Make oVCX Great Again

VaultCraft Forum
1

The oVCX discount has been below 25% for all of October and November. Multiple promises to fix it were made with no follow through. Calls for manual discount resets have been repeatedly ignored.

It has become obvious that the oVCX discount is being left broken intentionally in an effort to reduce sell pressure on VCX. Meanwhile, VaultCraft has continued to promote Boost APRs and Zealy rewards as if the discount is working, with oVCX valued at 25% of VCX’s market price. This is clearly misleading and has eroded community trust.

Since no reasonable justification for this has been provided, this post ventures a guess and a possible solution. The goal is to restart honest dialogue between the team and community and get this resolved.

WETH revenue from oVCX redemptions used to be the primary revenue source for VaultCraft. This incentivized the team to maintain the promised discount of 25%. Now that management fee revenue is coming in from major vaults, it’s less critical. And with the return of the bull market, VaultCraft’s treasury has increased in value.

The VaultCraft team deposits treasury assets in their Boost Vaults. They also control the vast majority of veVCX and use that power to direct a significant proportion of oVCX emissions to the Boost Vaults containing their assets. This is an open secret that can be seen onchain. It’s another way to absorb oVCX and prevent other participants from acquiring and selling VCX. The longer the discount is broken, the more depositors give up and withdraw their assets, and the more oVCX goes back to VaultCraft.

If the team believes in the long-term vision of VaultCraft, why would they destroy trust by keeping their core token emissions mechanism broken just to prevent some short-term selling? That’s the real question.

The only rational explanation I can think of: There is a CEX listing on VaultCraft’s roadmap that would presumably provide significant liquidity for VCX when it happens, and there are VaultCraft team members and possibly initial investors who have been waiting for a profitable exit since Popcorn was founded, long before the pivot to VaultCraft. By continuing to prioritize VCX price over core functionality, the team may be optimizing for that exit rather than the health of the project.

This is speculation based on the team’s actions and inaction, their communication and lack thereof. As an early Popcorn and VaultCraft supporter, I’d be thrilled to be wrong. I want this project to succeed and grow, but it can only do so if it works as promised. I call on the team to change course and reinstate frequent and consistent oVCX discount resets, either automatically or manually.

On the issue of sell pressure — if a 25% discount has proven unsustainable, a modification to the discount should be presented and implemented through a formal proposal. Make it 20%, 15%, or whatever rate strikes the balance between enticing users with yield and actually delivering that yield with an acceptable impact on price. However, this should only happen after those who have already earned oVCX are given an opportunity to redeem it at the full 25% discount they were promised.

Next steps:

  1. Input and discussion (reply below)
  2. Formal proposal for a solution if it includes modifications to the oVCX discount
  3. Formal vote if needed and implementation of solution

I look forward to hearing from both the team and community on this.

1 Like
2

Appreciate the write up Joey.

The oVCX discount price will officially be reactivated at 9 AM CET on November 25, 2024. During our Wormhole setup, we discovered that the Time-Weighted Average Price (TWAP) calculating the historical price was inaccurate. The only solution was to manually set the discount price. Given our focus on preparing for the V2 launch, we temporarily prioritized other critical development tasks.

We acknowledge the community’s frustration and are pleased to confirm that starting Monday, you will be able to exercise your oVCX.

Regarding your point here:

On the issue of sell pressure — if a 25% discount has proven unsustainable, a modification to the discount should be presented and implemented through a formal proposal. Make it 20%, 15%, or whatever rate strikes the balance between enticing users with yield and actually delivering that yield with an acceptable impact on price. However, this should only happen after those who have already earned oVCX are given an opportunity to redeem it at the full 25% discount they were promised.

The 25% discount should function accordingly to the TWAP going forward. Once we list VCX however, our plan to submit a proposal to adjust the tokenomics given there will be much more liquidity and the token economy dynamics will change. I would expect much more sell pressure on CEX’s plus bot play. We will need to anticipate and make adjustments.

3

For the record, this promise was kept for only two days before the discount was disconnected from the TWAP and manually reset to make oVCX useless.