TREN & veTREN
TREN is a fixed-supply value accrual token architected on the principles of the ve(3,3) model
Last updated
TREN is a fixed-supply value accrual token architected on the principles of the ve(3,3) model
Last updated
TREN is the value accrual token for Tren Finance, with 90% of protocol revenue directed towards TREN buybacks. The token supply is designed to diminish over time through TREN burns, and starts at a fixed initial supply of 1 billion tokens. As the cornerstone of our ecosystem, TREN plays a crucial role in aligning incentives among stakeholders and fostering the development of a sustainable hybrid DAO-governed protocol.
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.
Users commit their TREN tokens to obtain veTREN, with the lockup period ranging from one week to a maximum of 4 years. veTREN works nearly identical to Curve's veCRV model. The duration of the lockup significantly influences the user's voting power and potential yield, embodying the principle: the longer the lock, the greater the influence and rewards. veTREN is designed so that even users with low TREN holdings can still have a significant impact on the ecosystem through locking.
The amount of veTREN a user receives is determined by the number of TREN tokens they lock and the duration of the lockup:
For example, if a users locks up 100 TREN for 219 days, they would receive 15 veTREN:
When a user locks their TREN tokens for veTREN, they will receive veTREN based on the lock duration and the amount locked. Locking is not reversible and veTREN tokens are non-transferable. If a user decides to lock their TREN tokens, they will only be able to reclaim the TREN tokens after the lock duration has ended. Users can withdraw their TREN at any time after their veTREN has decayed to 0 (lock time has expired).
Additionally, a user cannot have multiple locks with different expiry dates. However, a lock can be extended, or additional TREN can be added to it at any time.
The amount of veTREN a user has will decay linearly over the chosen lock time as their unlock date draws closer. There are two ways a user can change their lock. They can add to their lock or they can extend their lock. What happens in both situations and how it affects their veTREN and the decay is shown in the charts below.
Extending locks means increasing the time left on a lock. If a user locked 100 TREN for 4 years, after 3 years the user would only have 25 veTREN left as the lock time is now 1 year. If the user extended the lock to be 4 years again after these 3 years, the user would again have 100 veTREN:
Adding TREN to locks means the unlock date will remain the same, but more TREN will be locked, meaning more veTREN. If a user locked 100 TRENV for 4 years, but after 2 years added 200 TREN to their lock, the user would have 150 veTREN (300 TRENRV total locked for 2 years). This veTREN would continue to decay to 0 over the next 2 years:
Holders of veTREN are also referred to as the TrenDAO, as governance and voting power in the protocol is represented by the amount of veTREN held. Eligible TrenDAO members can make proposals on a diverse array of matters related to the Tren Finance protocol, including the following:
Isolate Module Parameter Changes
TrenDAO members can submit proposals to change parameters of isolated modules. These parameters include:
Most importantly, veTREN holders vote on Gauges, which determine how the protocol's rewards are allocated. While gauge voting is designed to align the protocol with optimal incentives for different stakeholders (e.g. ensuring enough rewards are allocated to properly incentivize Insurance Pool stakers), a significant share of protocol rewards is expected to go to veTREN holders. These rewards include protocol revenue such as fees generated from operations like 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.
