Revenue Model

Universal Fee

The Universal Fee charges a 2% annual fee on the assets deposited (principal) at the time of rebalance. If this fee is greater than 50% of the yield earned, then the fee will only equate to 50% of the yield earned.

Yield Mechanics

For community pools, a 5% share of both of these fees goes to the developer who authored the strategy. This is paid in the pool’s asset.

Incentives

Any user may trigger a Rebalance-Collateral operation, to address pool-wide systemic risk and generate additional stablecoin yield. If collateral price falls below Low Water, this operation will prevent liquidation. If collateral price rises above High Water, this operation will generate additional DAI, which, in turn, generates more yield for the entire pool. Users have the incentive to use this to earn maximum yield and avoid liquidation.

Any user may trigger a Rebalance-Earned operation. This operation swaps earned stablecoin interest for underlying collateral (e.g. DAI to ETH), and adds this collateral to the pool's holdings. Users have the incentive to not call the operation, as the longer the collateral stays in there, the more yield it earns. Balancing that, they have the incentive to call the operation prior to withdrawal, to maximize the amount of collateral in pool, to maximize their share of collateral withdrawn.

Treasury Income

[Ed. note: This section is under revision per the Nov. 15, 2021, community vote to revise the treasury income model to be more focused on the long term growth of Vesper.]

Community Growth Engine

The Vesper project and community are tied together by the VSP token.

At launch, 10,000,000 VSP tokens will be minted, and allocated almost entirely to community-focused efforts. In the short term, 3,400,000 of these funds will be allocated to product and liquidity provisioning incentives.

In the long term, the community reserves (3,600,000 tokens) combines with community-defined level of VSP revenue from the VSP vault. These VSP tokens will be held in a community vault, to be used to create a continuous cycle of bootstrapping new products with VSP incentives, which in turn benefits the VSP token, which generates funds to bootstrap yet more products.