veMULTI VS veCRV

The long-expected veMULTI mainnet went live on 9th May. MULTI staking opened on May 9th, and rewards claim commenced on May 12. As of this writing, a total of nearly $2.8M MULTI (14.92% of circulated MULTI) is locked, at an average lock time of 3.8 years, with a high APR of 110%.

veMULTI has been in the air for a while, and it didn’t disappoint the MULTI holders. The number speaks, avg. lock time of 3.8 years demonstrates their support and confidence in veMULTI.

veMULTI shares a lot of its tokenomics with veCRV. Today we will demystify the parallels and differences between the two projects and let’s see whether veMULTI is the next veCRV.

Introduction — veMULTI basics

veMULTI is the governing scheme for multiDAO. Anyone who stakes MULTI will receive veMULTI NFT. The NFT holders share Multichain bridge fees, most importantly, which are distributed in USDC! According to its announcement, a total of $ 3,901,975.04 fees in Q1 will be distributed 9 weeks before July 14. Meanwhile, NFT holders have the power to initiate and vote for the governance proposals.

The rights and power are determined by the MULTI amount and lock duration.

• 1 MULTI locked for 4 years = 1.00 veMULTI
• 1 MULTI locked for 3 years = 0.75 veMULTI
• 1 MULTI locked for 2 years = 0.50 veMULTI
• 1 MULTI locked for 1 year = 0.25 veMULTI

veMULTI NFT is the first tradable NFT with which there are juicy rewards to be distributed every week in addition to the NFT value.

How does it work?

To mint veMULTI, investors stake MULTI in the staking portal. Then, each investor receives a unique veMULTI NFT that represents the weight of their vote in governance and the percentage of Multichain bridge fees they receive as rewards.

The calculation formula is as follows:

v: the number of locked MULTI

T: the time that you stop locking

t: current time

maxtime: maximum lockout duration, which is a fixed value of 4 years

When there are n users who finish locking, the overall Power value of the total locked MULTI is calculated as:

The share of each user’s Power is the ratio of the individual veMULTI’s power value to the total veMULTI’s. The formula is as follows:

How much reward can you get?
For example,

• Total distribution rewards of Q1 2022 — $3,901,975.04
• MULTI circulating supply — 18,639,320
• MULTI price — $16 (Five-day average price starting from Apr 2)
• Average locking duration — 2 years

The reward per 1000 MULTI staked is as follows:

The value of veMULTI NFT is a function of the amount of MULTI staked and the lock-in period (max four years), as the value of NFT grows with more MULTI staked or a longer lock-in period. Here you can find the detailed guide. veMULTI is an essential step to fostering community growth, decentralizing governance, and ensuring that the true believers of the protocol are rewarded for their conviction.

Some key reward metrics:

• The lock-in period and quantity of MULTI staked are inter-connected. Locking 1 MULTI for four years is equivalent to locking 4 MULTI for one year.
• 45% of the quarterly proceeds from the Multichain bridge fees are distributed to veMULTI holders in USDC.
• veMULTI NFT tokens are freely tradable in the open market.
• The Lock-in period can be extended (reward will reduce with time) before expiry.

Why are we comparing veMULTI to veCRV?

As mentioned, many design characteristics of veMULTI draw inspiration from veCRV, and veNFT from Solidly. Such design similarities between the two ve(vote escrow) have led investors to compare the most profitable avenue between Curve and Multichain. Today, we will explain the differences and why veMULTI is worth investing in.

veMULTI vs veCRV

Freely tradable

When MULTI is staked, veMULTI is received as NFTs, that are freely tradable on the NFT marketplace. On the contrary, veCRV is a non-transferable token. The liberty to trade veMULTI NFTs in the free market opens doors to more liquidity and greater decentralization, as investors will have the option to swap veMULTI NFTs with other ERC-20 tokens.

Higher APR

While holders of veMULTI are offered 45% of the trading fees from Multichain, Curve distributes 50% of the trading fees to veCRV holders. Despite the lower distribution by percentage, veMULTI accrues an absolutely higher APR than veCRV.

Comparing the revenue of veMULTI with veCRV(at the time of writing)

The current market price(as of May 16th) of $MULTI is $8.07, and that of $CRV is $1.36. Therefore, from the above data we can calculate that if an investor would have locked $1000 worth of $CRV and $MULTI on the respective platforms each for one year, they would make 183.8 veCRV and 31 veMULTI tokens respectively. From these ve tokens, the investor would accrue $0.91 in Tripool LP tokens from veCRV and $5.27 in USDC from veMULTI as rewards in a week.

Quite evidently, veMULTI is more profitable for investors.

Reward in USDC

The rewards earned by veMULTI owners are distributed to them in USDC, a collateralized stablecoin pegged to the US Dollar. USDC is one of the most stable and liquid stablecoins in DeFi, which helps with slippage significantly.

The holders of veCRV tokens receive rewards in the form of LP tokens for the Curve 3pool (or the Tripool), comprising DAI + USDC + USDT fund pool, which has an APY of 0.28%(which can be boosted with CRV up to 0.7%). Therefore, investors who wish to liquidate their rewards must first redeem equal parts of DAI, USDC, and USDT from the Tripool LP token, and then they need to perform more transactions if they want to club the rewards into one currency. This not only attracts unnecessary fees (which are usually very high on the Ethereum chain) but also makes the whole experience cumbersome for investors.

Governance distribution

The spread of governance distribution of veMULTI is significantly better than that of Curve Finance. Look at the following pie chart that describes the latest veCRV distribution:

The Curve governance is extremely centralized, where protocols like Convex Finance and Yearn Finance control the majority governance stake. This means that an individual’s weight of veCRV will have little to no influence on Curve governance, such is not the case with veMULTI.

Exit mechanism

Once an investor locks their CRV in the vote escrowed scheme, they cannot redeem their CRV until the selected lock duration is fulfilled. If they still wish to un-bond their CRV, they have to use third-part protocols like Convex.

With Multichain, veMULTI holders can easily sell their holdings as NFTs on marketplaces like Opensea for any ERC-20 token if they wish to. This provides a lot of flexibility to veMULTI holders.

Simple UI

The Multichain staking portal has a very simple and easily understandable UI, whereas the retro interface of Curve and its pledge logic is not user-friendly. It seems as if the Curve interface was designed to appeal more to technically savvy investors.

Dilution risk

Only about half of the maximum supply for CRV has been emitted yet, this puts veCRV at a more significant dilution risk than MULTI.

Conclusion

Though the ve(vote escrow) design between Curve Finance and Multichain do share some similarities, they are two significantly different projects. Curve is an AMM that focuses on similar asset swaps, like stablecoins. Curve allows investors to swap assets with less liquidity and flexibility for other, more liquid, similar valued assets. Multichain on the other hand is a cross-chain router protocol that now supports around 50 blockchain networks connected with each other. Their similarities end with using a similar, vote escrowed governance mechanism. With veMULTI, it is the first project without token inflations. As of May 16th, during the last 24h, Multichain’s trading fees totaled $47.90K, and trading volume totaled $100.13M.

If we talk strictly from a technical perspective, where yield and price appreciation are the only concerns, investing in veMULTI is a more profitable strategy, both in the short and the long term.

Is veMULTI the next veCRV? I wouldn’t say so, but veMULTI sure is a good project that has been undervalued.