Rebase
Reconstruction of rebase
Looking at the existing ve(3,3) protocol, it seems that the rebase rate is often set between 100-30%.
Rebase has the effect of preventing token dilution, so there is an "early lock incentive" at work. The more lockups are encouraged, the more positive it is for the flywheel effect, making rebase an indispensable mechanism for ve(3,3).
However, on the other hand, rebase is also a "slow-acting poison."
The higher the rebase rate, the more rebase tokens will become a major selling pressure later on.
Let's organize things.
Benefits of Rebase
The earlier Users enter, the more they benefit from rebasing. This motivates many Users to lock up their ASTs early.
As more AST is locked up, the market's AST decreases, and AST prices rise.
With higher AST prices, Farming's APR increases.
With higher APR, more people are incentivized to provide liquidity (LP).
When providing liquidity, people use swaps, resulting in swap fees being generated.
With generated swap fees (increased revenue distribution capital), veAST's APR increases.
With higher veAST APR, people want to lock up more AST.
Drawbacks of Rebase
Rebase becomes a potential selling pressure on AST (=slow-acting poison).
For latecomers, the amount of "receiving AST" will gradually decrease compared to early birds, leading to a loss of entry motivation.
It's a tricky problem. We want the dilution prevention feature (Rebase) and the flywheel effect, but we don't want any selling pressure.
Therefore, there is a new proposal that fulfills this selfish desire.
First, start with a 100% rebase rate to raise interest during the startup period. As time goes on, gradually reduce the rebase rate until it eventually reaches 0%.
Setting the rebase rate at 100% would give too much of an advantage to early investors compared to a rate of 30%. However, gradually reducing the rebase rate avoids discouraging latecomers from joining.
This approach aims to achieve both a flywheel effect and sustainable ve(3,3) protocol.
Rebase Rate Schedule
0-1
2 week
100%
2-5
4 week
80%
6-9
4 week
60%
10-13
4 week
40%
14-21
8 week
30%
22-29
8 week
20%
30-37
8 week
10%
38-
0%
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