Rewards
Types of Rewards
Rewards and incentives are provided to holders and stakers of Vela Exchange utility tokens via several different methods.
VLP value
A percentage of fees, realized losses, and liquidated collateral will go into the VLP vault, increasing the value of VLP for holders for each chain.
esVELA
A rewards token claimable by stakers of $VELA, $esVELA and $VLP. esVELA may be staked to earn a portion of $esVELA rewards, or vested over time to be claimed as $VELA. A percentage of fees, realized losses, and liquidated collateral will be used to buy back $VELA from supported market places to supply vested $VELA.
USDC
Stakers of $VELA and $esVELA qualify for a percentage of fees in the form of USDC.
Platform Rewards Flow Process
Reward Cycles
With the exception of the first cycle (Cycle 0), in which a set amount of esVELA are rewarded over a ~21 day period for VELA, esVELA and VLP stakers, every subsequent reward cycle is 35 days in duration. Any fees earned during the first 14 days of each cycle are paid out in rewards during the last 14 days. The 7 days in between will be used to buyback VELA from the open market. The following diagram shows how the cycles overlap and go on in perpetuity.
VELA Buyback Model
The Vela treasury is dedicated to maintaining a stable supply of VELA through a unique buyback model.
To calculate the percentage of funds from generated fees (- spot, - perpetual) that will be allocated to treasury buybacks (), we utilize this formula:
To give an example of projected buyback treasury values, a total of $350,000 will be dedicated towards VELA buybacks assuming $500k in spot trading fees and $1 mill in perpetual trading fees.
The VELA bought back from the market will be used as a reserve (held in a dedicated wallet) for paying out the rewards in esVELA (for VELA, esVELA and VLP stakers). This means no additional VELA will need to be minted to maintain this rewards structure.
Fee Splits for Perpetual Exchange
The fees generated from the perpetual exchange are split according to:
55% in USDC
a. 5% for staking VELA and esVELA
b. 50% for holding VLP
20% in esVELA (via VELA buybacks which is kept as a reserve 1:1 for minting esVELA)
a. 10% for staking VELA and esVELA b. 10% for staking VLP
25% to Treasury
Trading Fee Discounts
Your staked VELA + esVELA has the utility of earning discounts on position fees per chain. The table below shows the number of staked tokens required at any given time to achieve the corresponding discount %.
| Staked VELA + esVELA | Discount |
|---|---|
500 | 3% |
1,000 | 5% |
2,500 | 10% |
5,000 | 15% |
10,000 | 20% |
25,000 | 25% |
50,000 | 30% |
100,000 | 35% |
250,000 | 40% |
In addition to the above discounts, Vela Exchange offers a referral program. Rebates derived from being referred shall be applied after Trading Fee Discounts have been deducted from any position fees. For example, a user has a 10% Trading Fee Discount from staking VELA, and they were also referred by a standard user (Tier 1). They open a position with $10 fees, and receive the initial $1 discount, and then 2.5% from their rebate, equaling an additional $0.225 deducted.
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