🍿oVCX
A call option on VCX | A reward token
oVCX is a call option token for VCX that lets its holder purchase VCX at a discount to the market price. Unlike regular options, oVCX does not expire. The discount price is set by VaultCraftDAO governance.
oVCX rewards
oVCX is given to VaultCraft liquidity providers as an incentive. You will need to provide liquidity on VaultCraft Smart Vaults and stake in gauges to receive oVCX incentives.
Why oVCX?
Replacing VCX rewards with oVCX rewards is a strategic move to accumulate more in protocol revenue that can be used for buyback and hiring additional resources, for example, and lets loyal VCX holders buy VCX at a discounted price.
oVCX example:
Let’s say VCX is $100 and a call option gives user oVCX the perpetual right to buy VCX at 90% of market price. VaultCraft issues 1 oVCX to farmer Bob who immediately exercises the option to buy 1 VCX for $90 and sell it on a DEX for $100.
Total gains & losses:
VaultCraft protocol: -1 VCX, +$90
farmer Bob: +$10
DEX LPs: +1 VCX, -$100
VS. total gains/losses for straight VCX farming:
VaultCraft Protocol: -1 VCX
Farmer Bob: +$100
The DEX LPs: +1 VCX, -$100
We have the following observations, where oVCX achieves:
Incentivization efficiency for protocol cash flow - The higher the discount, the more efficient incentivization, at the expense of protocol revenue.
Revenue reallocation - Revenue generated by farmers is not transferred to the Popcorn protocol, without affecting the LP.
Continuous token sale - Users are incentivized to LP the Balancer 80VCX-20WETH pools to acquire VCX at a discounted price and then sell on the market.
Much higher protocol revenue - Users are incentivized to LP the Balancer 80VCX-20WETH pools to acquire VCX at a discounted price and then sell on the market.
Over time, protocol ownership will be transferred to LP’s and then to the farmers who are providing liquidity. Given VCX can now be acquired at a discount only if a user provides liquidity, we can assume there to be less sell pressure as users would want to increase their veVCX to improve their yield on Smart Vaults via gauge as well as earn protocol revenue.
Gauges
oVCX incentives are distributed among different gauges based on how veVCX gauge distribution. Smart Vault LPs stake their LP tokens in gauges to receive oVCX incentives that are distributed to the Smart Vault gauges.
VaultCraft gauges are based on Curve gauges. Read the Curve docs to learn more.
oVCX example:
Provide liquidity to a Smart Vault that has a gauge
Stake your LP tokens into the gauge
oVCX rewards are distributed over time, which need to be claimed from the gauge contract
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