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Voting System

Liquidity Acquisition

A protocol's emissions serve to attract users and liquidity, but the value of liquidity can vary. UpDEX addresses this issue by incentivizing emissions for pools that generate high fees for voters. The DEX is self-optimizing, continually having voters chase the best voting yields each week. The interests of voters are automatically aligned because they exclusively receive fees and bribes from the pools they vote on. This approach ensures that UpDEX can constantly optimize and enhance the voting yields for its users.

Voting NFT (veUP)

Just like Curve, UpDEX utilizes a similar method by having users lock UP into veUP (where "ve" stands for vote-escrowed). However, unlike Curve, UpDEX does not tie the ve position to a specific account. Instead, it makes the ve position transferable by tokenizing it into an NFT (ERC-721). This unique approach addresses the general capital inefficiency of ve assets and makes them tradeable.

Voting Power

The overall voting power of the protocol is determined by the collective amount of UP tokens locked within all veUP, which is then multiplied by the combined linear time decay of the vests.
For instance, let's say you lock up 1 UP for 4 years. This translates into a voting weight of 1 that decreases linearly with time. In other words, if you lock up 1 UP for 2 years, its voting weight would be 0.5.
Suppose 1,000,000 UP were locked up in veUP for 3 years. The total voting power of the protocol would then be calculated as follows:
3/4 * 1,000,000 = 750,000 voting weight.

Anti-bricking Mechanism

We have implemented an anti-bricking mechanism for trading fees in UpDEX. If no user claims their trading fee rewards, the fees are transferred to the voters of the next epoch and become instantly claimable. However, if even one user claims their rewards, the fees become permanent for all users.

Voting Process

To participate in the voting process, follow these steps:
  1. 1.
    Lock UP tokens into a veUP. This lock-in can last for a period of 1 week to 4 years.
  2. 2.
    Vote for specific liquidity pools such as USDT-WBNB.
  3. 3.
    Collect voter bribes and fees only from the pools that the veUP voted for.

Reward Flow of Voting

There are two types of rewards that voters can receive: voter bribes and trading fees. Voter bribes are deposited before the start of an epoch, and voters who vote for a pair with voter bribes can claim them on a pro-rata basis immediately after the epoch ends. Trading fees, on the other hand, are generated during the epoch and become claimable as they come in. To save on gas costs, it is recommended to claim trading fees at the end of an epoch.
Last modified 6mo ago