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Value Accrual

LENDS Value Accrual

The LENDS token is designed with multiple value-boosting mechanisms to reflect the protocol's growth and ensure long-term incentives for LENDS holders.

Key Features

  1. 1.
    Long-term Retention: By locking their LEND tokens, holders can access additional revenue generated from lending to specific vaults or loan pools, fostering long-term commitment to the protocol.
  2. 2.
    Increased Governance Power: As the Lends Protocol expands, the governance power of the LEND token becomes increasingly valuable, driving demand for the token as users actively participate in crucial decision-making processes.
  3. 3.
    Rewarding Fee Rebate System: LENDS holders benefit from the protocol's fee rebate system, as a portion of collected fees is allocated to reward active participants, or "stakers". This positive feedback loop ensures that the protocol's successful growth directly benefits LENDS token holders.
  4. 4.
    Ongoing Development: As the protocol evolves and introduces new features, LENDS holders may enjoy additional value-building mechanisms, further enhancing the token's appeal to investors.

xLENDS/vxLENDS

To benefit from the various value accrual methods, users must participate in the following locking mechanisms involving LENDS Protocol and its LENDS token:

LENDS ↔ xLENDS

Users who stake LENDS tokens into governance will receive xLENDS, which accrues value in LENDS as fees are collected. This is similar to how Compound accrues value in cTokens. xLENDS holders will be eligible to collect revenues generated by the protocol through lending activities. xLENDS can be unstaked to reclaim the original LENDS with a short unstaking period.

xLENDS ↔ vxLENDS

Users who have staked LENDS can further stake their xLENDS to earn vxLENDS (locked LENDS). vxLENDS is a non-transferable token with the following properties:
  • 1 staked xLENDS generates 0.012 vxLENDS per hour
  • Maximum vxLENDS balance is capped at 100 times the xLENDS staked
  • If any xLENDS is unstaked, the user's entire vxLENDS balance will reset to 0
An individual user will reach their maximum cap in roughly one year, assuming no increases in xLENDS staked. vxLENDS will be used to determine the amount of LENDS settlement rewards from participating in lending vaults. Users will have the following weighting scheme for determining rewards in vaults:
where
l0
is the number of vxLENDS deposited by the user, and
d0
is the amount deposited in the vault. Then the percentage of rewards that an individual user can claim per epoch/week is determined pro-rata based on their weighted stake over the total sum of all weighted stakes:
where:
  • ​
    ru
    represents the percentage of rewards for the individual user
  • ​
    wu
    represents the weighted stake of the individual user
  • ​
    sum(wi)
    represents the total sum of all weighted stakes from all users
  • ​
    ro
    represents the total rewards allocated to a specific vault