To promote the development of Vena Network, and enable more people to participate in the Vena ecological construction, share Vena ecological earnings, and establish a decentralized collaborative decision-making mechanism, Vena team will issue ERC 20 token based on Ethereum blockchain, VENA Token, which shall be mainly used for the inner circulation of Vena ecosystem, and motivate Vena users to construct, use and maintain Vena Network. VENA Token shall become the lubricant for the stable operation of Vena Network.
Economic Model of VENA Token.
The value storage function and the circulation function of protocol token is a pair of contradiction in the token economic model. If the design of the token economic model is partial to the value storage function, due to the anticipation that the price will increase, the token holders will tend to hold but not use such tokens, which further weaken their liquidity. Such self-reinforcing positive feedback will result in a high entry threshold for new users, and hinder the expanding of protocol use range.
Such a situation has been verified in the bitcoin system. It can be predicted that when such self-reinforcement reaches a limit, people will no longer use such tokens in the market, and no new users enter the market; so, the whole token economic model will be close to the edge of a breakdown.
Based on above analysis, we can draw the conclusion that the balance is maintained only when a protocol token has both value storage function and circulation function at the same time, and the price can be stably maintained. Vitalik Buterin discussed this problem in a blog in 2017 and put forward a formula to assess the token price: MC = TH
M represents the total supply quantity of tokens.
C represents the token price.
T represents token transaction volume.
H represents the average time of users holding tokens.
Our design objective of VENA Token economic model is to maintain token price C at a relatively stable long-term increase rate, and to maximize the total market value of tokens MC/TH at the same time. For this reason, we need to pay attention to two aspects. First, enlarge the token transaction volume T as far as possible, and increase the average time of users holding tokens H; second, ensure that the increase rate of total supply quantity of tokens is lower than the increase rate of TH.
Use Cases of VENA Token
To establish a verified Vena node, a certain number of VENA Tokens should be deposited in Vena Foundation.
To take the post of Vena verification juror, a certain number of VENA Tokens should be deposited in Vena Foundation.
Paying OTC trade service charges in VENA Tokens can enjoy 50% discount.
Users borrowing money with VENA Tokens as collateral can enjoy a 50% service charge discount, and obtain a higher loan-to-value ratio and lower liquidation limit.
The order of borrowing money with VENA Tokens as collateral shall be highlighted.
VENA Token holders can participate in Vena DAO voting, and become a member of protocol governance decision-making level.
Additional Issue of VENA Tokens and Bounty Pool
The initial issue volume of VENA Tokens is 1 billion, also there is a bounty pool which is funded by Vena Foundation, and later, a certain number of additional tokens shall be issued every year. The additional issue volume of VENA Tokens is closely related to the operation state of Vena Network, now the additional issue scenarios which have been determined are as follows:
Vena jurors may obtain VENA Token rewards for appropriate arbitration, and the reward part shall be generated by bounty pool, the insufficient part will be produced by additional issuance. If the juror node is malicious, the punish token will be counted into bounty pool.
When any black swan event happens, execute the compulsory liquidation immediately, and issue additional VENA Tokens to compensate the lending party, thus to avoid a debt default. The additional part of Vena Token will be confirmed by DAO and compensated to the party made collateral in less than 3 working days.
For any scenario in which additional issue of VENA Token is required, submit a proposal to Vena DAO for voting. Additional issuance will not be more than 3% of the total token amount of the year.
Aragon DAO Governance
Aragon released in 2017 is an operating system of Decentralized Autonomous Organization(DAO).
In Aragon, a simple and easy-to-use set of basic administration components for Decentralized Autonomous Organization(DAO) can be easily realized, which includes token distribution management, organization member management, voting management, crowdfunding management, financial management etc.
The behaviors of Aragon organization can be easily defined by modifying regulations. In addition, Aragon organization can be extended through the third-party module for organizing contract.
VENA Token holders can vote on every aspect of Vena Protocol through the voting module of Aragon software, and such aspects include but are not limited to:
Vena Protocol upgrading proposal.
Proposal for additional issue of VENA Tokens.
Vena DAO committee election.
Trusted oracle set modification proposal.
Vena Network general parameter (scope of tokens which can be mortgaged, mortgage rate, compulsory liquidation limit, service charge, transfer channels in which fiat currency can be used etc.) modification proposal.
Vena Network temporary open and close proposal.
It largely depends on a robust decentralized ecosystem to promote liquidity whether Vena Network can be recognized by the public eventually. The roles participating in ecological construction are not limited to VENA Token holders, but also developers, terminal users etc.