Thread by @anchor_protocol

1/ With the passing of Prop 26, $ANC tokenomics are getting an upgrade! 🎉

Let’s dive into what the move from $ANC to $veANC will look like & how it impacts voting, staking rewards, & the soon-to-come collateral gauges which could lead to the #AnchorWars⚔️ 🧵

2/ At a high-level, $veANC, also known as vote-escrowed or vote-locked $ANC, will replace $ANC as the voting token for the Anchor ecosystem & introduce vote locking periods to the tokenomics model.

3/ Users will be incentivized to lock-up their $ANC for anywhere from 1 week - 4 years to get boosted governance power of up to 2.5x in return. 🚀

4/ Vote-locked $ANC, or $veANC, will have a “decay / unlock interval” of 1 week. This means that the total $veANC a user locks will linearly unlock each week & convert into non-voting $ANC. Users will then need to re-lock their $ANC to regain voting rights & a voting power boost.

5/ For example, if a user locked 100 $ANC for 4 yrs (providing the max voting boost of 2.5x), their voting power would start at 2.5 * 100 = 250. This 250 $veANC would then linearly “decay”, or unlock each week, at a rate of:

❇️ 4yrs * 52 wks = 208 wks
❇️ 250 / 208 = 1.2 $ANC/wk

6/ Here, if the user wanted to retain their 2.5x vote boost, they would need to re-lock their $ANC for the max lock-up period of 4 yrs. Conversely, if they only wanted the ability to vote & didn’t care for the max boost, they could lock for the minimum lock-up period of 1 week.

7/ It’s important to note that the corresponding $veANC parameters discussed above can be adjusted through Anchor governance ⚓:

❇️ Minimum lock-up period: 1 week
❇️ Maximum lock-up period: 4 years
❇️ Decay/unlock interval: 1 week
❇️ Max voting boost: 2.5x

8/ For those currently staking $ANC, note that now that $veANC is live, staked $ANC will no longer have voting rights but will continue to yield staking rewards. Users who wish to continue voting will need to acquire $veANC.

9/ Also in the vein of staking rewards, and to incentivize active governance participation, 50% of $ANC staking rewards will be redirected to those $veANC holders who vote on polls.

🗳️ ➡️ 💰

10/ Finally, let’s briefly introduce collateral gauges which will be implemented in the new Anchor 2.1 borrow model (more info on this sewn 👀) & be heavily influenced by $veANC whales 🐋

11/ At a high-level, every collateral whitelisted on Anchor will have its own collateral gauge & corresponding gauge weight that is determined by $veANC voters.

Higher gauge votes = higher gauge weight

12/ In the new 2.1 borrow model, users will be able to borrow against non-liquid staking derivatives such as $LUNA, $ETH, & $AVAX. On the back-end, the protocol will swap these into token baskets composed of different liquid staking derivatives (LSDs) to improve sustainability.

13/ For example, for $LUNA there could be a basket of $bLUNA, $stLUNA, & $LUNAx that the protocol swaps into from $LUNA whenever someone provides $LUNA as collateral on Anchor.

14/ The gauge weights, which $veANC holders can vote on, will determine what percentage of the $LUNA provided is used to mint each of these LSDs on the backend.

15/ This competition for the minting of LSDs (Which protocols like @LidoFinance, @staderlabs, @BenqiFinance & others earn significant fees on) is what could give rise to the #AnchorWars⚔️.

16/ As Anchor continues to grow & more users provide collateral to be staked in the background, LSD providers will want to do everything in their power to maximize the amount staked to them.

17/ In this new 2.1 borrow model, LSD providers who would like a piece of the “staking pie” will need to thus acquire $ANC, lock-it up for a minimum of 1 week (reducing the circulating $ANC supply) & vote for their LSD’s gauge to increase its weight in its corresponding basket.

18/ As mentioned, there will be more to come on the new 2.1 borrow model sewn, so stay tuned frens 👀

19/ In the meantime, check out @qubitn8’s post on the Anchor governance forum to learn more about the roll-out of $veANC, which will officially launch on Wed. May 11th 👇

forum.anchorprotocol.com/t/proposal-vea…