Preon Gauge & veTokenomics

Preon will feature a built-in ecosystem of governance & DeFi primitives outside of overcollateralized lending.

Users will be able to use their $STAR for yield opportunities such as:

• Stability Providing

• Liquidity providing

A liquid stablecoin is our top priority, and to stimulate a constant flow of liquidity and volume to STAR, we are incorporating the Preon Gauge, which will incentivize STAR-paired liquidity pools. Users who wish to partake in Preon's governance or simply farm within the protocol can deposit their liquidity inside of Preon's gauges & earn oPREON, which can be redeemed with ETH or locked for vePREON.

What is a gauge?

On Preon, a gauge system is used to determine the flow of oPREON emissions to Preon's farms. In very simple terms, a gauge system is used to determine vePREON's distribution of token emissions in each liquidity pool every week.

How does the gauge work?

The gauge works in a simple manner:

• Each epoch vePREON holders vote on where to direct a set amount of emissions. Every epoch lasts 1 week & based on oPREON's emission schedule.

• Users must vote before the next epoch for their vote to be valid.

• After the current epoch is concluded, the gauge weighs emissions & distributes them over the length of the next epoch

• If certain pools are bribed by a protocol, bribes are distributed to voters at the beginning of the epoch.

Binary gauges

Preon is the first project to incorporate binary gauges into its ve(3,3) mechanics.

Gauges can be of two types:

• With 0-gauge emissions - Gauges that can be boosted by a $vePREON NFT

• With 1-gauge emissions - Gauges that are boosted by the Preon protocol & cannot be boosted any further

Users who deposit liquidity into a pool with 1-gauge emissions do not need vePREON to boost their emissions.

Why?

Preon boosts certain pools due to their consistent net positive effect on the protocol. They can be understood as the 'Core' pools of Preon.

Examples include:

• Concentrated Liquidity pools with autobribing solutions

vePREON boosting

Holders of vePREON can lock a portion of their oPREON emissions to boost the emissions they get each epoch. While boosting, users are free to vote each epoch, earning bribes.

Example of boosting:

The boost would be based on the below formula:

There are 2 users Bob and Alice. The DollarProvided of both Bob and Alice is 1000 STAR in the STAR pool on Preon and the TotalLiquidity of the pool is 100,000 STAR. The VotingBalance (vePREON Balance) of Bob is 1000 vePREON and Alice’s VotingBalance is 0. The VotingTotal (Total vePREON Balance) is 100,000.

Bob’s Earning Weight = min((1,000*40/100)+(100,000*1,000/100,000*(100-40)/100),1000) = 1000

Alice’s Earning Weight = min((1,000*40/100)+(100,000*0/100,000*(100-40)/100),1000) = 400

Since Bob locked for the max duration he has a 2.5x boost over Alice = 1000/400 = 2.5