TAP & veTAP
TAP is a fixed-supply value accrual token architected on the principles of the ve(3,3) model
What is TAP?
TAP is the value accrual token for Tren AI Protocol, with 90% of protocol revenue directed towards TAP buybacks. The token supply is designed to diminish over time through TAP burns, and starts at a fixed initial supply of 1 billion tokens. As the cornerstone of our ecosystem, TAP plays a crucial role in aligning incentives among stakeholders and fostering the development of a sustainable hybrid DAO-governed protocol.
What is veTAP?
veTAP stands for "vote-escrowed TAP," a modification of the veTokenomics model prevalent in DeFi that encourages long-term governance participation and investment. Unlike regular TAP tokens, veTAPcannot be transferred and is used to gauge the voting power and economic commitment of users who choose to lock their TAP tokens for a specified duration.
Through veTAP, Tren AI Protocol not only ensures robust governance and fosters long-term engagement, but also aligns holder incentives with the overall success and profitability of the platform. By enabling veTAP holders to capture a significant portion of the protocol's full economic activity, it underscores a superior model for value accrual compared to traditional lending platforms. This strategic approach enhances governance effectiveness and ensures that committed stakeholders have a substantial impact on the protocol’s direction and financial health.
veTokenomics
Token Lockup and Voting Power
Users commit their TAP tokens to obtain veTAP, with the lockup period ranging from one week to a maximum of 4 years. veTAP works nearly identical to Curve's veCRV model. The duration of the lockup significantly influences the user's voting power and potential yield, embodying the principle: the longer the lock, the greater the influence and rewards. veTAP is designed so that even users with low TAP holdings can still have a significant impact on the ecosystem through locking.
Calculation of veTAP
The amount of veTAP a user receives is determined by the number of TAP tokens they lock and the duration of the lockup:
For example, if a users locks up 100 TAP for 219 days, they would receive 15 veTAP:
15=(100∗219)/(4∗365)
When a user locks their TAP tokens for veTAP, they will receive veTAP based on the lock duration and the amount locked. Locking is not reversible and veTAP tokens are non-transferable. If a user decides to lock their TAP tokens, they will only be able to reclaim the TAP tokens after the lock duration has ended. Users can withdraw their TAP at any time after their veTAP has decayed to 0 (lock time has expired).
Additionally, a user cannot have multiple locks with different expiry dates. However, a lock can be extended, or additional TAP can be added to it at any time.
veTAP Decay
The amount of veTAP a user has will decay linearly over the chosen lock time as their unlock date draws closer. There are two ways a user can change their lock. They can add to their lock or they can extend their lock. What happens in both situations and how it affects their veTAP and the decay is shown in the charts below.
Extending Locks
Extending locks means increasing the time left on a lock. If a user locked 100 TAP for 4 years, after 3 years the user would only have 25 veTAP left as the lock time is now 1 year. If the user extended the lock to be 4 years again after these 3 years, the user would again have 100 veTAP:
Locking up Additional TAP
Adding TAP to locks means the unlock date will remain the same, but more TAP will be locked, meaning more veTAP. If a user locked 100 TAPV for 4 years, but after 2 years added 200 TAP to their lock, the user would have 150 veTAP (300 TAPRV total locked for 2 years). This veTAP would continue to decay to 0 over the next 2 years:
Benefits of veTAP
Governance
Holders of veTAP are also referred to as the TapDAO, as governance and voting power in the protocol is represented by the amount of veTAP held. Eligible TapDAO members can make proposals on a diverse array of matters related to the Tren AI protocol, including the following:
Isolate Module Parameter Changes
TapDAO members can submit proposals to change parameters of isolated modules. These parameters include:
Ecosystem Rewards and Protocol Revenue
Most importantly, veTAP holders vote on Gauges, which determine how the protocol's rewards are allocated. While gauge voting is designed to align the protocol with optimal incentives for different stakeholders (e.g. ensuring enough rewards are allocated to properly incentivize Insurance Pool stakers), a significant share of protocol rewards is expected to go to veTAP holders. These rewards include protocol revenue such as fees generated from operations like transaction fees and liquidation penalties. Unlike typical lending market tokens, which often only distribute a portion of the fees collected from borrowers, veTAP holders benefit from the full spectrum of supply-side interest without having to share these profits with traditional depositors. This arrangement provides a more direct and potentially more lucrative value accrual mechanism, as it captures all economic activity related to the borrowing and management of assets within the platform.
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