On January 6th 2022, Andre Cronje posted a Medium describing a ve(3,3) project, stating it was a:

Quick article to explain how a “potential future” (wink wink) emission based token could balance ecosystem participants.

He also posted an opaque picture of what would later become widely known as the Solidly logo

Solidly was built as a Decentralized AMM, primarily for other protocols to leverage the model to drive ecosystem growth and help them avoid needing to use their own inflationary tokenomics to build deep liquidity on Fantom.

A snapshot was taken of the top projects by TVL on the 21st of January 2022 and the list of eligible project published. These projects would receive a veNFT representing a locked veSOLID position that provided them the opportunity to vote for the 2m $SOLID emissions that would be distributed in the first epoch.

Theoretically, each protocol was capped as to how much vote power they had based on the size of the veNFT they were given, however there were other mechanisms at their disposal to increase the governance power and therefore emissions that were directed to their pool(s) of choice - Bribes

By bribing users to vote for their pools, a larger % of weekly emissions could be directed to their pools thus deepening liquidity and allowing users to benefit from increased incentives to actively provide liquidity on Solidly.

Bribing is one of the key elements of the Solidly flywheel, as a supplement to fees - bribes drive significant value to veNFT lockers. There is one major problem, consistency.

Bribes cannot always be counted on…

So, at Stratum we have incorporated a mechanism to reward participants that model the behaviors that drive value toward the veNFT holders through bribes. Introducing Meta Bribes

Meta Bribes

Firstly, who bribes?

Typically, it is a protocol with a large treasury, native token, or some other mechanism through which it makes sense for them to bribe the pool in order to receive more votes to deepen liquidity for their token on the network. Why do this? Well, let’s do some quick maths and use theoretical numbers:

Let’s say I’m a project, and I want to calculate the value of bribing vs. incentivising a pool natively using my own token (inflationary and dilutive to current holders)

So, I deposit $5k worth of $USDC from our Treasury onto Stratum in bribes for users to vote for my pool of choice (in this case it is my projects native token & $USDC in an LP).

This helps me to gain an additional 2% of the total votes for the next epoch from users who believe that my bribe is incentive enough for them to vote for our token pool.

If the total value of emissions that week was $150k and with my own protocol owned veNFT (lets say ~3%) + the bribes I deposited I was able to receive 5% of the total emissions that epoch. That would mean:

My cost is $5,000 USDC in bribes

Emissions value ($)150,000 * total % of votes 0.05 (5%) = $7,500 revenue

Value gained $2,500

So for the cost of $5k I am able to generate $7.5k of revenue, AND I don’t need to issue rewards in my own protocol token. If I am voting for my pool I am also able to also get a return in bribes to further validate my strategy.

This is the power of bribing as a protocol on Stratum.

So how do we support and enhance the value of bribes for projects that see the value in issuing them, especially consistently and at high levels? Through Meta Bribes

How does it work? We bribe the bribers!

Two factors are important here:

✅ The relative size of the bribe in relation to the total bribe amount across all pools.

✅ The partner's relative voting power needs to be factored in.

We will use the following formula to determine the weekly rebase for partners:

Weight(Pool) = 2x $Bribe(Pool)/total$Bribe +1x Votes(Pool)/PartnerVotes.

This formula was invented by our friends over at Solisnek Finance. The first part of the equation incentivizes larger bribes in general. Think of it like a cashback for spending money on bribes.

The second part focuses on the protection of the protocol. Larger bribes will attract more votes and therefore a higher revenue in return for your bribes. So, each epoch 7% of weekly $STRAT emissions are directed towards meta bribes and are claimable at epoch flip.

Partners will need to whitelist their addresses to receive meta bribes. Any protocol can participate, including partners that start to accumulate STRAT (and lock it) at a later stage.

According to internal calculations, based on the assumption that the average size of veNFT for the top bribers is around ~2.5%, and the majority of meta bribes goes to the top 5 protocols in this scenario, the rebase would result in an approximate 50% annual cashback. This successfully provides an avenue for dilution protection tied to conditions that help veSTRAT holders to generate cashflow, while also improving the overall health of the protocol.

Conclusion

TLDR; Stratum is building on the Solidly incentives model to support the right behaviors that are in the interests of veNFT lockers. It’s a delicate balance, but with each iteration, it becomes more and more clear where the inefficiencies lie. The lack of consistency in bribing or lack of incentives for protocols to bribe and bribe well, is something that can and should be addressed.

Stratum Exchange continues to revise and refine the model as more information becomes available. It’s important to our team that we are not just another ‘solidly/velodrome fork’ - but another project that is driving the ecosystem forward for the greater good of the network, the projects, and the users alike.

In order to commemorate the second Mirror article in the series of these announcements, we have created a NFT that can be minted by Stratum supporters!

Thank you as always for your support!

The Stratum Exchange Team