The Vector Team has been hard at work adding new features and upgrades to the protocol. While we’re at it, we also think it’s important to take time to reflect on our tokenomics for VTX. Bringing value back to VTX lockers always has been and always will be our #1 priority.
Coordinating emissions plays a key role in optimizing tokenomics, and a lot has changed since we launched our protocol ~9 months ago. We initially launched with a projected 3-year, logarithmic, emissions schedule; however, we quickly realized that it was too aggressive / inflationary to be successful. Thus, we tapered emissions faster than projected, and are now emitting VTX at a rate that is significantly ahead of schedule.
In this article, we’ll outline what our current emission rate is, what we project to decrease this rate at, how long it will last us, and what kind of reserves we will leave in (bonus emissions for rush programs, etc.).
TL;DR: we’ve been reducing emissions ahead of schedule and will continue to do so. This means VTX will continue to be a rare and coveted asset!
What is an emissions schedule?
An emissions schedule outlines what rate VTX will be emitted into the future, on a month-by-month basis.
The VTX coming from these emissions are emitted in the form of liquidity mining, i.e. APR for our liquidity pools (VTX-AVAX, xPTP-PTP, and zJOE-JOE) as well as some of the rewards for xPTP and zJOE stakers (the remaining rewards come from our protocol fees).
Current market conditions
The recent bearish sentiment in the market has meant that reserving emissions for a more amicable time period is incredibly important. While Vector remains in a prominent position on the Avalanche network (consistently one of the top most used protocols, with some of the highest TVL and real yield), remaining in that position means being responsive to market conditions. Diluting the value of VTX through unsustainable high emissions during a bear market isn’t a wise decision for our holders, users, and interested parties.
Effective emissions and goals
As the top PTP and JOE holders on Avalanche, Vector has met many of our goals for ve-token aggregation, and the resulting boosted yield has been noticed by users on Avalanche. As a result, over the last several months, we have shifted VTX emissions to what matters most (incentivizing further accrual of PTP & JOE) and away from our less-sticky liquidity pools — which we incentivized early on in order to bootstrap TVL / users.
We’ve both concentrated our emissions and reduced how quickly they are distributed. Doing so has allowed us to extend our liquidity mining runway dramatically. Our original schedule had us reducing to 0.93 VTX emitted per second by November, 2022. Instead, we’re now only emitting 0.33 VTX per second. At this rate alone (0.33 VTX per second), the protocol can withstand the rate for an additional ~4.5 years! We want our emissions to last even longer than this though!
Emissions as of November 2022
As of November 2022 we have emitted a little over 25 million VTX from our liquidity mining program. This means we have around 45 million VTX left to emit from our liquidity mining and bonus emissions.
Our go-forward plan:
VTX emissions will continue to decrease over the next several years. Our forward looking emissions plan is the following:
- Decrease emissions of VTX by 5% each month for the next 12 months
- Decrease emissions by 3% each month for the following 12 months
- Decrease emissions by 1% each month into perpetuity
The above plan will provide us with 8 years of continued VTX emissions and greatly reduce the dilution of any VTX currently on the market. The plan also gives us an additional 16.2 million VTX reserved for bonus emissions. These bonus emissions will be used for rush programs, or excess emissions pending market conditions.
About Vector Finance
Vector Finance is the number one yield booster on Avalanche. We incentivize conversion of JOE and PTP on ourplatform, accrue ve-token boosts on those protocols, and pass that on to our users. Vector is the top owners of vePTP and veJOE on Avalanche.