$veSPLASH

To get the share and voting power users must participate in the locking process, also known as vote-escrow. In combination with gauges, such a system is designed to build deep liquidity, promote long-term token-holder alignment, and facilitate fair protocol fee distribution.

By locking SPLASH tokens, users receive veSPLASH, a non-transferable token representing both the share and voting power in the Splash Protocol.

Protocol share and voting power

Instead of granting protocol share and voting power just with the token amount $a$, in Splash Protocol tokens are lockable in a Voting Escrow Contract for a selectable lock time $t_l$, where $t_l < t_{max}$, and $t_{max} = 1 year$. After locking, the time left to unlock is $t ≤ t_l$. The share is equal to:

$$w = a{t\above{1pt} t_{max}}$$

After the moment of the lock, veSPLASH decreases over time. In other words, the voting power and share are both amount and time-weighted, where the time counted is how long the tokens cannot be moved in the future. The following chart demonstrates the logic:

Example

Bob has 20 ADA and 20 SPLASH tokens. He provides liquidity to the ADA/SPLASH 20/80 LP and gets, let's say, 1000 LP tokens. This 1000 LP token is a representation of his liquidity position. He would like to get maximum ownership weight. So he locks 1000 of his LP tokens for 1 year (max lock) and gets 1000 veSPLASH. Now he has 1000 ownership weight points and can benefit from the DAO. However, let's say 6 months have passed. If Bob has never relocked his LP tokens until this point, his ownership weight will drop twice to 500 ownership weight points.

Users are also given an option to maintain their lock time so their voting power and share stays constant.

veSPLASH holders

veSPLASH has the following uses:

1. Governance

veSPLASH holders can make various collective decisions, which are recorded on-chain and executed automatically. Users can vote for various proposals, such as changing protocol parameters or spending the treasury.

1. Inflation control

A special multi-poll governance proposal type is introduced to control the SPLASH distribution among liquidity providers. veSPLASH holders can vote for various pools in the system and decide which one deserves more rewards.

Understanding gauges

1. Protocol fees

100% of all protocol fees can be claimed weekly by veSPLASH holders.

Each Splash liquidity pool includes a small fee, usually 10% of the total pool fee. We call it Protocol Fee. This is redirected to a distribution system, allowing veSPLASH holders to claim weekly rewards. The token portion of the fee is to ADA, ensuring that rewards are paid out entirely in ADA.