Governance
Last updated
Last updated
XAV governance will be driven by two key participants in the Xave ecosystem, stablecoins issuers and LPs:
Stablecoin issuers that list their tokens on the Xave AMM will need to acquire veXAV in order to vote for pool parameters and to direct XAV emissions towards their sponsored pools in order to increase the LP APR.
veXAV accrues a percentage of the fees for every swap that takes place on the Xave protocol. These fees are paid as a market making bonus to XAV:AVAX LPs, and not paid to XAV holders.
*For an overview of the vote-escrow mechanism please review Balancer’s documentation (veXAV is a fork of veBAL)
*Protocol fees are paid to XAV:AVAX LPs as bonus market making fees
*No fees are paid to XAV traders or holders
veXAV (vote-escrow XAV) is a vesting system based on Balancer's veBAL which locks 80/20 XAV/AVAX Balancer Pool Tokens for a maximum of 1 year. The veXAV and Gauge system is designed to promote long-term token-holder alignment and facilitate fair protocol fee distribution.
By locking the XAV/AVAX 80/20 BPT, holders are given veXAV, entitling them to governance rights and protocol fee collection. A user's veXAV balance is directly proportional to the amount of XAV/AVAX 80/20 BPT locked and the duration of time left in the lock period. In short if a user locks 1 BPT for 52 weeks, they will receive the same amount of “vote escrowed” strength as someone who locks 2 BPT for 26 weeks.
Implications:
veXAV equates to boosted liquidity mining emissions for all gauges. The share of a given staked pool, and the lock multiplier are both factors in the amount a user will be entitled to in liquidity mining emissions.
veXAV holders receive 50% of swap fees (with the other 50% going to LPs)
veXAV is the governance token of Xave, used in Snapshot voting to authorize changes to the DAO including the management (adding/removing) of gauges and funding of service providers.
This gives veXAV holders the option to choose pools for which they have liquidity positions for increased emissions or a potential for "bribing" battles can ensue. Bribe markets may be built by protocol contributors in the future, though the likely scenario is that Xave will list on existing bribe markets.
