a quarterly basis in the future. Whether adjustments are necessary will be determined by governance.

Fee Income Allocation: We propose allocating 15% of the protocol fee income buyback for EXTRA burning, with the remaining 85% of the protocol fee distributed to veEXTRA holders.

Continued Incentives:

Incentives for lending and veEXTRA staking will persist in Tokenomics V2. Distribute EXTRA to achieve higher returns for veEXTRA holders or EXTRA LP users, such as rewards on Velodrome/Aerodrome.

5. Protocol & EXTRA Token Flywheel:

Token in ExtraFi X: In the upcoming ExtraFi X version, increase more utility of veEXTRA within the product.

Normalized Governance: veEXTRA holder governance will become a standard practice. For instance, following a Discord discussion on current issues, veEXTRA holders will vote on Snapshot for decision-making.