TREN & veTREN
The governance token of Tren Finance
What is TREN?
TREN, the governance token for Tren Finance, begins with a fixed initial supply of 1 billion tokens, which is designed to diminish over time. As the cornerstone of our ecosystem, TREN plays a crucial role in aligning incentives among stakeholders and fostering the development of a sustainable DAO-governed protocol.
What is veTREN?
veTREN stands for "vote-escrowed TREN," a modification of the veTokenomics model prevalent in DeFi that encourages long-term governance participation and investment. Unlike regular TREN tokens, veTREN cannot be transferred and is used to gauge the voting power and economic commitment of users who choose to lock their TREN tokens for a specified duration.
Through veTREN, Tren Finance not only ensures robust governance and fosters long-term engagement but also aligns holder incentives with the overall success and profitability of the platform. By enabling veTREN holders to capture a significant portion of the protocol's full economic activity, it underscores a superior model for value accrual compared to traditional lending platforms. This strategic approach enhances governance effectiveness and ensures that committed stakeholders have a substantial impact on the protocol’s direction and financial health.
veTokenomics
Token Lock-up and Voting Power
Users commit their TREN tokens to obtain veTREN, with the lock-up period ranging from one week to a maximum of three years. The duration of the lock-up significantly influences the user's voting power and potential yield, embodying the principle: the longer the lock, the greater the influence and rewards.
Calculation of veTREN
The amount of veTREN a user receives is determined by the number of TREN tokens they lock and the duration of the lock-up:
Formula: The multiplier is calculated by the ratio of the lock-up days to 365 days (one year). For example:
Benefits of Holding veTREN
Governance Participation: VeTREN holders gain enhanced voting rights and the ability to submit proposals for protocol decisions, such as new asset listings.
Ecosystem Rewards and Protocol Revenue: A significant advantage for veTREN holders is their entitlement to a share of the protocol’s revenue. This revenue includes fees generated from operations such as transaction fees and liquidation penalties. Unlike typical lending market tokens, which often only distribute a portion of the fees collected from borrowers, veTREN holders benefit from the full spectrum of supply-side interest without having to share these profits with traditional depositors. This arrangement provides a more direct and potentially more lucrative value accrual mechanism, as it captures all economic activity related to the borrowing and management of assets within the platform.
Yield Claims and Post-Lockup Handling
Yield Claims: Holders can claim their accrued protocol revenue based on their proportion of the total veTREN pool. These claims can be made at any time but may take up to a week to process in alignment with the protocol's weekly buyback schedule.
Token Burn: When the lock-up period concludes, the veTREN is burned, and the original TREN tokens are returned to the user. This mechanism not only maintains the token's deflationary nature but also incentivizes long-term commitment and participation.
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