Proposal 6: Vesting, Liquidity Mining & PowerIndex Design

My team and I have been watching the forums / discord recently and we’ve been really impressed by the level of engagement from the community so far. While there are a lot of factors still up in the air right now, we wanted to propose a comprehensive model that pulls everything together and charts a strong path forward for the community heading into mainnet launch. We’ve seen new projects fall out of favor and quickly lose traction after their unsustainable, unvested rewards dry up. We don’t want PowerPool to follow in their footsteps, but rather set a positive example with a sustainable, long-term oriented strategy.

Proposed PowerPool LM Model

Currently, only 5,360,154 CVP are in circulation, with ~95% of the total supply still locked up / not distributed. Luckily, this gives us a lot of dry powder to work with in terms of optimizing the supply side release schedule and liquidity mining incentives for bootstrapping adoption. We propose the following:

  • Beta (5m CVP) - 1 year lock then 12 month linear vest
  • Gamma (5m CVP) - 1 year lock then 12 month linear vest

While this is a much longer time period than others have put forward, we believe it is the right decision. We need to do right by the current CVP holder base since they are comprised of either 1) Alpha participants who held, 2) people who purchased on the open market or 3) people who took risk providing liquidity. It would be a disadvantage to those early supporters to release the Beta and Gamma distributions quickly, given those participants did not take any risk. As Gamma participants ourselves, we are happy to accept this lock-up period because we believe it gives PowerPool the best chance to succeed.

  • DAO Grants (7m CVP) - 2 year lock then 12 month linear vest

For PowerPool’s meta-governance to work, the CVP community needs to be on good terms with the DAOs of the composite members, operating to the mutual benefit of all. We believe allocating 7% of the total supply for DAO grants will align incentives between both communities and make admittance into the first PowerIndex more appealing. With this approach, PowerPool will hold the governance tokens of the composite members, while they hold the governance token of PowerPool itself. At current prices, this grant would be worth ~$2m for each DAO, however, as the TVL of the PowerIndex grows, so too will the value of the grant they hold. We propose the 2 year lock and 12 month linear vest so that the receiving DAOs have a long-term stake.

Combined, the lock ups above leave 77,639,846 CVP available for incentives. We believe this should be deposited into the community treasury for CVP stakers to govern. From that supply, we propose a liquidity mining program that distributes 2m CVP a month for the first year, with rewards locked for 1 year from the date they’re paid (similar to Synthetix’s program). Based on the attached model, we believe this will provide an attractive, yet consistent, yield for the initial bootstrapping phase without overpaying. Our goal is for the yield to rise from an increasing CVP price, not from a short-term supply dump (this is not financial advice). In case the 2m CVP a month ends up being too much or too little of an incentive, we suggest giving the community power to adjust the rewards distribution every month. With this plan in place, the community treasury will control ~50% of the total supply by the end of year 1. The community can vote to use that supply to liquidity mine a new PowerIndex or even burn it if they believe that is no longer necessary. (Everyone should DYOR and evaluate your risk tolerance before participating in liquidity mining).

We also propose allocating 3m CVP as a reward for the first vote to decide on the PowerPool’s composition. With a circulating supply 5,360,154 CVP this could be worthwhile. However, we should emphasize that participating in this first vote will lock up your CVP for 6 months, meaning those who participate won’t be able to use those same CVP to provide liquidity at the launch of the PowerIndex (although participants will still be able to use their locked CVP to vote on other proposals). The 3m CVP reward allocation will be locked for 6 months and vest linearly over the following 6 months. In our model, we forecast that 25% of the current circulating supply will participate and be locked up. While this may seem like a large reward, when we discuss the dynamics of the PowerIndex it will become clear why incentivizing the lock up of more CVP supply makes sense. Before we get into that, let’s summarize what this supply distribution could look like over the following 2 years.

As you can see in the chart above, this leads to a very tight supply side over the first year, with vested tokens gradually unlocking in year 2 after the initial bootstrapping phase is complete. Now let’s talk about what this means for the PowerIndex. When considering it’s design, we borrowed some concepts from another portfolio investment of ours - RUNE. In that design, as the value of exogenous assets in their pools rises, so does the value of RUNE based on their security model and incentive pendulum. The PowerIndex can affect CVP in a similar way. As the TVL of the PowerIndex rises, so too must the value of CVP held within it, given its minimum target weight of 1/8. For example, let’s say the TVL of the pool is $240m. That means CVP must represent at least $30m of that value. If the circulating supply of CVP is only 3m, then that equates to a price of a least $10 per CVP for the pool dynamics to work. This also creates a reflexive feedback loop.

As the TVL of PowerIndex rises > the value of CVP rises > the yield for providing liquidity scales with it

For this design to work, it hinges on the ability to re-direct incentives when CVP falls below its target weighting. If CVP < 1/8 of the TVL in PowerIndex, then incentives pivot to rewarding the liquidity providers who add more CVP to the pool, bringing the index back to its targeted equilibrium.

Previously, we proposed that trading fees from the PowerPool should be saved to create permanent liquidity and governance power for the CVP community, rather than being paid out to liquidity providers. As TVL rises and sustains itself over long periods of time, from the steady stream of incentives, more and more governance tokens will be earned from trading fees. The PowerIndex will certainly be the pool with the deepest liquidity for CVP, but it may also grow to be a spot of deep liquidity for its composite members as well. Traders could capitalize on the unique ability to trade between the top DeFi tokens without any intermediary pass-through asset. As liquidity deepens, slippage declines, further reinforcing the pool’s appeal to traders.

My partner Anil also came up with a great way to generate more permanent liquidity from fees, incentivize long-term oriented stakeholders and mitigate potential manipulation of the incentive pendulum detailed above. We suggest a withdrawal fee that decays over time. For example, let’s say you add liquidity to the pool then immediately want to withdraw those tokens. This would incur a penalty withdrawal fee of 10%. However, if you wait a month to withdraw, the fee declines to only 1%. These are placeholder numbers for now and will require more modeling to fine tune what that decaying withdrawal fee curve should look like. Will this deter liquidity from short-term oriented LPs? Yes, but in their absence rewards for long-term oriented LPs will increase, which is the stakeholder group we want to stick around.

This is a lot to consider but we encourage all members of the community to think it over, check out the model we’ve attached, ask questions and engage in discussion. We believe there’s a very unique opportunity here to liquidity mine a DeFi index with meta-governance coordinated on layer 2, uniting the communities and aligning the interests of the top protocols in the space. We’re happy to commit ourselves for the long-term, we hope you do as well.


alpha testers got their distribution quickly, and they also could provide those free tokens as liquidity for additional rewards. I think the community is under the assumption its a one or the other when its not, this is quoted like alpha testers took a a massive amount of risk while you say beta and gamma testers took no risks?


Same level of risk. Just pointing out that there are Alpha holders that held their distribution of CVP and that should be appreciated. Purchasers & liquidity providers certainly took more risk.


This is a excellent proposal. I think it will keep all parties happy as it benefits everyone involved in this project.


I think its a great proposal,it aligns with everyone’s interests. It seems to reward all the early contributors in powerpool. Beta and Gamma testers are being rewarded with a massive amount of tokens that are just going to be vested for a slightly longer period. It a win- win for everyone


Great token model. But we need to take some time to adjust all the numbers properly


he’s just trying to praise the alphas that didn’t dump.

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Anil - I don’t want to shoot you down but as a gamma tester it doesn’t feel like this proposal has any maturity or fairness in it. Let me explain why

  • If you wanted vesting, it should have been across the board bar a team holding. Since alphas received their entire bag with no vesting at all, and the understanding was that other testers will receive tokens in a pre-agreed vesting schedule, proposals like these only put them at a disadvantage

  • It seems as though everyone thinks long lockups will be the solution here. The honest truth is, longer the lock-up, the more incentive people have for rent-seeking behavior because people can simply be voted out. It is what Sergey has been doing for days now. What you want to do is balance between vesting and the time period

  • Now this is where I agree with you, longer vesting itself is not an issue but if you are going to expect people to be aligned 2 years after a social contract has been ignored (10% on main-net) that is going to hurt the reputation of this project. It will be killing it on arrival.

  • The 10% vesting on main-net should stick because it gives people temporary liquidity and sufficient incentives for people to stay aligned on the long run. Yes, it means interim sell pressure but frankly its just $10k. Most people have more reason to hold than to sell at that price range given most testers have been in this space (unlike Alphas who had 50k*17 = 350k USD at the top)

  • My proposal would be to let the 10% unlock remain, reduce the vestings on 3 month cliffs. Change it to 10% monthly. for 9 months from Jan onwards - that will mean a net 1 year vesting schedule and 10% release of the alpha/tester pool each month. Why? It reduces the quarterly sell pressure while allowing people to exit if they are not aligned with Powerpool. If you lock-in people who are not aligned with Powerpool with vesting tokens that have governance rights you are opening up the protocol to all kinds of governance attacks.

  • Now if that is too strict, I would still consider making a 1% per day vesting schedule from 6 months from now (keep the 10% on mainnet proposal intact). And 25% per 3 month cliff from there. That buys 1 year for the venture to grow into what it needs to be.

As a firm, Dephi can be fine with long vesting and that is great but many gamma testers are solo capitalists who would definitely appreciate the optionality of interim liquidity rather than being locked into the network


I don’t think it’s too much to ask that beta’/gamma testers wait 1 year to start receiving their 50,000 free tokens. interested to see Anil and Dephi response though. It’s important all parties are left feeling satisfied as we definitely want a harmonious community.

I think the point everyone is missing is - cutting down token releases will not avoid the inevitable that price will go lower. It will only be when people have incentives to hold the token even when they have the optionality of selling that we will see the price go up. Make CVP a desirable asset instead of doing tricks like long-lock ups and LP rewards.

I am willing to commit that 90% of my tokens wont move - in a year’s period via a legal agreement if need be. My intention is not to dump but i do feel we are obsessing on the wrong things here. The 10% will be the optionality of liquidity if i feel like it.

Also I have repeatedly said, nobody should receive “free” tokens. All testers should commit to certain things and deliver on them if they are to really make a dent. Or else its rent seeking and like i said earlier - rent seeking will happen regardless of how long you vest this.

Edit : FYI - I literally just said lock for a year if need be but removing the 10% on mainnet and saying two year vesting is a lost battle.


I agree boop. Everyone just griping about beta gamma tokens that haven’t even been sent out yet, while alpha got fully unlocked bags. This hypocrisy makes no sense. No one has a problem with alpha testers already receiving their tokens but everyone else’s getting there’s is “unfair”.


Yep some held and I agree - but Why not allow the other testers to hold and be rewarded for that? Why force the hand here but with the other group you’re fine to allow them to do right thing on their own?

Feels like some double mindedness here.


Oh okay - That makes total sense - can we praise the gamma/ beta testers that hold and not dump too?

Guys u get tokens. Almost for free. If project will be successful u will sell at 50+ prices rather than 0.5$.
Mb u personaly will not dump. But if most only have the possibility to dump it is enough to destroy the project.
We have seen what happens with alfas. Most cashed out. Same will happen again because most of gammmas are just bounty hunters (project was already known as giving free money when team start to collect gamma testers applications).
U think it’s not fair compare to alfas? I think that buyers of tokens(belivers) Should be defended first of all because testers are winners in all possible scenarios.
That is fair


Lock-ups are pretty strict, but if you think about bigger picture, it give PowerPool and opportunity to become a real deal, even outside of crypto.

With proper delivery, Power Index can become a major entry point for institutionals, hence skyrocketing the value of CVP. And I believe technical & marketing teams of Power Pool are capable of doing it.

Complexity of the situation is to do right by all the participants, meaning LPs, testers, buyers.

PowerPool community is well-spoken and articulated, so I invite everybody to raise their voices. We need support & alignment across the board.


Not to sound rude but you’re getting 50,000 free CVP tokens, i don’t know how you couldn’t be satisfied with that? You just need to wait 12 months to receive them, i think that’s a fair compromise. Alpha testers that didn’t sell are the type of community members that i really want to see in this community. They could of sold and cashed out hundreds of thousands of dollars but the ones that didn’t sell obviously believe a lot in this project.


Proposal is good but if testers will get full voting power from the team efforts testers could easily cancel vesting

To emphasise again on the points I am driving

  1. Longer vesting is good but simply saying lets put longer vesting to burn tokens is nonsensical. Its breach of a social contract, burns reputation of the project and sufficiently incentivises rent-seeking. By that logic, lets put on 10 year vesting… you see how its a slipper slope? In addition a year from now if price is not where we want it to be we will be playing this same dumb game of charades again saying lets burn all tester tokens because they didn’t do anything. You may as well have that liquidity in the market sold and re-distributed.

  2. I literally said multiple times that I am FOR vesting but the way it is structured is intellectually lazy in the sense that it does not balance incentives with rewards. The easiest way to circumvent this situation is to reward the initial tokens on main-net and extend the vesting over longer period of time…

To make my intention very clear - I am happy signing a legal agreement of not moving 90% of my gamma tokens if it helps. What i dont want is some form of self-cannabilism (if thats even a thing) where you piss off people’s alignment with the project and then sit wondering how to make this project work. What I absolutely dont want us for us to focus on the nonsensical (Tester tokens, LP rewards, price dump) without emphasising on how to make the index and other token blackholes work.

I may be burned for my opinion but saying burn tokens or push maximal vesting is populism at best .We aren’t finding middleground.

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To assume gamma/beta testers as the source of all pain while they barely have any assets and ignore everything else is the crux of what we are doing wrong.How blinded does one have to be to think that…

I mean by this logic proposal 7 may as well be : Cancel all Beta/Gamma tokens and redistribute them to token buyers and LP’s

Happy to do that if thats the game you want to play

There’s a very real irony when a community gets a curated list of 300 people from 15,000 applicants then it decides to piss off 200 people that were selected from that list. You are getting the most resourceful people in an industry to care the least.


Project gain value from its fundamentals and token economy
not shillers