VE Mechanics- What is a VEDEX?

The VE model at its core is simple, yet with many buzzwords and intricacies people can often get confused. In a normal AMM Dex, the team decides which LPs get rewards in the native token of the Dex. In a VE Dex, people lock their tokens and get voting power, each week deciding which pools get the rewards the following week.

It is therefore obviously essential to the protocol that the main pool (TYDE-SUI in our case) is also voted for, as there is no guaranteed rewards for it.

The MAX LOCK time on TYDE is 6 months, deviating from the traditional 4 years we see in other protocols, as an attempt to balance sustainability while allowing users freedom with their tokens. 4 years is a long time and in our view a predatory one, trapping some unwilling participants. Locks are extendable always, so if you want to lock for 4 years you can continue to do so in 6 month increments, or permanently increase your lock every time you vote. The Locking Mechanism Basic Rules:

-Lock $TYDE for a chosen duration.

-Receive veTYDE proportional to lock time.

-Longer locks = more veTYDE per token.

-Lock duration decays linearly over time.

-6 month locks receive 1:1 voting power with their TYDE.

Your veTYDE power doesn't stay constant. If you locked for 6 months and never extended, after 3 months you only retain 50% of the original voting power. Decay ensures a choice between continuous recommitment or sacrifice of decision making power. Gauge Voting - Directing Emissions Every week, veTYDE holders vote on which LPs can receive rewards. Think of gauges as buckets that collect emissions:

-SUI/USDC gauge receives 30% of votes and gets 30% of this week's emission.

-SUI/$TYDE gauge receives 20% of votes and gets 20% of this week's emission.

This is where the game theory gets interesting. VE Dexes are known as VE 3,3 because in Game Theory, the 3,3 represents all actors in the game being aligned in their interests. In traditional Defi models, everybody is only out for themselves. Max extract, loyal to their wallet only, then leave. In a VE Dex like Tydeshift, the system is designed to benefit everyone who participates without, theoretically, taking from anyone else.

Trading Fees

Fees are set at a flat 0.3%. Of this:

-50% goes to the LP itself, eg 0.15% of trade volume.

-35% goes to Tyde Lockers/Voters on that pair eg 0.105% of trade volume.

-15% goes to protocol eg 0.045% of trade volume. So, in theory, what if vetyde holders vote for the SUI𝐼/TYDE pool? They receive:

-Their share of trading fees from that pool.

-Their share of emissions from their vote.

-Bribes from protocols and team / treasury that want to ensure the main pool always has $TYDE rewards.

This creates a self-reinforcing loop: $TYDE liquidity, more trading volume, more fees for ve holders, more locking = deeper liquidity.

Protocol Votes/Treasury Allocation The protocol treasury of TYDE or any other protocol could:

-Lock treasury $TYDE for ve voting power.

-Vote for strategically important pools.

-Capture bribes to refill the treasury.

The TYDE Treasury will be used for Bribes on main pools initially as well as the Team voting power to ensure TYDE-SUI captures rewards. But the above is one of many ways the VE system can be used by protocols themselves.