Gauge Voting
Hold veBAL and you can determine where liquidity mining incentives should be allocated. Learn more why this would benefit our users by reading below.
Last updated
Hold veBAL and you can determine where liquidity mining incentives should be allocated. Learn more why this would benefit our users by reading below.
Last updated
Gauge voting has been implemented by Curve finance to give their governance token control over financial outcomes. This delegates a much larger amount of power to token holders and amplifies the meaning of governance by a new magnitude.
Balancer Protocol is adopting this same method of governance and is confident not only from Curve’s outcomes but also from the more comparable friendly fork of Balancer, BeethovenX. By giving a financial power of control to the governance token it not only becomes more desirable to hold it can be utilized as an asset that other protocols wish to control the outcomes of as well.
The initial use case of the gauge voting system is to allow governance token holders, in this case veBAL, the ability to select the pools they are invested in to receive liquidity mining incentives for the next epoch. This eventually transformed when projects would bring their liquidity to Curve or Beethoven and would then bribe the holders to vote for the pools which would benefit the protocols. This has proven to be financially sound for the protocols which are doing the bribing because their token’s pools receive incentives for only the cost of their bribe.
Gauges will be voted for through mainnet only, here delegation of BAL incentives can be done across all chains and gauge approved pools. Users do not need to vote each week if they will maintain the same delegation as the previous. Voting is only needed once, and then again if a change in selected pools is done.
Users can view the current pools eligible for gauge voting here. Interested in proposing your project's token to be eligible for voting? Check out the instructions page on our forum.
A key note here is that veBAL can vote for the gauge of veBAL itself. This is capped at 10% of total emissions of BAL at a given time in the inflation schedule. The overflow, if a vote goes over 10%, will go to the DAO treasury, where governance will have ownership of it.
The potential for external incentives or cross project incentivization, also known as "bribing" is a common byproduct of gauge voting systems. How this benefits veBAL holders and the projects which choose to influence their votes is described below.
To be clear, “Project A” will give a veBAL holder their project’s tokens to use their voting strength to incentivize “Project A’s” pool with BAL liquidity mining incentives. Typically, “Project A” will offer a lump sum to all those who vote for their pool.
After the voting is completed, this lump sum is then divided amongst the votes proportionally and distributed to those who voted for “Project A’s” pool. This means the more veBAL you hold the more bribes you can be entitled to. On the flip side, the more votes “Project A” attracts with their bribe, the more liquidity mining incentives their pool will receive.
