Bro, I was Pitching My Decentralized Exchange idea to VC in my dream and someone laughed at me and asked, "Do you even know what is ve(3,3)?" ๐ญ๐ญ
Dude, that's rare insult, even for a dream. But now you can go back to sleep. ve(3,3) is a system for a protocol's token that was designed by the legendary developer Andre Cronje. It's a mashup of two of the most powerful ideas in DeFi: ve from Curve Finance and (3,3) from OlympusDAO.
Let's break down the ingredients first.
1. The "ve" part (Vote-Escrowed):
This idea comes from Curve ($CRV). Instead of just holding a token, you lock it up for a period of time (up to 4 years). In return for locking your tokens, you get veCRV. The longer you lock, the more ve power you get. This "vote-escrowed" token gives you three superpowers:
Governance Power: You get a bigger say in the protocol's decisions.
ย Boosted Rewards: You earn way more fees and token rewards from the protocol.
ย Bribes: You can get paid by other protocols who want you to use your voting power in their favor.
The goal is simple: reward long-term believers, not short-term sellers.
2. The "(3,3)" part (Game Theory):
This comes from OlympusDAO. It's a super simple way to think about game theory. Imagine every token holder has three choices:
ย Stake (+2): You stake your tokens, which helps the protocol. This is good for you and the protocol.
Bond (+1): A more complex action, but still helpful for the protocol.
ย Sell (-2): You sell your tokens, which hurts the protocol's price. This is bad for you (long-term) and the protocol.
(3,3) represents the best possible outcome: If everyone stakes, everyone wins the most. It's a meme that encourages cooperative, positive-sum behavior. If everyone stakes (+2 for me, +1 for the protocol = 3) and you stake too (+2 for you, +1 for the protocol = 3), we're all in a (3,3) world.
So, how does Andre Cronje's ve(3,3) combine them?
Andre's ve(3,3) model cleverly merges these two ideas to create what he hoped would be the perfect token system:
ย You lock your protocol's tokens to get veTokens (the "ve" part).
These veTokens give you voting rights and claim to 100% of the protocol's fees.
However, the protocol's token emissions (new tokens being created) are given to all token holders, but they are designed to decrease as more people lock their tokens up.
This creates a (3,3) game theory dilemma. If everyone locks their tokens, emissions go down, making the existing tokens more scarce and valuable. The fees paid to veToken holders become huge. This is the best outcome for everyone. But if you're the only one who doesn't lock, you can try to dump your tokens on everyone else.
The core idea is to make locking tokens the most logical and profitable decision for every single user, aligning everyone to act in the best interest of the protocol's long-term health. It's designed to prevent the classic "farm and dump" problem that hit badly for so many DeFi projects.