Governance and Boosted LST Yields with veCHI

veCHI, Voting Power and Boosted LST Yields

Governance with veCHI

Voted-escrowed CHI, or veCHI, is CHI that has been locked for a specified period. The longer you lock CHI for, the more veCHI you receive. veCHI cannot be transferred, and the only way to obtain veCHI is by locking CHI. The maximum lock time is four years.

Locking one CHI for four years yields an initial balance of one veCHI. A user's veCHI balance decays linearly as the time until the CHI unlock decreases. For instance, locking 4,000 CHI for one year yields the same amount of veCHI as 2,000 CHI locked for two years or 1,000 CHI for four years.

veCHI holders can influence the direction of the Chi community, treasury, and protocol by actively engaging in governance decisions. They can exercise their voting rights to adjust protocol parameters and add new collateral assets, thereby playing a fundamental role in shaping the evolution of the Chi ecosystem.

Earn a Boosted LST Yield Through veCHI.

veCHI holders are also regarded as CHI stakers by earning the ETH staking yield of the protocol's LSTs. Furthermore, to compensate veCHI holders for the locking time of their positions, additional veCHI incentives are allocated to veCHI. The longer the time lock, the greater the amount of veCHI and the higher veCHI rewards. This ensures the protocol's interests are aligned by redirecting emissions to long-term participants.

veCHI Amount Calculation

CHI can be locked for at least one month (4 weeks) and a maximum of 4 years (208 weeks). The formula to calculate veCHI is given by CHI Amount * lock time/ max lock time denominated in weeks

CHI	veCHI	Lock Time (Weeks)
1	1	208
1	0.75	156
1	0.5	104
1	0.25	52
x	x * n / 208	n

However, it is important to note the inflexibility of the lock-up period for veCHI. Once the veCHI is locked up for a certain period, the duration of this lock-up cannot be decreased. Adjusting the lock-up period requires initiating a new lock-up cycle, which resets the countdown and starts a new veCHI position.

veCHI and Locking APR

The veCHI Percentage Rate (APR) is determined through a formula that considers various factors, such as the LSTs rewards, CHI rewards, the total amount of staked and locked CHI .

Claiming CHI Rewards

When users claim their CHI, it is automatically converted into veCHI, using the remaining time until unlock as the lock period. The CHI that is not claimed yet generates ETH staking rewards, and once it is claimed and locked, it will also start earning more CHI.

Rewards in the Ecosystem

Maintaining a thriving ecosystem requires adequately incentivising all participants, including minters, liquidity providers, developers, and partners. These incentives ensure continued contributions to the growth and robustness of the ecosystem. Forms of rewards and incentives can include batch solution rewards, trader incentives, and ecosystem grants.