VIP-XX: VCON Token Distribution

I hope everyone is holding up in these volatile times. We’ve been making steady progress on Volt Protocol development work and I’m happy to share news about the timeline for VCON token launch and details about the token distribution.

The launch of non-transferable VCON is expected to occur in February, but depends on engineering timelines.

Background

The VCON governance token is a share of the surplus buffer or insurance fund, first loss capital that takes the hit before VOLT holders in the event of losses in a yield venue. In return for taking on this risk, VCON holders have the right to direct which venues their pro rata share of the PCV is allocated to, and either earn or lose based on the performance in these venues vs a benchmark. This system is currently under active development.

To give a more concrete example of how this works:

Let’s say that by the time market governance is live, Volt Protocol has the following set of yield venues: the DAI Savings Rate, Morpho-Compoundv2, Euler, and Compound v3. If you held 10% of the VCON tokens staked in market governance and voted for Euler-DAI, 10% of the total PCV would be lent on Euler as DAI. If the next day rates on USDC went higher than DAI rates, you could rebalance to Euler-USDC, or move to another market at any time. You receive more VCON tokens in proportion to the yield you generate, being diluted if you underperform your peers (a kind of gradual slashing), or increasing your stake with wise allocation decisions.

A nontransferable version of the VCON token will be released prior to the release of the full market governance system, so that there is time for education and potentially delegation before the full system goes live.

VCON holders will eventually, but not immediately, also have the right to propose governance changes including new yield venues. In the early stages the core team will submit all governance changes, but VCON holders, like VOLT holders, will have veto rights over these changes.

VCON Supply

The VCON governance token does not and will not have a fixed supply. When the system is fully mature, regular VCON auctions will allow the surplus buffer (insurance fund) to grow as needed to meet the demands of VOLT holders, and VCON redemptions will allow holders to burn their tokens in exchange for a pro rata share of the surplus when it exceeds the target size. So long as the insurance fund is above the minimum size, VCON holders can withdraw at par, but VCON will only be minted through the VCON auction and may thus be minted at a premium.

The starting supply is 1 billion VCON tokens. ~10% of total supply was sold in the seed round, and ~25% allocated to early core contributors and advisors. The remainder is controlled by the Electric Development Co which is developing Volt Protocol. We fully expect this to be a years-long journey to global scale and robust decentralization, and the remaining supply will be split between future private funding rounds, incentives for new contributors, external grants, and token incentives. There is no fixed and confirmed allocation among these categories. Existing employee and investor vesting will be observable on chain once the token is live.

Restrictions on Insider VCON

At first the VCON token is non-transferable. When it is eventually made transferable, all employee or investor VCON will be subject to an additional unlock period. Investor VCON is under a one year cliff, two year linear unlock following the initial VCON unlock, contributor VCON is under a one year cliff, three year linear unlock following the initial VCON unlock. We don’t expect the unlock to come anytime soon. VCON transfer will be enabled with the consent of VOLT and VCON holders when the system is mature.

VCON Initial Community Distribution

1% of the initial supply of 1 billion VCON tokens, or 10 million VCON, will be claimable by VOLT holders when the token launches. An account’s claimable VCON will be based on the account’s average VOLT balance (including both mainnet and Arbitrum VOLT, though VCON will be only on mainnet) divided by the average VOLT supply in the period from April 17, 2022 (the date of VOLT token launch) to the time this post is live.

0.25% of the initial supply of 1 billion VCON tokens, or 2.5 million VCON, will be claimable by VOLT holders based on the account’s average VOLT balance (not including Arbitrum VOLT) divided by the average VOLT supply in the period from the time this post is live to the date of VCON token launch in February.

All known insider addresses will be excluded from the initial 1% distribution, but eligible for participation in the distribution following this post. As the rest of our VCON is locked and unable to participate, this is the only way for the team or investors to participate as users in early market governance, on level ground with everyone else.

Subsequent distribution epochs will be conducted iteratively until such time as the community and team together decide we are ready to end VCON distributions and turn on VCON auctions and the liquid market.

TLDR

Longtime VOLT holders have already been accruing VCON. It will be claimable (but not transferable beyond that) once the token is live in February, similar to how things work with MORPHO tokens. 1% of the supply for retroactive distribution, 0.25% between now and February, rate for the next epoch to be finalized prior to VCON token launch.

2 Likes

Hi everyone, a quick update that we are working on adding VCON distribution tracking to the UI, and I also want to share the exclusion criteria for insider addresses. These criteria have only been applied to addresses that would receive over 100k VCON, which is 1% of the initial distribution.

Any address that meets two or more of the following conditions was excluded:

  • FEI Genesis Participant
  • early VOLT minter (minted within two weeks of launch)
  • large VOLT minter (minted over 100k)
  • large FEI holder (>100k)
  • large Fuse user (>100k deposits or borrows)

If you believe you have been excluded in error, you may contact us. These exclusion criteria are intended to prevent undue concentration of market governance voting power.

Reminder, all addresses are eligible to participate in the ongoing distribution. These restrictions apply to the retroactive distribution only.

1 Like

Market Governance Testnet Competition

Along with the VCON distributed to VOLT holders, there will be 2.5m VCON tokens (0.25% of total supply) allocated for a testnet competition where users can take market governance for a spin. Testnet has the benefit of making market governance accessible to a wider user pool than mainnet, and allows us to test the interface and iterate rapidly before going to audit.

Details

  • There will be a mock VCON airdrop on testnet, with very broad criteria such as “any Ethereum address that has spent more than 0.1ETH on gas” (can’t be totally open or else we get griefed)
  • Testnet market governance will include a set of mock venues, which could include interesting behavior to test the limits of the system and how participants can respond in an emergency.
  • Distribution of the 2.5m real, mainnet VCON after the competition is over, based on performance.
    • Deduct a penalty based on testnet gas usage to realistically reward strategies according to mainnet efficiency
    • There will be an additional 2.5m VCON available for whitehats that manage to drain user funds on testnet

The launch date and precise duration of the testnet competition are not yet confirmed. These will be finalized once the market governance development reaches a sufficient stage of completion. Expect more details and updates in this thread over the next month.

2 Likes