veModel

Vote Escrow Model

The Vote Escrow (ve) model is an essential element of our ecosystem, giving SWA token holders the ability to actively influence the direction of the protocol. By using this mechanism, users can lock their SWA tokens for a specific period in exchange for veSWA tokens. The longer the lock period, the more voting power the user gains.

How it works

Locking Mechanism: Users can lock their SWA tokens for a period ranging from a few weeks to several years, receiving veSWA tokens in return. The maximum voting power of 1 veSWA, equivalent to 1 SWA, is only reached when tokens are locked for the full duration, while shorter lock periods result in proportionally reduced voting power.

Increased Influence: The longer the lock period, the more veSWA tokens a user receives, boosting their voting power. This gives users who commit to longer lock durations a greater influence over key protocol decisions.

Rewards and Governance: veSWA holders actively participate in governance by voting on which liquidity pools should receive additional incentives and influencing protocol updates. Additionally, veSWA holders are rewarded with SWA tokens, distributed from the fees collected during swaps on the platform.

Practical Implications of veSWA

The veModel is essential to our Decentralized Autonomous Organization (DAO) and governance framework. Here are its key implications:

• Governance Voting: veSWA holders can vote on which liquidity pools should receive additional rewards, directly influencing the protocol’s economic dynamics. The more veSWA a user holds, the greater their voting power in shaping reward allocations.

• Incentive Rewards: veSWA holders receive incentives in the form of SWA tokens, which come from a portion of the fees generated by the platform’s swaps. This provides continuous rewards for those who commit to locking their tokens.

• Liquidity Pool Selection: Most SWA token holders acquire tokens through liquidity provision. By locking their SWA in exchange for veSWA, they increase their voting power and can influence the distribution of incentives to pools in which they have a vested interest.

Strategic Benefits of the veSWA Model

veSWA model provides several long-term advantages that benefit both the protocol and the community:

• Enhanced Liquidity: By incentivizing token holders to lock their tokens, we reduce market volatility while enhancing the stability and liquidity of SWA.

• Increased Protocol Activity: veModel promotes active participation in governance, voting, and transactions within the ecosystem, fostering greater engagement.

• Long-Term Alignment: Requiring token locks aligns the interests of SWA holders with the long-term success of the protocol, ensuring continuous growth and sustainability while fostering a dedicated community.