CVI’s new Tokenomics Model is LIVE!

CVI
6 min readMay 9, 2023

Introduction

We are absolutely thrilled to share with you that our brand-new tokenomics have officially gone live on Arbitrum! Our new escrowed model is set to revolutionize GOVI’s tokenomics and completely transform the way we reward our valued users. Our team has worked tirelessly to create a system that not only incentivizes GOVI stakers, CVI traders and liquidity providers but also reduces unlocked GOVI emissions to zero, which makes GOVI a scarce token. We are very happy to introduce this revolutionary new tokenomics model which will be instrumental in achieving our goals and taking GOVI to great heights on Arbitrum today and zkSync in the very near future.

What Is escrowed GOVI

esGOVI is a next generation incentive mechanism designed to reward committed, long-term holders, and is of equal use to GOVI. Holders of esGOVI have two options available to them: compounding with already staked GOVI or vesting gradually over the course of 365 days, which allows for conversion into GOVI.

This unique design eliminates any selling pressure from short-term, mercenary capital, as there are zero unlocked GOVI emissions. By incentivizing long-term holding with esGOVI, we aim to promote diamond-handed holders and reinforce the core value of GOVI.

How To Earn esGOVI

Staking GOVI: The first way to earn esGOVI is by staking GOVI. This is similar to the current system, there’s no lock up so you can stake/unstake your GOVI at any time. The amount of esGOVI you earn depends on the size of your stake relative to the size of the staking pool.

Staking Theta Vault LP tokens: Staking LP tokens also works in the same way. There’s no lock up, you can stake/unstake at any time. The amount of esGOVI you earn also depends on the size of your stake relative to the size of the staking pool.

Traders: Users who mint, burn and swap CVI will earn esGOVI proportional to the volume of their trades. To vest the esGOVI granted to traders, they are not required to stake and reserve GOVI. (Important: esGOVI for traders will launch at a later stage)

How To Use esGOVI?

So you earned a nice stack of esGOVI, now you have 2 options: You can either compound the tokens to earn additional staking rewards or you can claim your esGOVI.

Compounding: This adds your esGOVI to the staking pool where they will earn additional staking rewards exactly the same as staking your GOVI. You can choose to unstake esGOVI at any time to make the tokens available for vesting.

Claiming: When you claim your esGOVI, the tokens become available for vesting. This will allow you to convert esGOVI into GOVI over the period of 1 year. The following paragraph will dive deeper into the vesting mechanics.

  • Keep in mind that esGOVI is not a tradable asset. You can only use it for staking or vesting.

How To Vest esGOVI

Once you have decided to vest your esGOVI, you need to reserve the average amount of GOVI or Theta Vault LP tokens used to earn esGOVI. This means if 1000 GOVI were staked to earn 100 esGOVI, you need to keep 1000 GOVI reserved to vest the 100 esGOVI tokens. (This is just an example, the actual ratio may vary)

esGOVI that has been deposited for vesting will not earn any additional rewards, but the staked tokens reserved for vesting will continue to earn rewards.

During the vesting process, esGOVI tokens will be gradually converted to GOVI with every block until fully vested over 365 days. The resulting GOVI tokens are immediately claimable.

If a user sells GOVI or Theta Vault LP tokens and wishes to vest their esGOVI rewards at a later stage, they will need to reacquire the tokens. It is possible to deposit tokens for vesting while an existing vesting process is ongoing. Tokens reserved for vesting cannot be unstaked or sold, but the “Withdraw” button on the “Vest’’ page can be used to unreserve them. Note that withdrawing will unreserve all tokens and pause vesting, partial withdrawals are not supported. Any esGOVI tokens that have already been converted to GOVI will remain as GOVI tokens.

What About Polygon?

In view of our new strategic direction towards Arbitrum and zkSync, we have decided to gradually phase out our activities on Polygon. As a result, we strongly advise our liquidity providers and traders on Polygon to transition to Arbitrum. USDC liquidity providers on Arbitrum are able to achieve returns that are currently over 400% higher in comparison to Polygon (20,97% vs. 4,22%). Additionally, the trading of CVI benefits from higher efficiency and reduced slippage.

If you’re staking on Polygon, there’s no reason to move yet. You will receive the same APR and unlocked GOVI as usual. We will continue to provide access to Polygon staking but from now on solely for withdrawal purposes. It is our intention to provide enough time for the transition away from Polygon. Detailed bridging instructions will be provided at a later stage.

esGOVI on zkSync is expected to launch in the very near future. Once it becomes available on zkSync, V2 staking on Polygon will be terminated and CVI will make the final transition to 100% esGOVI.

Next Steps For GOVI’s Tokenomics

This fundamental change is a first major step towards the fully upgraded tokenomics model. The team is very excited about the future and working tirelessly to reach the milestones set out in our roadmap. We know the community is very excited about this as well so we will soon launch a vote to determine the threshold where we will gradually start to switch from esGOVI to USDC as real yield. Remember, before we switch to real yield we need to reach at least 2 of the milestones as described in the previous Medium article. This real yield will include protocol fees and additional profits from Theta Vault protocol owned liquidity.

In addition, we are currently exploring the implementation of a multiplier points system. This system is designed to provide additional incentives for GOVI holders with long-term commitment. While this implementation poses some technical challenges, we are confident in our team’s abilities to deliver it successfully.

What Is zkSync

zkSync is a layer-2 EVM based blockchain technology that employs pioneering approaches to address the issue of Ethereum scaling. The term “zk” denotes zero-knowledge, while “rollups” refers to the grouping of smart contracts to facilitate transactions off the primary layer. Zero-knowledge proofs, also known as zk-Proofs, provide robust cryptographic security. For example, zk-Rollup solutions verify transaction integrity without revealing any supporting evidence.

Our team has been closely involved with zkSync for over a year and we are looking forward to being one of the first derivatives projects to be integrated into the zkSync ecosystem. We see this as a huge step in the right direction for the protocol and look forward to launching CVI on zkSync.

Important To Know

  • Escrowed GOVI rewards (esGOVI) are now live on Arbitrum! Staking V2 on Arbitrum is over! You need to unstake GOVI and stake it again in the new contract on Arbitrum to start earning esGOVI.
  • Choose to compound your esGOVI rewards with your staking stack, or alternatively, vesting it to receive GOVI tokens.
  • The retroactive rewards for early Theta Vault depositors are set to be distributed in a form of esGOVI. We’ll share more details regarding this distribution as it gets closer.
  • At a later stage you will be able to earn esGOVI by minting, burning and swapping CVI. (More details coming soon)

Get Involved

We believe that learning by doing is the most effective method to understand how CVI works, and therefore, we encourage you to participate in the Theta Vault by providing liquidity and by minting, burning and swapping $CVI when you predict an increase in volatility.

As we progress towards launching on zkSync and finalizing CVI’s scalability upgrades, which were set several months ago, we anticipate a significant influx of new users.

We would like to invite everyone to join our vibrant community on our social channels. If you have any questions, our team & community are always on stand-by and eager to assist.

Website: https://cvi.finance

Staking tutorial: https://cviofficial.medium.com/cvis-new-tokenomics-tutorial-1e9dd8908b6e

v3 Litepaper: https://cvi.finance/files/CVI.v3.Litepaper.pdf

GitBook: https://docs.cvi.finance/

Whitepaper: https://cvi.finance/cvi-white-paper.pdf

Twitter: https://twitter.com/official_CVI

Telegram (group): https://t.me/cviofficial

Telegram (channel): https://t.me/cvichannel

Discord: https://discord.gg/yuDsy7SM2H

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CVI

CVI is a decentralized volatility index for the crypto space