FAQ - Tokenomics
What is Tokenomics 2.0?
Tokenomics 2.0 represents the evolution of FCTR utility and Factor’s governance model. This new model significantly enhance participation and incentives. It's specifically designed to encourage and reward long-term commitment.
What are the Major Improvements in Tokenomics 2.0?
The significant improvements in Tokenomics 2.0 include:
Simplified Staking Model: Redesigning the staking mechanism to be more intuitive and user-friendly. It eliminates complex elements like delegation systems and penalty mechanisms (such as rage quit penalties) to streamline the user experience.
Reduced Staking Duration: The maximum lock-in period for staking has been reduced from four years to two. This change reflects user feedback, market trends, and offers greater flexibility.
Enhanced Incentives for Long-term Staking: To encourage and reward users who commit to the protocol for longer periods, the system now offers increased incentives. Those choosing the maximum lock-in duration receive up to a 2.5x multiplier on vault rewards, which can make a significant impact on APYs.
How Does the Simplified Staking Model in Tokenomics 2.0 Work?
The new staking model in Tokenomics 2.0 is streamlined for ease of use and understanding. By removing complexities like delegation and penalties for early withdrawal (rage quit), the system becomes more accessible, especially for newcomers. This model is based on a linear decay principle, where the value and influence of staked tokens gradually decrease over time, encouraging active stake management and continued engagement with the protocol.
Why Has the Maximum Staking Duration Been Reduced?
The reduction in the maximum staking duration from four years to two years is a strategic change to align the protocol with current market dynamics and user preferences. This change acknowledges the fast-paced nature of the DeFi space and the desire of users for greater liquidity and flexibility. It allows users to commit to a time frame that is more manageable and less daunting, while still offering significant incentives for those who choose to stake for the maximum period.
What Incentives are Offered to Users Who Choose Maximum Lock-In Staking?
Users who commit to the maximum lock-in duration of two years in Tokenomics 2.0 are substantially rewarded for their commitment. They receive up to a 2.5x multiplier on vault rewards. This multiplier effect is designed to reward loyalty and long-term trust in the protocol, aligning the interests of the users with the long-term growth of the ecosystem.
veFCTR
What is veFCTR, and What are Its Benefits?
veFCTR (voting escrowed FCTR) is a special token representing your staked FCTR in the Factor protocol. Holding veFCTR offers several advantages:
Revenue Sharing: You receive 50% of the protocol's revenue as a veFCTR holder.
Governance Rights: veFCTR gives you a say in the protocol's decision-making processes.
Enhanced Rewards for Long-Term Commitment: The longer you commit your FCTR in staking, the more rewards you can earn.
How Do I Acquire veFCTR?
Acquiring veFCTR involves staking your FCTR tokens. The process is straightforward:
Stake FCTR: Lock your FCTR tokens in the protocol.
Receive veFCTR: Based on the amount and duration of your stake, you receive a corresponding amount of veFCTR.
Longer Stakes, More veFCTR: The longer the duration of your stake, the more veFCTR you receive, enhancing your influence in governance and share in protocol revenue.
How Does veFCTR Influence Governance?
veFCTR directly impacts governance in the Factor protocol:
Voting Power: The more veFCTR you hold, the more voting power you have. This means your influence on governance decisions and protocol direction is proportionate to your veFCTR holdings.
Decision-Making: veFCTR holders participate in key decisions, including updates to the protocol, tokenomics changes, and other strategic initiatives.
esFCTR
What is esFCTR?
esFCTR (escrowed FCTR) is a unique token representing rewards that are vested or locked for a certain period within the Factor protocol:
Vested Rewards: Rewards are emitted as esFCTR and can be converted to FCTR at a 1:1 ratio. The esFCTR to FCTR conversion is subject to a 90 day linear vesting schedule.
How is esFCTR Different from Regular FCTR?
esFCTR differs from regular FCTR in several key aspects:
Non-Transferability: Unlike FCTR, esFCTR cannot be immediately traded or transferred until it completes its vesting period.
Vesting Period: esFCTR undergoes a 90-day vesting period, after which it can be converted to FCTR on a 1:1 basis.
Revenue Share
How Does Revenue Sharing Work in Tokenomics 2.0?
Revenue sharing in Tokenomics 2.0 is a significant incentive for veFCTR holders:
50% Revenue Allocation: A substantial portion (50%) of the protocol's revenue is distributed among veFCTR holders based on each holder's relative share.
Governance Migration
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