# What is MetaDEX?

## *ve(3,3)* <a href="#undefined" id="undefined"></a>

[Andre Cronje](https://x.com/AndreCronjeTech) 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:**

### Rebase <a href="#rebase" id="rebase"></a>

A core element of the ve(3,3) model was the rebasing of locked positions to prevent a user from being diluted by emissions, [OHM (3,3)](https://www.olympusdao.finance/). This anti-dilution mechanic for veTOKEN holders allowed them to **maintain the same ownership without having to buy and lock more tokens.**

### Vote Escrow (ve) <a href="#vote-escrow-ve" id="vote-escrow-ve"></a>

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 [whitepaper](https://classic.curve.fi/files/CurveDAO.pdf).

This system intentionally creates a **risk vs. reward** scenario. where more governance power is given to active participants continually extending their locks.

### DEX Limitations <a href="#previous-dex-limitations" id="previous-dex-limitations"></a>

The history of decentralized finance has been marked by repeated attempts to solve the <mark style="color:purple;">**"DEX Trilemma"**</mark> - the challenge of aligning incentives between <mark style="color:purple;">**traders**</mark>, <mark style="color:purple;">**liquidity providers**</mark>**,** and <mark style="color:purple;">**token holders**</mark>. 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 <mark style="color:purple;">**two-party system**</mark>: 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* [*original graphic and concept*](https://x.com/wagmiAlexander/status/1862191154932195570)*.*

<figure><img src="/files/rU5vHNCouHYbhrbXJTeg" alt=""><figcaption></figcaption></figure>


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