NOIP2: veNEWO Implementation

Introduction To further increase the utility of NEWO we propose introducing a locking system that distributes protocol perks in favour of token holders with conviction rather than simply the number of tokens held. We acknowledge the value add of the “ve” system, though it needs to be tailored to New Order’s tokenomics and protocol mechanics to bring the largest utility to the NEWO token. After the V2 migration, with important changes made to vesting of Core team and Investors/Advisor tokens, we can move to the next step in bringing additional value to high conviction NEWO holders. The conviction system that is proposed transforms veNEWO into a yield generating index of the most innovative projects in DeFi. Lockers are guiding the criteria and the projects chosen for incubation, allowing them to participate in pre-seed stage rounds, paving the way for value creation in the New Order ecosystem.

Some have raised concerns about excessive emissions of NEWO, and the bias that favours Liquidity Providers. With the passing of the Olympus Pro proposal we are moving towards accumulating Protocol Controlled liquidity, mitigating the high emission rewards used to entice a liquid trading pair. Having said that, we want to continue our focus of putting value in the hands of long term holders with the highest conviction. Rather than decreasing overall emissions, with the rise of POL and introduction of a NEWO locking mechanism, we want to shift those emissions to the most aligned and highly convicted members of our community. Having this approach will ensure that governance power and token utility is disproportionally favouring lockers with long term protocol interests in mind.

What is “ve”?

“Ve '' is short for Vote escrow and the first protocol to launch veTOKEN was Curve, followed shortly by other protocols, including DeFi leaders like Frax Finance.

The ve mechanic allows most convicted holders to effectively lock their tokens for a ranging period of time, giving them a larger governance presence and higher yield. The protocol essentially reciprocated the loyalty of token holders with added perks.

veNEWO allows users to lock up their NEWO for up to 3 years for 3.3x the amount of veNEWO (e.g.,100 NEWO locked for three years returns 330 veNEWO). veNEWO is not a transferable token, nor does it trade on liquid markets. It is more akin to an account-based point system that signifies the vesting duration of the wallet's locked NEWO tokens within the protocol.

The boosted veNEWO (330 veNEWO at a 3 year lock) will slowly decay down to the original locked amount (100 veNEWO) over the locked period. At the end of the lock period the user can redeem the veNEWO back for NEWO.

It is important to note that the user can also increase their veNEWO balance by locking up more NEWO, extending the lock end date, or both. It should be noted that veNEWO is non-transferable and each account can only have a single lock duration meaning that a single address cannot lock certain NEWO tokens for 2 years then another set of NEWO tokens for 3 years etc. All NEWO per account must have a uniform lock time.

The mechanic is proven to be a robust value add to convicted token holders, aligning protocols long term aspirations with loyal backers. This system has worked very well for Curve and Frax, though for it to generate the highest utility for NEWO, many aspects should be tailored particularly to core competencies of incubation and treasury aggregation.

veNEWO

Lock Time New Order is fundamentally different from protocols like Frax Finance and Curve as its core focus is on incubation and acceleration. To appropriately tailor the locking mechanics to the protocol's objectives , the maximum locking period should be adjusted accordingly. A minimum lock period of 3 months and a maximum lock period of 3 years would be more appropriate. Users can lock for any period of time within the 3 month and 3 year periods. Though, the locking schedule is subject to change upon community responses and suggestions.

Lock Boosts The boosts will range from 1x for a 3 month period to a 3.3x for a 3 year period. Users can choose any preferred time in the range. A full graph and expression will be available upon deployment of the model.

Ve Mechanics There will be 5 distinct value accrual mechanisms for veNEWO that are aggregating protocol utility to lockers.

1. Voting Power Governance is only available to veNEWO holders, as the protocol would benefit most from the input of long term backers. The longer the lock the higher the boost in governance representation. This mechanic would allow users with the most conviction to steer incubation engagements and protocol changes.

2. Protocol Emissions Emissions (currently staking rewards) will be distributed to veNEWO holders and LP stakers. veNEWO holders are eligible for the locking boost, that will vary based on the length of the lock period. LP stakers will have a separate emission allocation to continue incentivizing liquidity providing during the period of accumulating POL. The emissions directed to LP’s will be continually adjusted to ensure healthy incentivization.

Having a conviction model allows for long term backers to benefit from emissions and accumulate a larger share of the protocol according to their level of conviction. To be clear, overall protocol emissions are staying consistent with the current emissions schedule, only the distribution mechanism is to be changed.

3. Treasury Yield Rewards Treasury rewards are contingent on yield generated by the incubated project tokens held in the treasury and other revenue generating streams. New Order will be introducing DeFi infrastructure projects, and other non-incubation revenue streams from stable asset yield farming.

All accumulated treasury yield will be subject to a revenue share with veNEWO holders.

Only veNEWO holders are eligible to receive the yield generated by the treasury, LP stakers will not be eligible. The specific percentage distributions will be discussed with the community and will soon follow.

To put some context around the proposal with current treasury assets, let's consider the following 4 examples:

• BTRFLY When Redacted introduces their V2 architecture and a reworked pToken model around rlBTRFLY (revenue locked) the yield generated on the position would be shared with veNEWO holders based on their locking schedule. This yield would include the various bribing inflows, Hidden Hand fees, protocol emissions, and other products announced in the coming weeks.

• H2O A portion of the treasury held PSDN will be used for liquidity provision assisting ecosystem growth. Further, PSDN will be staked in the stability pool, accumulating protocol emissions and participating in the H2O treasury surpluses. To learn more about the utility of PSDN, please refer to the gitbook. WIth the introduction of other data token DeFi primitives, PSDN can be used in lending protocols as collateral to generate lending yield further building the base layer for tokenized data in web3.

• Stable assets Stable assets not immediately required for incubation or acceleration will be deposited in various low-risk yield farms or LP strategies. This approach would ensure that all treasury assets are utilised, minimising idle reserves.

• OptyFi Upon launch, purpose built vaults will be introduced for New Order. The revenue generated on the vaults would be distributed to the treasury, creating further utility for incubated projects and a new revenue stream for New Order.

4. Airdrops of Incubated project tokens Incubated project airdrops will only be available to veNEWO holders. The allocation of the airdrop will be contingent on the lock period and number of tokens locked. This approach would decrease the divide between backers as even smaller token holders can amplify their allocation through higher conviction.

It is important to note that airdrops are on a case-by-case basis, as some projects may prefer fair launches. If airdrops are not part of the tokenomic design of a particular protocol veNEWO holders would still be entitled to the treasury yield revenue share mentioned above.

To put a case in point, NEWO stakers will be eligible for the upcoming H2O airdrop. The airdrop will be made in the governance token PSDN, which can be used to provide liquidity in various token pairs and staked in the stability pool for surplus auction participation and protocol emissions.

Once veNEWO will be introduced only lockers will be able to participate in the airdrop and will be entitled to an allocation that is based on the number of tokens locked and the period locked for.

5. Whitelists for incubated projects Incubated project whitelists are subject to the same approach as Airdrops. The allocation will be contingent on the lock period and the number of tokens locked. Highly convicted holders would be entitled to higher allocations shifting ownership of ecosystem protocols to long term backers.

LP Staking In the proposed ve system, staked LP position will only be entitled to LP emissions (Accrual Mechanism #2), without exposure to other perks. To boost the emissions received, a user can lock additional NEWO as veNEWO under the same wallet.

Locking an equivalent amount of NEWO as used in the staked LP position will unlock an emissions boost. The emissions boost is based on the same boost schedule as used in veNEWO locking. As an example, if a user has pooled 1000 NEWO / 1000 USDC and staked the LP token, locking an additional equivalent amount of NEWO (1000) for 3 years would entitle the LP staker to a 3.3x boost on the emissions received. If the additional amount of NEWO locked is a fraction of NEWO LP’d with, a fractional boost would be applied. Using the same example, if 500 additional NEWO is locked for 3 years the boost to LP emissions would be 500/1000 * 3.3x = 1.65x.

It is important to note that the additional NEWO locked as veNEWO will be entitled to all of the above mentioned perks based on the period locked for.