vxPremia is Live: New Tokenomics

New and Improved featuring Manifold Control!

It’s here, it’s finally here. Meet vxPREMIA!

The tokenomics update for Premia is going live. We are sunsetting xPREMIA and if you were staking xPREMIA, no action is necessary — your tokens have been automatically converted into vxPREMIA.

Let’s look at the current tokenomics to see what’s changing and what’s staying the same.

What’s changing and what’s staying the same

  • Users are still be able to earn PREMIA tokens as liquidity rewards from depositing into the pools, Liquidity Mining rewards are not going away

  • In the old tokenomics, users stake PREMIA tokens in order to receive a number of xPremia tokens corresponding to the xPREMIA : PREMIA ratio but with vxPREMIA this is simplified so users stake PREMIA tokens in order to receive an equal number of vxPREMIA tokens. Goodbye confusing fluctuating ratio 👋

  • Staking PREMIA for xPREMIA was only available on Ethereum mainnet. Staking PREMIA for vxPREMIA is available on all Premia supported chains, which will return rewards and discounts on the corresponding chain

  • xPremia could be locked for a specific period of time in order to get discounts on the Premia.finance app. Locking PREMIA for vxPREMIA is also done for a specific period of time, accrues discounts, and cannot be unlocked or withdrawn until this period is over (unless penalty is paid). More about that below in Locking PREMIA for vxPREMIA

  • Unlocking or withdrawing xPREMIA required the lock period to be over, vxPREMIA allows a penalty fee to be paid to remove the lock period, the penalty percentage increases the longer the unlock period remaining.

  • Users could bridge xPremia tokens to and from mainnet using our default bridge modal. vxPREMIA can also be bridged to other chains but it uses its own bridge functionality in the form of a function call on the vxPREMIA token contract itself. You won’t even notice the difference when using our bridge module, the change is on the backend.

  • xPremia and Premia tokens could be used to vote on protocol governance. With the updated tokenomics, only vxPREMIA can be used to vote using snapshot for protocol governance. More on this below under Voting with vxPREMIA

  • There is a 10 day withdrawal delay period when unstaking xPREMIA, which is still a part of the vxPREMIA tokenomics

vxPREMIA: The Basics

If you noticed several things are unchanged between xPREMIA and vxPREMIA, that’s because vxPREMIA is an upgraded version of the original xPREMIA contract.

The biggest changes in tokenomics are with regards to how locking, rewards, and voting work with vxPREMIA. Let’s take a look at both.

Locking PREMIA for vxPREMIA

To acquire vxPREMIA, a user needs to stake an equivalent amount of PREMIA tokens for a determined period of time. Tokens cannot be unlocked or withdrawn until this period is over. There is no minimum locking period, however, all staked PREMIA is technically locked for at least 10 days due to a 10-day withdrawal period when unstaking vxPREMIA. Any additional lock duration is optional, but longer locking is highly incentivized by the multiplier attached to each user’s staked vxPREMIA. The longer the user’s lock period, the more rewards will be earned per staked PREMIA (vxPREMIA) and the more voting power will be accrued per vxPREMIA.

The reward multiplier is determined according to the formula:

Power = 0.25 + (1 * min(yearsLocked, 4)) * premiaAmountStaked

Locked PREMIA (vxPREMIA) becomes available to withdraw once the lock period is over. At that point, it can still be used to vote, earn fees, and get discounts even though it is no longer time-locked. Your original lock boost from the deposit will persist until the tokens are withdrawn or more tokens are deposited (updating the timelock).

For example:

If someone locks for 4 years, they will maintain a 4.25x boost for all 4 years and even after, until they eventually deposit more or withdraw those tokens. This incentivizes users with long locks to stay deposited after their timelock expires.

Extending your timelock

Locking more vxPREMIA will extend the staking period according to the time-weighted average formula.

To extend your timelock, go to the My Stats page on the vxPREMIA Dashboard and find the Extend button. That will pull up the Extend module which will show you the additional boost you’ll receive for extending your timelock. This feature allows users to get the most out of their locked vxPREMIA and flexibly decide what lockup / boost is right for them.

In the above example, a user is extending their timelock from 1 week to 6 months to increase their boost from 0.27x to 0.74x. If you’re wondering how this is calculated, the answer is math. Let’s discuss the formula.

“How does extending my timelock work and how is the boost calculated?”

Let’s say you have 10,000 PREMIA staked for 4 years with 1 year left til unlock and you decided to add 1,000 PREMIA to your stake with a 4-year lock, the formula would look like this:

(10,000 x 1y + 1,000 x 4y) / 11,000 = 1.27 years

So in this scenario, you get the benefits of increasing your locked stake by 10% while only extending your lock period by 27%. Of course, this outcome will depend on your existing lock period, the amount you’re adding, and the selected lock period for the new tokens.

This time-weighted average is used to calculate the staking period, which determines the multiplier you receive for your staked tokens.

This formula is also used when bridging to another chain. If there are no tokens on your destination chain then your stake period would remain the same as on the origin chain. If your stake period is longer or shorter on either the origin or destination chain, when bridging, then your stake period will be longer or shorter as a result of this formula.

If all of this sounds a little confusing, don’t worry — Premia will display the changes to your stake period and voting power when you’re staking more PREMIA or bridging vxPREMIA.

Bridging while locked

Users can bridge vxPREMIA to any chain supported by PREMIA. This is done through the vxPREMIA contract and will allow you to move vxPREMIA to the same address on any destination chain without it having to go through mainnet first. They can be bridged while still locked or while they’re withdrawable. When vxPremia is bridged, the underlying staked PREMIA will still remain on the original chain. This means that users can potentially not have enough PREMIA liquidity when they want to withdraw on a particular chain, and might have to bridge their vxPREMIA to another chain with liquidity to be able to withdraw. Inversely, users can bridge their vxPremia back to the initial chain prior to initiating a withdrawal. The contribution group will also be looking to balance bridge liquidity prior to vxPremia release, however as this is a manual process and not perfect. Due to the fact vxPremia is omnichain native, we don’t anticipate many issues.

Keep in mind that bridging vxPREMIA to chains where your wallet already contains vxPremia will combine & affect the lock period based on the time weighted average as mentioned above.

Voting with vxPREMIA

You might be used to participating in Premia governance with PREMIA tokens but that’s changing. With the updated tokenomics, only vxPREMIA can be used to vote in Premia Governance & the Manifold Control. Here’s how it works:

  • When tokens are staked into vxPremia contract, users obtain “influence” which allows them to participate in voting mechanisms, vote for liquidity mining allocations, earn protocol rewards, and get protocol fee discounts when using the platform.

  • Voting influence, protocol fee distribution percentages, and protocol fee discount percentages are all scaled directly by the vxPREMIA boost (e.g. 2 power earns 2x more protocol fees and 2x more votes than 1x boost)

We will be using “valve gauge weight votes” to further decentralize our liquidity mining rewards. Gauge weight votes are a new feature that will occur on the upcoming vxPremia Dashboard page. This allows users to vote on the percentage of total liquidity mining rewards to devote to each pool on that specific chain. The rewards “gauge” is the complete distribution of reward %’s per pool on each chain.

In practice it looks like this:

  • Pools can have a weighting of 0%, which would mean that pool receives 0 rewards from liquidity mining

  • Pool can have a weighting of 100%, which would mean that pool receives all of the PREMIA liquidity mining rewards on that chain

  • Pool votes are multiplied by utilization rate of the pool (with a minimum of 25%), so that pools with high utilization get more rewards

This encourages vxPREMIA holders to vote on the pools with the highest expected fee revenue, because more fee revenue for the protocol directly results in more rewards for stakers. It is an important step in further decentralizing the Premia protocol.

Protocol Fees

Protocol fees will be distributed based on which % of (pro-rata) influence each user owns from the total influence (vxPremia with boost multiplier applied).

The decay function works by releasing fees over time instead of all at once. When fees are distributed, they’re added to a balance, which rewards stakers over time. The decay function is set to release ~50% of the current balance over the next month, perpetually.

So let’s say there’s 10k USDC in the reward fund: if no funds were added, after a month there would be 5k distributed and 5k left in the balance, after 2 months there would be 2.5k distributed and 2.5k left. This mechanism is designed to prevents user hopping from chain to chain to try to game the fee distribution.

What Happens Now that vxPREMIA is Live

As we already mentioned, if you are staked in the xPREMIA contract — no action is necessary, your vxPREMIA will be automatically distributed to you upon contract upgrade. Unlike xPREMIA, there is a constant 1:1 ratio of PREMIA : vxPREMIA so there is always 1 underlying PREMIA for any vxPREMIA token.

PREMIA tokens can be bridged to any of the other supported chains using our standard bridge (ex: Arbitrum native bridge vs. Multichain for Fantom). vxPREMIA can also be bridged to any supported chain, even while locked, but this is done through the vxPREMIA contract with the help of LayerZero.

LayerZero is an omni-chain interoperability protocol that enables cross-chain transactions through their low-level communication primitive. The protocol makes use of a verifiable oracle and relayer network to secure the cross-chain transactions.

The benefits of holding vxPREMIA will be applied to whichever chain you hold the vxPREMIA on. For example: you could have your vxPREMIA on Ethereum mainnet, buy some options with reduced fees, then bridge your vxPREMIA to Arbitrum to get reduced fees buying options on Arbitrum. This means users aren’t tied to one chain and can flexibly move chains as the market evolves, or to take advantage of price differences in options on other chains.

The new vxPremia Dashboard page shows 3 PREMIA token balances:

  • PREMIA: unstaked PREMIA tokens in the user’s wallet

  • vxPREMIA: staked vxPREMIA tokens in the user’s wallet (includes Withdrawable and NON-Withdrawable tokens)

  • Withdrawable: staked vxPREMIA tokens that (while still being used to vote) are no longer locked and can be immediately converted back into PREMIA tokens

“What does it mean to withdraw my tokens?”

Withdrawing tokens converts them back into PREMIA and removes any residual lock boost on the withdrawn tokens. So for example, you could have 1,000 withdrawable vxPREMIA after being locked for a year earning a 1.25 multiplier — you are still able to earn that multiplier and vote with your vxPREMIA until you decide to perform the withdraw and receive the 1,000+ PREMIA tokens back in exchange for your 1,000+ vxPREMIA.

Have questions about vxPREMIA?

That’s the deal with vxPREMIA! We are excited to about the vxPREMIA launch and we’re available in Discord to answer any questions you may have. Also yes, we are aware we changed the naming convention from vePREMIA to vxPREMIA, documents have been amended to reflect this change.

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