TLDR

Too Long Didn't Read - A Brief summary of veBAL tokenomics. Vote-escrow governance, financial implications, and the new emissions schedule.

By locking the BAL WETH 80/20 BPT holders are given veBAL in exchange for governance and implied financial purposes and benefits. The longer the length of the time lock a user agrees to the higher their multiplier got governance. In short if I lock 1 BPT for 52 weeks I will receive the same amount of “vote escrowed” strength as someone who locks 2 BPT for 26 weeks. Quite simply voting strength is a function of the amount of pool tokens locked multiplied by the length of locking time.

Financial implications:

• veBAL equates to boosted liquidity mining incentives for all incentivized pools. In short, the staked pool share, and the lock multiplier, or boost, are both factors in a user’s liquidity mining “APR”.

• Lockers receive 75% of protocol fees. 50% of the swap fees accumulated on Balancer Protocol are collected as protocol fees. So, of all fees 75% of 50% are distributed to the veBAL holders, more veBAL equates to a larger portion of the protocol revenue distribution.

• veBAL will be used for a governance gauge voting mechanism to decide which pools receive BAL liquidity mining incentives. Users can direct liquidity mining incentives to the pools of their choice.

  • veBAL does have a gauge to direct rewards to the holders if chosen. This option 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.

This gives veBAL holders the option to choose pools they have liquidity positions in for increased incentives or a potential for bribing battles can ensue. Bribing battles will essentially allow projects to provide veBAL holders a compensation or incentivize to vote in a direction they prefer, hence the term “bribe”.

In the same breath, the emission schedule for BAL has been defined and will be set permanently. Currently 145,000 BAL is emitted per week, which is unsustainable without a ceiling on emissions. The two key takeaways for the new inflation schedule will be a halving of the inflation rate every 4 years, and a total supply of BAL being capped at 94,000,000.