💥oTokenomics

Introduction

oTokenomics is a relatively new concept in DeFi, and especially new to ve(3,3) DEXs. With oTokenomics, ZERO can ensure that veZERO holders are being rewarded with maximum incentives, while at the same time discouraging mercenary farm and dump strategies on the DEX.

oTokenomics is a fundamental shift in the way that liquidity is incentivized, and shifts value from farmers looking to extract profits at ZERO's expense to loyal stakeholders of the protocol.

$oZERO Emissions

Instead of traditional emissions in the form of $ZERO that could be immediately dumped into the market, liquidity is incentivized through $oZERO, which is the the option call version of $ZERO. Essentially, someone with $oZERO in their possession can do three things with it:

1.) Hold $oZERO for autocompounding rewards

Thanks to our revolutionary v2 oTokenomics, users don't have to do anything with their bought or earned $oZERO. The vault will use the underlying veZERO to vote, claim rewards, market buy more $ZERO, lock into veZERO, and increase the value of $oZERO by the same margin.

LPs can simply let their liquidity rewards accrue, confident that their $oZERO rewards are themselves farming more value for them.

This autocompounding rewards mechanism is explained in detail in the next section.

2.) Exercise the option and purchase $ZERO 1:1 at a discount with $CASH

• example - current $oZERO discount is 70%. Farmer A has 100 $oZERO tokens from emissions (let's say market price of $ZERO is $1 for this example). He decides to exercise his option and redeem his $oZERO for $ZERO. He will pay $30 in $CASH tokens, and receive 100 $ZERO.

When exercising an $oZERO option, the “discount” paid upfront by a user is split 75/25.

75% goes to bribe the top fee earning pools, which veZERO holders receive by voting. 25% goes to the isolated Overcollateralization Treasury, which boosts yields on $CASH APR’s as described earlier in these documents.

3.) Convert $oZERO to max locked veZERO 1:1

If the user decides to convert their $oZERO to veZERO, there is no fee to do so. This entitles the user to begin voting with their veZERO and earn massive real yields as a result of ZERO's efficient fee and bribe generation mechanisms.