Research Summary
The report discusses Vertex’s recent Liquidity Bootstrapping Auction (LBA) and its subsequent developments. It highlights the creation of the initial liquidity pool for $VRTX, the launch price, and the locking and vesting of liquidity. The report also covers the staking statistics, revenue generation, and the Vertex Incentive Program. Additionally, it mentions Vertex’s proposal to Arbitrum’s Short-Term Incentives Program (STIP) and the distribution of $ARB tokens as rewards.
Key Takeaways
Successful Liquidity Bootstrapping Auction
- Creation of Initial Liquidity Pool: The LBA was designed to create the initial liquidity pool for $VRTX in a manner that avoided price volatility. It relied on supply and demand as well as free market mechanics to achieve a fair launch price for the $VRTX token.
- Launch Price and Liquidity Locking: Post-LBA, liquidity was locked and vested, the $VRTX and $USDC.e pools were merged, and the $VRTX token was launched at a price of $0.3133. A third of the LP liquidity will be unlocked on January 19, 2024, and the rest on April 20, 2024.
Impressive Staking Statistics
- Staking of $VRTX Tokens: Only 6 hours after the launch of the $VRTX token, 25 million $VRTX had already been staked. As of November 28, the number of staked $VRTX tokens had climbed to 37 million and a total of $300,887 $USDC.e had been distributed to stakers.
- Staking Rewards: Staking the $VRTX token generates a “user score” in voVRTX, a non-transferable sub-type of the $VRTX token that exists as an incentive layer to control a multiplier effect on incentives for $VRTX stakers. The longer you stay staked, the more this multiplier effect compounds, and the more voVRTX you earn as a reward.
Revenue Generation and Distribution
- Revenue Generation: Vertex, like all other exchanges, generates its revenue from trading fees. Currently, 50% of this revenue is allocated to the Protocol Treasury.
- Revenue Distribution: Another percentage of the revenue is distributed to users that show a long-term commitment to the protocol (based on their voVRTX score) and this is paid weekly in $USDC.e. The percentage of revenue distributed to both the treasury and to users will be determined on an epoch-by-epoch basis, based on the needs of the protocol.
Vertex Incentive Program
- Trade & Earn Incentives Program: The Vertex Trade & Earn incentives program is designed to reward users for their activity on the protocol and is paid in $VRTX tokens. The allocation of $VRTX tokens to be given as rewards is split between the Initial Token Phase and the Ongoing Incentives Phase.
- Trading Volume and User Growth: The Trade & Earn program has seen $22.12 billion in total trading volume so far with $5.23 billion in the last week alone. Total platform users are also steadily increasing, currently sitting at around 15,820.
Arbitrum’s Short-Term Incentives Program (STIP)
- STIP Proposal: The Vertex protocol’s proposal to Arbitrum’s Short-Term Incentives Program (STIP) was passed with 160 million votes in favor. As a result, Vertex has been allocated 3 million $ARB tokens to be used as incentive rewards to be distributed to users of the platform.
- $ARB Rewards: These $ARB rewards will be distributed each week until January 31, 2024, and can be earned by either trading on the platform or by providing liquidity to the Elixir Fusion Pools.
Actionable Insights
- Understanding Vertex’s Tokenomics: Given the newness of $VRTX in the market, it’s crucial to understand the basic tokenomic aspects of the token. There will be a capped total supply of 1 billion $VRTX tokens, where 90.85% of these will be distributed over the next 5+ year period.
- Exploring Vertex’s Incentive Programs: The Vertex Trade & Earn incentives program and the STIP offer significant rewards for users. It’s worth exploring these programs and understanding how to maximize benefits from them.
- Monitoring Vertex’s Growth: With Vertex’s initial efforts aimed at attracting professional traders to build liquidity and volume, it’s important to monitor the platform’s growth and user adoption, especially as it begins to target the retail market.
