Opal thrives for sustainability and efficiency, in order to achieve these goals it is necessary to encourage the different stakeholders of the protocol to coordinate and balance their interests to reach an optimal equilibrium.
Bringing together in symbiosis certain elements of historical successful models, Opal's hybrid governance system strengthens coordination between protocol participants at many levels; let’s begin by introducing the $vlGEM, a governance token and cornerstone of Opal tokenomic.
Instead of securing only Opal's native liquidity by locking single sided $GEM to access $vlGEM, resulting in a major imbalance in the idle float of $GEM supply, Balancer BPT token from the GEM-ETH pool will be required. This will ensure liquidity depth for Opal’s native token as well as allowing it to keep accruing trading fees.
Locked Balancer GEM-ETH BPT will facilitate the governance of Opal DAO. Liquidity providers who lock and delegate their voting power (self-delegation allowed), before the start of the following epoch will be able to participate in all decisions surrounding the molding of the protocol.
There is a unique 16 weeks lock duration, and no decay is applied to the governance power.
Why hodling $vlGEM ?
Take part in a biweekly liquidity gauge vote, whereby the weights that determine how much liquidity of an Omnipool each underlying DEXs pool receives (LAVs), and how much $GEM emission each Omnipool will be allocated (GAVs).
Vote on whitelisting and blacklisting DEXs pools that can be used to receive liquidity in an Omnipool, as well as which assets get added to the platform.
Propose protocol changes by submitting OIPs.
Alternatively to vlAURA holders paid to direct rewards, $vlGEM holders can be incentivized by projects willing to capture direct liquidity in the same fashion than a launchpad would do.
$vlGEM holders earn swap fees from the GEM-ETH pool, fee sharing from the protocol, boosted GEM rewards and external voting incentive.
Liquidity Allocation Vote (LAV) :
During a LAV, $vlGEM holders can vote on new distribution weights for each Omnipool’s TVL. The weight of an underlying DEX pool determines how much of an Omnipool's liquidity the pool should receive. In order for a new pool to be eligible in a LAV, it must be whitelisted before the start of the voting period.
In order to further align the protocol’s operations with the underlying sources of yield, as well as strengthen the network effect with other ecosystem participants, LAVs will happen bi-weekly, starting Thursdays at 00:00 UTC and ending on Tuesdays 00:00 UTC, following the Liquid Lockers voting schedule.
Each Omnipool will have its own LAV. All LAVs will run in parallel.
$GEM Allocation Vote (GAV)
During a GAV, $vlGEM holders can vote and define the allocation of Opal's liquidity mining between the Omnipools. The process is similar to the LAV.
This will encourage a positive feedback loop where liquidity providers and voters will align themselves to distribute $GEM emissions with the best equilibrium
Furthermore, it creates a second layer of voting incentive for $vlGEM holders from external LST projects wanting to incentivize their asset’s Omnipool.
APR Boosts :
To bootstrap Opal's users and holders and reward them proportionally to their commitment and pro rata of their share of the protocol TVL or Supply, a $GEM emissions boost mechanism is set to apply up to 2.5x APR multiplier.
The boost mechanism is expected to create a competitive environment between users, feeding Opal's flywheel by encouraging the compounding of rewards into the protocol.
In order to become eligible to $GEM boost rewards, a user must hold either $vlGEM or sGEM which represents staked LP tokens from Opal's Omnipools, the rewards claims are subject to a 8 epochs cooldown which can take two forms :
Classic Claim : a 8 epochs cooldown is automatically triggered when boost rewards are emitted, and eligible users receive all $GEM at once at the end of the period.
Early claim : users can claim all their $GEM rewards before the end of the cooldown by forfeiting a % of the rewards equivalent to the % of cooldown time remaining.
Stay tuned for the next article within which we’ll provide a comprehensive and detailed reasoning behind the design of Opal’s tokenomic, the goals and flywheels at play.