Governance and Boosted LST Yields with veCHI

veCHI, Voting Power and Boosted LST Yields

Governance with veCHI

Voted-escrowed CHI is simply CHI locked for a period of time. 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.

One CHI locked for four years provides an initial balance of one veCHI. A user's veCHI balance decays linearly as the time until the CHI unlock decreases. For example, a balance of 4000 CHI locked for one year provides the same amount of veCHI as 2000 CHI locked for two years or 1000 CHI locked 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 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 the veCHI output when locking is given by CHI Amount * lock time/ max lock time denominated in weeks

However, one important point to note here is the inflexibility of the lock-up period. Once the veCHI is locked up for a certain period, the duration of this lock-up cannot be decreased. If users adjust their lock-up period, they need to initiate a new lock-up cycle, which resets the count to the beginning and opens 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 the users claim their CHI, they are automatically converted into veCHI using the remaining time-to-unlock of their position 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.

Governance Fees to veCHI

veCHI holders are entitled to receive trading fees generated by the protocol's POL when no oCHI positions are locked. This ensures that fees are preserved within the Chi Protocol's ecosystem, and CHI lockers benefit the most due to their long-term goals.

Rewards in the Ecosystem

To maintain a thriving ecosystem, it's crucial to adequately incentivise all participants – from minters, liquidity providers and developers to 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.

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