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When one party guards another's rights or assets while waiting for the fulfillment of a certain condition, this is known as an escrow mechanism (e.g. safe receipt of goods purchased with those assets). Escrow methods in DeFi entail giving your tokens to a third party (e.g. BEE AI LABS) so they can use them to carry out certain features on your behalf. As a result, every escrow mechanism is usually created using a token economic ("tokenomic") architecture in the tokens you own.
For instance, the native token of a blockchain may be staked to safeguard it by safely and equitably confirming its transactions. The native token can produce value for the holder thanks to the tokenomic architecture, which enables users to stake their tokens in exchange for transaction fees from blockchain users. Staking comes with trade-offs, such as locking your tokens and limiting your capacity to trade in them which is difficult. In order to let you take advantage of tokenomics without having to handle the staking yourself and yet be able to trade your interest in the locked tokens, third-party escrow solutions have been developed.
Vote escrow mechanisms are a type of tokenomic escrow design that favors long-term holders of a protocol's governance tokens over short-term holders by giving them more voting power in exchange for their loyalty. This is accomplished by limiting holders' capacity to trade in their governance tokens by staking and often locking those tokens with the protocol (typically in exchange for a return on protocol earnings). By doing this, the holder increases their voting power or unlocks voting privileges (which are otherwise unavailable to holders), usually in accordance with the length of time that their tokens have been staked or locked. By asking users to vote on how to distribute newly generated tokens as additional incentives among the protocol's liquidity pools, for example, this voting power is frequently utilized to steer the economics of the relevant protocol.
The CRV and veCRV coin designs from Curve Finance established the vote escrow system in DeFi (hosted on Ethereum). Other prominent escrow designs include the veCVX (Ethereum) from Convex, the veBAL (Ethereum) from Balancer, and the veFXS (Ethereum) from Frax (Ethereum).
In the majority of vote escrow systems, a user's ability to vote is not directly correlated with the number of governance tokens they own, but rather depends on things like how long the tokens are locked for. In response, the idea of "veTokens"—vote-escrowed tokens—was created to represent the amount of voting power that a user has as a result of their staked/locked tokens. Even while the number of governance tokens held remains constant, when the variables affecting voting power change over time, the user's holdings of veTokens will likewise change.
Contrary to what the name would imply, veTokens aren't always represented by an ERC20 token, and as a result, aren't always received and retained by users in their wallets. This is so that voting power can alter continuously when input factors (such the length of the lock period) change. This is how veToken economics, also known as "veTokenomics," is intended to work. If veTokens were to be distributed to users, maintaining a fair record would necessitate ongoing rebasing (changing the total supply and nominal holdings of all users), which would be very complex and expensive. Implementing voting power in a transferable ERC20 format could also work against the purpose of veTokenomics, which is to encourage long-term ownership of governance tokens, as it would allow long-term holders to trade their interests in the same manner as short-term ones.
Consider a voter who has one EXMPL token, which was issued by Example DAO and gives them one full vote in Example DAO's current governance system. Thereafter, for example, DAO implements a vote escrow architecture, where the voter can stake and lock their tokens for a period of time up to two years, and will then earn an increase in voting power equivalent to the number of years left in their lock.
Ordinarily, the voter's 1 EXMPL token would allow them to have voting power in the governance process equal to a static 1 veEXMPL, or 1 complete vote. The voter then had the option of locking their 1 EXMPL token for 2 years in exchange for 3 veEXMPL (1 base + 2 bonus), or 3 complete votes. The holder's lock term would have dropped to one year after a year of boosted voting, lowering their bonus and veEXMPL such that they are only eligible for two votes. The user may choose to wait another year to exit the lock or choose to extend it back to two years to boost their veEXMPL at any time and then sell their tokens.
BLAB-escrowed tokens, also known as "beTokens," are wrapper tokens created and deployed by Beefy to enable our customers to trade their interests in the governance tokens of our partners while also enabling escrow tokenomics. In other words, we set up a temporary smart contract that can hold the governance tokens, lock them using the partner protocol for the tightest lock possible, and take advantage of the escrow model's advantages. By combining these capabilities with the issuance of a new ERC20 beToken to you, which you may subsequently exchange to exit the lock at any time, we also add additional value.
Each Token is specifically created to work with the various veTokenomic models of our partner protocols, and as a result, they have a wide variety of potential capabilities. These can be boosts to related BEE AI LABS vaults as well as withdrawal reserves, supported DEX liquidity, pegged or free-floating pricing, an BEE AI LABSvoting method for awarding votes on the underlying protocol, and user-led or BLAB-led bribes.
Our Tokens are always supported by vaults on the BEE AI LABS platform, where you can stake them to make money. This might take the shape of an earnings pool or an auto-compounding Token Vault (i.e., earn more beTokens) (i.e. earn more of the underlying governance token). In either case, you're free to withdraw from your staking at any time, to trade in your beToken and exit your position.
We offer a website for each of the several Tokens we currently manage in this section. These include the following as of this writing:
Each of our existing beTokens' designs is fully described in this section. Contacting us on the BEE AI LABS Discord server will allow you to ask any particular queries you may have concerning our Tokens.