On Wednesday, the Plenty.network protocol launched its first liquidity pool voting with veNFT.
What is veNFT, where to get it, how to vote for pools and what tokens are rewards paid in? This post explains everything liquidity providers might need on Plenty.net.
How Plenty.network works
The backbone of Plenty.network are liquidity pools. Providers contribute assets to the pools and traders use this liquidity to exchange funds.
With traditional DEX, pool providers make money in two ways:
- Commissions: Traders pay trading commissions for each trade. When the liquidity is withdrawn, the provider receives his share of the commissions received;
- Farming: When depositing liquidity, a provider receives LP tokens that represent their assets in the pool. LP tokens can be put into a farm for additional profit.
In addition to the usual LP tokens, Plenty.network has two other assets that affect revenue: PLY and veNFT.
PLY is a native Plenty.network token. The provider locks its LP tokens into a Gauge contract (Gauge) and receives periodic rewards in PLY. The emission depends on the number of PLYs blocked in veNFT.
veNFTs are NFTs that the user receives for blocking PLYs for a certain period of time. VeNFTs are required to vote for pool meters and receive the trading commissions accumulated in them. In the process, veNFTs gradually lose “weight”, but their holder automatically receives a part of the PLY emission to protect against inflation.
The aim of this Plenty.network mechanism is to provide the protocols with liquidity in the long term.
How to make money on Plenty.network
The first way is to add liquidity to the pool, block the LP tokens and get rewards in PLY.
To do this, select the desired pool on the pool page, click on Manage and confirm the liquidity deposit. You will receive PNLP tokens in your wallet.
Then go to the staking tab and deposit PNLP.
The Bonuses tab shows bonuses in PLY on the My Portfolio page. They can also be picked up there.
The next step is to vote for a pool that will receive its trading commissions. You can vote for any pool, not just the one you contributed liquidity to.
First you need to get veNFT. You can buy them from OBJKT or get them via PLY blocking. To do this, click on Create lock on the vote page and specify the size and duration of the PLY lock in the menu that opens.
veNFT’s voting rights depend on the duration of the block. For example, blocking 154 PLY (~$1) for a week results in a veNFT of 1.39, while blocking for 4 years results in a veNFT of 153.39. Basically it works like this:
- Suspension for 4 years (maximum): 100% voting rights;
- 2 year ban: 50% strength;
- Blocking for 6 months: 12.5% potency;
- Blocking for one week: 0.4% strength.
After confirmation you will receive a veNFT in the appropriate colour:
- green: one week to one year;
- red: one to two years;
- purple: two to three years;
- red: three to four years.
Too bad, but veNFTs are not displayed in the Temple Wallet. However, they can be displayed on OBJKT.
You cannot vote immediately: you have to wait up to 7 days for the next epoch. When it starts, select the pool in the diagram on the right or in the list in the middle, add votes and confirm the transfer from veNFT.
The amount of rewards in each era is displayed next to each pool. The highest number is the bribe any user can add to the pool to increase its attractiveness. In the UP/ctez pool, the bribe is $682 in UP. This money is shared by users who voted for the pool. The lower number is the accumulated trading commissions in the pool.
Diploma
Plenty.network supports three ways of earning:
- Deposit liquidity, secure PNLP and earn PLY;
- Block PLYs in veNFT or buy a ready-made veNFT, vote for the pool and earn trading commissions;
- Deposit liquidity, get PLY, bind them to veNFT, vote and get commissions, reinvest them in the pool, get more PLY, bind them to veNFT with more voting rights and so on to gradually earn more and more.
Long PLY locks, customizable PLY issuance, focus on earning trading commissions and no trusted farms – all these mechanisms target long-term profitability for liquidity providers and lure tokens into popular pools.
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