Tokenomics

$KYO / $veKYO

Kyo Finance utilizes two tokens for managing its utility and governance:

• $KYO— ERC-20 utility and reward token of the protocol

• $veKYO — ERC-20 governance token of the protocol

$KYOis used for rewarding liquidity providers through emissions.

$veKYO is used for governance. Any $KYOholder can vote-escrow their tokens and receive the same number of $veKYOat any time. There is no lock-up period and every $veKYOtoken has the same voting power.

Conversion from $KYOto $veKYOis always possible, but it's irreversible. $veKYOcan be liquidated at any time through the $KYO/$veKYOpair on Kyo Finance.

ve(3,3) Mechanics

Kyo Finance mechanics were inspired a blend of two DeFi concepts:

• Vote-Escrow — first introduced by Curve to bolster incentives for long-term token holders

• Staking/Rebasing/Bonding or (3,3) game theory — designed by Olympus DAO

Kyo Finance is designed differently from the typical model known as ve(3,3), yet it inherits its spirit.

At the heart of Vote-Escrow is the virtuous cycle structure where high trading volume leads to high trading fees, high gauge votes, high rewards, and in turn, high Total Value Locked (TVL). This ensures the utility of the token and prevents distortion in the incentive structure. It's further optimized through the removal of epochs and a real-time voting mechanism.

The spirit of game theory, represented by (3,3), has been re-interpreted to give stakers the freedom to easily find the optimal balance point and act accordingly. While the structure that benefits the entire protocol when everyone stakes their rewards is maintained, the problem of liquidity difficulties faced by existing stakers and the barrier to entry for new users has been resolved. Now that $veKYOhas transitioned from NFT to a fungible ERC-20, it can be converted to $KYOat any time according to market value.