What is MetaDEX?
Elevating Engagement amongst all stakeholders
Last updated
Elevating Engagement amongst all stakeholders
Last updated
revolutionized exchanges by creating a system where all participants are incentivized to act in the best interest of each other and the exchange. While not perfect, it was a huge step forward as a means to align incentives with participants. To understand ve(3,3), we need to break down two key concepts:
A core element of the ve(3,3) model was the rebasing of locked positions to prevent a user from being diluted by emissions, . This anti-dilution mechanic for veTOKEN holders allowed them to maintain the same ownership without having to buy and lock more tokens.
The second concept you should understand is vote escrow (ve) - a fundamental change to governance and on-chain voting systems that introduced time-weighted voting.
Instead of voting with token amount a, tokens are lockable in a VotingEscrow, now shown as veA, for a selectable locktime
Your vote is not only calculating total tokens held, but also the lock duration. Curve first introduced this in a 2020 .
This system intentionally creates a risk vs. reward scenario. where more governance power is given to active participants continually extending their locks.
The history of decentralized finance has been marked by repeated attempts to solve the "DEX Trilemma" - the challenge of aligning incentives between traders, liquidity providers, and token holders. While Andre Cronje's ve(3,3) model theoretically solved this by balancing incentives between all participants—long lock-ups created a high friction system that forced users to lock tokens to participate equitably in the incentive model.
Uniswap focused on a simple two-party system: traders and liquidity providers (LPs). ve(3,3) improved this by properly aligning incentives with token holders as well.
Credit to the Aerodrome team for the .
