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VeC3 stands for "Vote-Escrowed C3". It is a non-fungible representation of the voting power and revenue distribution of the C3 ecosystem. In order to utilize the token fully, you must vote lock your C3 and acquire VeC3. When you have VeC3, you can Vote, Stake, and Boost in the C3 Ecosystem.
The veC3 balance linearly decreases as tokens approach their lock expiry, down to 1 veC3 per C3. This encourages long-term staking and long term alignment of users.
VeC3 can be staked in order to obtain bridging and other revenue sources from the C3 ecosystem. 100% of the bridging fees will be given to the users. The fees are given in the carbon assets obtained.
The biggest incentive for C3 users is the ability to massively increase your rewards on bridging, staking, and providing liquidity. The boost is automatically applied as you stake liquidity and carbon assets.
- Liquidity: 2x
- Staking: 2x
In order to get the max boost for liquidity, you will need 4veC3 per 1 KLIMA in LP. The exception is for C3/FRAX, where you will need 4veC3 per 1 FRAX in LP. For staking gauges, you will need 4veC3 per carbon asset.
Note that the boost itself does not increase the overall rewards distributed, but is an additive boost to the farmer yield. The amount of veC3 needed for a max boost can also be adjusted via governance vote.
Authors note: We are internally discussing the viability of allowing individual boosts for bridging, as there is the chance of over rewarding bridgers. Bridgers could in theory bridge and stake, getting both rewards. By removing the option for boosting in bridging, it reduces the chance of bridgers becoming the majority of reward holders. For now, we have removed it from the boost.
VeC3 users are able to vote on proposals submitted by users. A minimum of 10000 veC3 tokens is needed in order to create a new proposal.
Additionally, users are also able to vote on Carbon Gauge weights, to increase the amount allocated to that carbon asset. By having a larger share of rewards to that Gauge, more demand is given to that specific carbon token.
During the Guarded launch, VeC3 will be used to whitelist protocols, companies, or individuals to create their own carbon token and criteria's. Other changes, such as major protocol upgrades, tokenomics adjustments, Grants, and various other proposals will have to go through C3 governance.
Each veC3 represents 1 vote in governance proposals. When you stake veC3 for the maximum amount (4 years), it will generate 4 veC3. As time goes on, the balance will slowly decrease down to 1 veC3 at the end of the expiry. At that time, the user can redeem the veC3 into C3. veC3 is non-transferable and each account can only have a single lock duration. In other words, you cannot have a 2 year lock with one set of C3, and a 3 year lock of another set of C3. All the C3 in one wallet will have the same lock time.
Smart contracts & DAOs require whitelisting by governance to stake for veFXS. Only EOA wallets can directly call the veC3 stake locking function. For protocols that would like to stake veC3, they will need to submit a governance proposal.