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The veToken model was pioneered by Curve Finance, allowing people to lock their CRV tokens in exchange for governance power and economic incentives. Users have the option to lock tokens anywhere from 1 week to 4 years, with increased voting power the longer tokens are locked.
This mechanism has allowed the protocol to transfer voting and economic power to the people who are long-term invested in the protocol, chasing away short-term profit maximalists, potential governance exploiters, and mercenary capital. The model became incredibly popular, copied by Balancer, Frax, dYdX, and other DeFi protocols.
What’s not commonly done by these protocols, however, is improving on the veToken contracts instead of simply copy and pasting them for their own use. With the launch of OUSD’s governance token, Origin has taken the opportunity to improve veToken contracts for better user experience and less technical complexity, benefitting the entire DeFi space with its open-source code.
Firstly, Origin rewrote the veToken contract in Solidity instead of Vyper, allowing for easier integration for DeFi protocols and Origin Protocol itself. Then, Origin focused on making the contract itself less code heavy and more gas efficient. This meant fundamentally changing how stakers’ voting power was calculated.
The original veToken contract implemented linear voting power decay, preventing governance attacks from stakers that could exit their position soon. Though it was an innovative mechanism, it required lots of on-chain calculations and writes, resulting in increased gas costs.
Whenever voting power is required in a calculation, contracts on Curve have to calculate each staker’s voting power based on each individual’s linear decay at a certain checkpoint, taking into consideration each decay’s past, current, and future slopes. By changing the model to exponential decay, Origin could simply express each individual’s staking power as a flat percentage, eliminating the need for complex on-chain calculations, resulting in lower gas fees.
Furthermore, Origin changed decay to dilution, increasing tokens of new stakers instead of reducing existing stakers’ tokens. This allowed the number of votes for existing stakers to remain the same, but still reduce their overall weight in governance, making it compatible with Snapshot voting.
Essentially, Origin made veToken calculations simpler and less code intensive, reducing gas costs by 20% to 51%, and allowing easier integrations into other DeFi applications.
Origin also made improvements to voter delegations, flexibility of locks, and rewards distribution.
Enabling veOGV holders to transfer voting power allows them to delegate to trusted persons in the Origin ecosystem, encouraging higher governance participation. Stakers will also have the option of delegating to a hot wallet, increasing convenience while maintaining security.
veOGV holders can also opt to have multiple locks of differing periods in the same wallet, unlike Curve’s model which required all locks be the same duration. And instead of separating the rewards contract, Origin simply built in rewards distribution to the staking contract.
Due to the exponential decay, veOGV stakers will be left with residual voting power even after their lock up ends. Stakers will also receive exponentially more units of veOGV than their amount staked, and users voting power will not be reduced until someone else stakes.
As mentioned before, OGV has adopted the veToken model, allowing users to stake OGV in exchange for veOGV. These stakers receive performance fees from OUSD yield strategies, generating a variable 31.33% APY for stakers. With the optimized veToken contract, OGV has attracted a high staking participation rate, locking 78.51% of all circulating supply.
By building next-generation models of stablecoins and veTokens, Origin has innovated and pushed forward the frontiers of DeFi. OUSD allows anyone with an internet connection and a computer to access high-yielding passive income strategies, while veOGV’s open-source code allows other DeFi protocols to utilize a battle-tested gas optimized version of the veToken model.
Join the world-class ecosystem by acquiring OUSD or staking OGV today.
