A robust & sustainable fee distribution system is an integral part of any #DeFi protocol 🐸
There exist a few different models, but the two most well-regarded ones are the LP fee model (as adopted by @Uniswap ) & the Vote-escrow model (pioneered by @CurveFinance ) 🧵🔽
🟢The LP fee model (LPs provide liquidity & are issued LP tokens to earn rewards from txn fees generated on the protocol)
✅PROS: Highly sustainable in the long-run.
❌CONS: The native token (e.g. $UNI) has no real utility, & mcap is usually not indicative of protocol usage.
🟢The veToken Model (Token holders lock up tokens (e.g. CRV) to receive vote escrowed tokens in return (e.g. veCRV); holders of these earn a significant portion of protocol fees)
✅PROS: Rewards long term holders w/ the majority of governance power & passive income from proto-
-col rewards, reduces sell pressure in the short term.
❌CONS: Inflationary pressure as tokens are released, meta-governance protocols carry risk of centralisation (e.g., Convex Finance holding majority governance power on Curve), not sustainable in the long run.
So, what is SYNTHR’s strategy for its fee distribution?
Drop your answer in the comments below along with your #Discord ID, or on our official #DiscordServer to bag an early-adopter role (& more!👀)
➡️ discord.gg/kMph7ajN
Winners announced in the next 36 hours 🐸
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