Rewards and incentives are provided to holders and stakers of Vela Exchange utility tokens via several different methods.
A percentage of fees, realized losses, and liquidated collateral will go into the VLP vault, increasing the value of VLP for holders.
A rewards token claimable by stakers of $VELA, $esVELA and $VLP. esVELA may be staked to earn a portion of $VELA 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.
Stakers of $VELA and $eVELA qualify for a percentage of a percentage of fees, realized losses, and liquidated collateral in the form of USDC.
With the exception of the first cycle (Cycle 0), in which a set amount of eVELA 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.
A mechanism that will be used to stabilize the supply of VELA is a unique VELA buyback model.
To calculate the percentage of funds from generated fees (
- perpetual) that will be allocated to treasury buybacks (
), we utilize this formula:
Buybacks will be made strategically and occur over 2 weeks periods.
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.
The fees generated from the perpetual exchange are split according to:
- 1.55% in USDCa. 5% for staking VELA and esVELAb. 50% for holding VLP
- 2.20% 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
- 3.25% to Treasury