Key Finance
Key Finance is a protocol designed to maximize user profits by utilizing governance tokens of Defi protocols that have adopted ve Tokenomics.
veTokenomics?
veTokenomics, simply speaking, is a protocol design that offers boosted rewards to liquidity providers who lockup their governance tokens.
User A labeled in the diagram above, earns the minumim level of reward by merely providing liquidity. User C, in contrast may earn boosted liquidity providing rewards by locking up governance tokens for years while also providing liquidity.
veTokenomics is currently adopted by the most successful DeFi protocols in the Ethereum ecosystem, including Curve.finance. This is because veTokenomics has great merits as stated below:
Merits of veTokenomics
Protocols may secure stable liquidity inflow as they offer more rewards to liquidity providers who have signed a long-term holding agreement (lockup) of their governance tokens.
As governance token lockups provide additional rewards, more users tend to lock up their governance tokens. Thus, the price of a governance token is stablized as circulating token supply is reduced.
veTokenomics has greatly enhanced the operational stability of Defi protocols likewise. Several inefficiencies exist, however as users of veTokenomics-based DeFi protocols must 1) provide liquidity and 2) lock up their governance tokens at the same time to maximize their profits.
Demerits of veTokenomics
Individual liquidity providers must secure a great amount of governance tokens to maximize their rewards. In other words, additional expenses are incurred.
Individual liquidity providers must lock up their governance tokens to maximize their rewards. During the period of the token lockup, users are exposed to the risk of a price drop.
Key Finance was designed to address these issues. By providing liquidity through Key Finance, users can maximize their rewards without having to lock up their governance tokens anymore.
Key finance’s Solution
Key Finance aims to offer maximized rewards for its users in veTokenomics-based DeFi protocols, without exposing them to price risks during the lockup period or costing additional governance token acquisition expenses.
To realize such an ambition, Key Finance offers a solution by connecting liquidity providers with governance token holders. We were inspired by Convex which has successfully managed to address problems of veTokenomics for Curve.fi, a protocol in the Ethereum ecosystem.
Key Finance addresses problems of veTokenomics according to following steps :
Provide liqudity raised from liquidity providers to DeFi protocols.
Lock up tokens raised from governance token holders.
Key Finance may achieve profit maximization as both requirements: 1) Liquidity Providing and 2) Governance Token lockup are met.
Distribute the rewards earned to liquidity providers and governance token holders, thereby maximizing profits for both parties.
Key Finance has established a complementary relationship with veTokenomics-based DeFi protocols. We aim to accompany the sustainable growth of DeFi protocols as a Long-term lockup Liquidity Provider.
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