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Read Pickle's new token mechanism in one article

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DILL token + Smart Treasury treasury.

Original title: "Understanding Pickle's new token mechanism in one article"

Original source: Blue Fox Notes

Pickle was hit hard after the hacking incident last time, but with the merger with Yearn (YFI), things turned around. In this merger of Yean, in addition to the merger of PJars and YFI’s Vaults, for PICKLE token holders, the change of its token mechanism may be the most concerned. Regarding the merger of Pickle and Yearn (YFI), you can refer to the previous article "Merger of Pickle and YFI".

DILL Token

In this merger, Pickle's token mechanism emerged New token DILL. DILL is similar to VeCRV in the Curve protocol. DILL is generated by locking PICKLE tokens (similar to generating VeCRV with CRV), and it will give users corresponding rights and interests according to the length of locking time and the number of locking, these rights include:

-Voting rights in Pickle protocol governance

-Increased reward coefficient

-Get a part of the protocol profits

That is to say, the DILL token is closely related to the development of the Pickle protocol. Why do you need DILL when you have PICKLE tokens? Why is the PICKLE token not directly used as a governance token? DILL itself is actually derived from PICKLE tokens, which is equivalent to PICKLE with time weight. The advantage of DILL is to serve its governance. The length of PICKLE holding time and the number of holdings represent the degree of binding between the holder and the development of the Pickle protocol. In a way, it is equivalent to tokenizing time-weighted PICKLEs, resulting in DILLs.

Therefore, in the future Pikcle ecology, DILL is the most direct measurement token for obtaining protocol benefits. In addition to having the governance rights of the Pickle protocol, DILL also It is related to the user's reward (PICKLE additional issuance reward), and the profit distribution captured by the agreement. Regarding the additional issuance plan of PICKLE, you can refer to the previous article "PICKLE's Value Capture".

Token Model of Smart Treasury

Smart Treasury is Pickle The concept planned to be implemented, which originated from Placeholder Capital. Smart Treasury tries to come up with a way to increase the value of tokens: decrease token supply as income increases.

The Smart Treasury of the Pickle Program includes three main functions:

-For automatic repurchase

The fee generated by the agreement is used to repurchase PICKLE tokens, thereby reducing the circulation of PICKLE tokens. Note that this is a repurchase, not a destruction.

-Act as a liquidity provider

Smart Treasury acts as a liquidity provider and provides liquidity for PICKLE tokens At the same time, it can also earn transaction fees for the agreement. For example, build a PICKLE/ETH liquidity pool on Sushiswap or Uniswap.

-Token Issuance Pool

Smart Treasury provides convenience for the secondary issuance of PICKLE, mainly for ecological fund donations kind of thing. Because the automatically repurchased PICKLE tokens enter the capital reserve, these PICKLE tokens are not destroyed, but become a capital reserve to support its future ecological development. Therefore, it can provide financial support for ecological projects here, and at the same time it does not issue new tokens, nor will it cause dilution of tokens.

With the Smart Treasury, all PICKLE holders can directly benefit from the profitability of the protocol. Because protocol fees are used to buy back PICKLE tokens, buybacks increase buying pressure on PICKLE tokens. However, it does not use all protocol fees to buy back PICKLE tokens, and some of them will be allocated to DILL token holders to encourage PICKLE holders to lock up tokens.

In the current encryption projects, it is rare to adopt the "smart treasury" token model. On the one hand, this model can reduce circulation, reduce selling pressure, and increase buying pressure. At the same time, it can also provide sufficient liquidity and earn transaction fees for its tokens. Finally, it can be used to support the long-term development of the ecology.

The token mechanism of the smart treasury is not as radical as the token burning model. What impact will it have on token holders and the long-term development of the protocol? As more and more protocols adopt this token mechanism, its advantages and disadvantages will gradually be revealed.