- Yes
- No
Summary
This is a multi-fold proposal to do the following:
- Migrate the VCX governance from Ethereum Mainnet to Base
- Remove the vote-escrow veVCX tokenomic system all together
- Maintain pro-rata oVCX emissions to liquidity providers on appropriate chains, with the same emission schedule and no longer according to the veVCX distribution formula
Value Propositions
1. Strategic Positioning with Base & Coinbase
Base, Coinbase’s Layer 2 (L2) solution built on the Optimism stack, has demonstrated significant growth in both user adoption TVL since its launch in August 2023. VaultCraft has a close relationship with the Base ecosystem, as well as Coinbase Institutional. Below are the primary reasons to strategically align with Base & Coinbase.
TVL:
- Rapid Growth: Base’s TVL has experienced substantial increases over time. In October 2024, it surpassed Arbitrum, reaching approximately $2.49 billion, thereby becoming the largest Ethereum rollup by TVL.
- Recent Metrics: As of December 2024, Base’s TVL has continued to grow, reflecting ongoing user confidence and increased activity within its ecosystem. While specific figures for December are not provided in the available sources, the upward trend indicates sustained growth.
User Adoption & Activity:
- Active Addresses: Base has consistently led in user activity among L2 solutions. In October 2024, it recorded approximately 1.35 million daily active addresses, the highest among L2’s (source: Bankless)
- Transaction Volume: The network has maintained a high transaction throughput, with daily transactions exceeding 4 million since mid-August 2024. This surge is attributed to increased DeFi activities, including trading of memecoins, decentralized exchanges (DEXs), liquidity provision, and NFTs.
Blockbase Insights
Factors Contributing to Growth:
- Ecosystem Development: The launch of decentralized applications (dApps) like Aerodrome, a native DEX on Base, has significantly contributed to its TVL and user engagement. Aerodrome alone accounted for over $1.35 billion of Base’s TVL in October 2024. (source Bankless)
- Scalability Enhancements: Base has implemented measures to increase its throughput, such as raising the block gas target, enabling the network to handle higher transaction volumes efficiently (source: Blockbase Insights)
- Average Transaction Fees: Base offers significantly lower transaction fees compared to Ethereum. In March 2024, average fees on Base ranged between $0.0857 and $0.5582, depending on the transaction type.
(source: CryptoSlate)
In summary, Base’s impressive growth in TVL and user adoption underscores its position as a leading Ethereum Layer 2 solution, driven by strategic ecosystem developments and scalability improvements.
2. Simplify Governance & Rewards - remove veVCX
Little utilization of veVCX
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Look at the numbers:
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After evaluating the number of veVCX holders vs. locked veVCX, the numbers show that the incentive mechanism to earn up to 5X boost on oVCX did not attract nearly enough LP’s, especially in the context of Matrixport becoming the largest LP by far with 1,000 nBTC deposited into the nBTC Smart Vault with the goal of earning real yield on nBTC.
Reduce complexity
- Given the institutional focus on VaultCraft V2 and the limited utilization of veVCX for earning multiples on oVCX, it would be prudent to remove the requirement to lock Balancer 80 VCX / 20 WETH pool tokens. Instead, each epoch’s oVCX emissions should be distributed pro-rata to LPs in Smart Vaults. This change involves replacing the veVCX gauge system with a straightforward staking contract to reward LPs.
- Remove the veVCX multiplier and simply rewards LP’s with oVCX pro-rata
- Governance will strictly be done by VCX and staked VCX holders, according to the rules identified here: VaultCraft
Implementation sequence (subject to change)
- Open a migration smart contract in a specified window officially on x.com/vaultcraft_io in January 2025 for 1 month. The core team will continually inform all stakeholders to migrate in this window.
- Allow veVCX holders to unstake from app.vaultcraft.io and withdraw from their Balancer 80 VCX / 20 WETH pool positions. Once VCX is withdrawn from the Balancer pool, VCX holders will be able to migrate to VCX on Base.
- If required due to a redeployment of the oVCX contract, airdrop all current holders of oVCX on appropriate chain on the last day of the migration period.
- Airdrop all staked VCX stakers new VCX tokens on Base chain if they are unable to unstake before the end of the migration period.
- oVCX emissions will continue via gauges according to veVCX multipliers until the end of the migration period.
- VaultCraft will announce the cooldown period for oVCX emissions - the time between the end of the migration period to the start of the redistribution of oVCX to LP’s.
The app will continue to be live during the migration period. All current LP positions will continue to accrue the specified real yield and oVCX emissions.
Conclusion
This proposal outlines a strategic shift that will enhance VaultCraft’s operational efficiency, align it with a thriving ecosystem, and simplify its governance and reward structures. By migrating VCX governance from Ethereum Mainnet to Base, VaultCraft will benefit from Base’s rapid growth, low transaction costs, and strong adoption metrics, positioning itself within a robust and scalable Layer 2 network supported by Coinbase.
Eliminating the underutilized veVCX tokenomic system will reduce complexity and streamline rewards, ensuring pro-rata oVCX emissions directly benefit liquidity providers across supported chains. This change will create a more transparent, predictable, and equitable rewards structure, fostering long-term engagement from stakeholders.
The implementation plan is clear, phased, and considerate of all stakeholders, with defined timelines for migration, unstaking, and continued app functionality during the transition.
Overall, this proposal sets the stage for sustained growth, increased institutional adoption, and a more efficient, stakeholder-friendly VaultCraft ecosystem. It reflects a forward-looking approach that balances innovation, user incentives, and ecosystem alignment to deliver lasting value for all participants.