This article comes fromDecrypt, Original author: Liam J. Kelly&AC Twitter, compiled by Odaily translator Katie Ku.

YFI creator Andre Cronje and Wonderland developer Daniele Sestagalli

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In order to better understand ve(3,3), let’s review the charging and incentive distribution models of mainstream DeFi projects.

MakerDAO has a buyback and burn feature. Fees accumulated in DAI are used to buy MKR from the market, which is then burned.

Ethereum has "repos" and burns via EIP-1559.

Yearn Finance did the repo and build. Vault fees are used to buy YFI from the market, which is then used to incentivize builders.

Uniswap distributes all fees to liquidity providers and charges no fees to UNI holders.

Sushiswap distributes 50% of the fee to liquidity providers and 50% to Sushi holders who hold Sushi shares. 50% of the fees are used to buy back Sushi and allocated to xSUSHI.

Curve distributes 50% of fees to liquidity providers and 50% to CRV holders who lock CRV into the veCRV stablecoin.

Token issuance is considered an onboarding mechanism. When an agreement starts, it usually has no fees. Now assuming there is no block reward, would you still be running a node? So these public chains are guided by block rewards, but the goal is for these block rewards to eventually stop, and fees alone (mainly referring to gas) should be enough to incentivize participants.

Same goes for protocols, they should use tokens to guide what their incentive goals are, for public chains it's security, for AMMs it's liquidity and/or fees (depending on design), for lending Humanly speaking, this is borrowing.

Our goal is to combine token issuance with incentives, and the problem with many current AMM designs is that it is easier to incentivize liquidity than fees.

If we consider popular AMMs like Curve or Sushiswap, they stimulate liquidity, while holders of veCRV and xSUSHI receive fees.

On the surface this seems like a very simple change, neither incentive fees nor liquidity, the problem with this approach is that it just leads to wash trading, which we saw around 2018 when many All are repeating the promotion of "fee transfer mining".

The goal itself, though, is to provide the greatest incentive for liquidity at the highest fee. If we look at veCRV, as a veCRV holder, you will receive 50% of all fees, no matter where you voted to emit, so you may vote in a mining pool where the protocol generates 0 fees, but you still get from Earn fee returns from other more active mining pools.

• We've built a few things:

• The fees earned by the agreement shall belong to the ve(3,3) locker;

• ve(3,The emission stipulated by the agreement should go to the mining pool with the highest fee;

3) Lockers decide which mining pools receive emissions.

Ve(3,We want to align where ve(3,3) lockers vote, and ideally have them vote for the pool that generates the highest fees. To achieve this, we just need to add one modification to the popular veCRV model.

3) Lockers only charge fees to the pools they voted for.

This means, ve(3,3) lockers will receive 100% of all fees they voted for.

• This has several advantages:

• It incentivizes protocol fees (hence higher payouts to ve(3,3) lockers).

• It combines emissions with protocol incentives, allowing participants to self-optimize the system.

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AC new project Solid Swap

Andre Cronje, creator of Yearn Finance and several other notable DeFi projects, announced the launch of another DeFi project.

He teamed up with developer Daniele Sestagalli, who played a role in building Wonderland (a fork of OlympusDAO, but on the Avalanche network) and Abracadabra (a cryptographic protocol for minting and managing the stablecoin "Magic Internet Money"). Key role. The name of the new project is Solid Swap and its token will be called ROCK.

The project is positioned as a new type of automated market maker (AMM) built on the Fantom network. AMMs are how popular DEX (decentralized exchange) Uniswap was designed as an alternative to classic order-book exchanges like Coinbase. Rather than being a market maker that matches buyers and sellers, AMMs pool funds from different token holders and reward them with fees by increasing their liquidity.

It essentially decentralizes the sequential matching process into the hands of anyone interested.

Solid Swap will be more like a protocol for transactions, according to its creators, it is not designed for individual transactions.

This new AMM on Fantom is expected to have a lot of very interesting features, especially its token economy (how a project’s native token incentivizes certain behaviors).

Solid Swap looks like OlympusDAO, Curve, and Convex. There are buyouts, locked votes, and a treasury-backed reserve asset that looks a bit like OHM.

The combination of all these features is called ve(3,3).

The "ve" part refers to "vote escrow", or the vote-locking functionality behind Curve's CRV tokens, while the "(3,3)" part refers to the same game theory used in the OlympusDAO ecosystem to maximize Maximize the liquidity of the project while maximizing the benefits of token holders. It is expected that new DEXs designed specifically for the protocol will apply this new token economic model.There are also factors related to NFTs. Another point to remember is that ve(3,3) is a model, which means it can be applied to other cryptographic projects.

For example, another Cronje project, Keep3r Network, which matches people within the crypto community to perform different jobs, is also expected to implement the ve(3,3) model for its KP3R token.

• Let's quickly summarize:

• AC and Sestagalli are launching a new decentralized exchange on Fantom.

• According to Cronje, the AMM will be built “on the protocol architecture of Protocol 2.”

• The project will borrow and bundle token designs from several other DeFi projects.

Add NFTs to it.

The first point is simple. Fantom is a fast, proof-of-stake blockchain network that makes sense for a project that might process hundreds of thousands of transactions per day, as well as more complex operations like protocol-scale mining.

The second point is a little trickier. What does it really mean for an exchange that only focuses on the protocol?

As AC writes, the idea primarily refers to optimizing the current way asset managers accumulate fees, leverage buyouts, and incentivize liquidity. Projects may use buyouts to pay users for voting rights on protocol operations.

For example, a new project trying to create liquidity for its token might set up a mining pool on Curve. In order to get people to join this pool and increase liquidity, the same project may also start buying and locking more CRV so it can increase this pool's rewards.

But since most of the activity is carried out on Curve, the only people who enjoy this activity fee are Curve users, not projects that use Curve to obtain liquidity. AC's project is essentially to bundle these tools together on one platform, allowing buyouts, rewards, and fees to all stay on one platform.

The third point refers to the method by which the protocol’s ROCK token will be drawn from Curve and OlympusDAO’s token economy.

This means that users will be able to lock up their ROCK tokens in order to gain voting rights for projects (understood as "veROCK").

Similar to OlympusDAO's token, the value of ROCK will depend on the value of the protocol library.

This means that its floor price, or the lowest price for ROCK's market capitalization, will be the value of the treasury. If the premium is higher than this value, more ROCK tokens will be distributed to those who lock tokens into the protocol through attractive annual returns.

Finally, about NFTs. Unlike veCRV’s non-standard token format, veROCK tokens will be NFTs. This means that a secondary market can easily emerge where users' voting rights can be bought and sold.

And, AC seems to have piqued interest in creating these secondary markets right away. This also opens up the possibility of borrowing against these NFTs and adding more DeFi functionality to the asset.

In ve3, locks (with the ability to distribute) are NFTs, and they can be sold on secondary markets.

AC tweeted on the 13th of this month that when the game is released, the top 20 Fantom TVL teams will receive 1 NFT reward. He himself intends to participate in the auction.

DeFi degens (with their self-stylized gamblers and builders) think it's all incredibly fascinating and remind people again that identifying a bunch of different pieces of the crypto puzzle and putting them together , How powerful it is to create something completely new.