Proposing for Optimization for veEXTRA Long-term Value Capture

Summary

ExtraFi Tokenomics V2 and the revised fee structure on farming have boosted veEXTRA staking returns. With community feedback and a collective effort to optimize long-term value capture for veEXTRA holders, the following changes to the borrowing fee, fee allocation, and buyback distribution are proposed. These adjustments aim to enhance benefits for veEXTRA holders balance current returns with inflation control and ensure sustainable growth for our ecosystem.

Rationale

• Community Feedback Integration: Incorporate feedback to minimize borrowing fee impact on the farming end.
• Fee Structure Adjustments: Adjust fees based on market conditions to sustain veEXTRA staking yields.
• Inflation Control: Optimize emissions to prevent oversupply and ensure the long-term value capture for veEXTRA holders.

Proposed Fee Structure Changes

1. Restricting Borrowing Fee Application

• Limiting Scope of Use: Borrowing fees will be primarily applied to high APR pools.
• Eliminating or Reducing Fees for Low APR Pools: Borrowing fee will be eliminated or significantly reduced to minimize impact on farming:
  • Reduce the benchmark borrowing fees for volatile pools to 0.1% (currently 0.2%).
  • Eliminate or lower the benchmark borrowing fees for stable pools to 0.05% (currently 0.1%).
  • The borrowing fee will be reviewed every epoch.

2. Adjusting the Fee Structure on Farming

• Adjust the reinvestment fee from a fixed 6.5% to a range between 6.5% and 11.5%.

• The specific percentage will depend on the pool’s APR, with a default of 9%.

  （note: the current rate of 6.5% is provided as a discounted rate for early adoption.）

• Reinvestment Fee Breakdown:

  • Increase the portion allocated for distribution to veEXTRA holders weekly from a fixed 2% to a flexible range between 2% and 3%.
  • The distribution of the remaining portion remains unchanged.
  • The additional amount will be used for EXTRA buyback and burn.

3. Modifying Buyback Distribution

• For Borrowing Fee: No changes.
• For Reinvestment Fee: As described in section 2.
• For Liquidation Fee and Lending Reserve Fee: Adjust the current buyback allocation to distribute 70% to veEXTRA holders and allocate 30% to burning.