Introduction
ve(3,3) DEXs have been called complex and confusing by some. While there are a lot of moving parts, when simply looking at the conditions for success one thing becomes very clear: a ve(3,3) DEX lives, dies, and thrives on the overall health of its native token. That health is derived from the token’s ability or potential to create value in the eyes of the market.
Beam is the first protocol to leverage omnichain technology, powered by ZetaChain, to bring new vehicles of value creation to the existing ve(3,3) concept by being more than a ve(3,3) DEX.
A brief survey of Web3 asset value
It is important to note that we are talking about value, not price. Marketcap is a good indicator of the perceived value of an asset according to the opinion of the market, while price is arbitrary.
Top Web3 assets by marketcap are in that list for various reasons, but all are related to a high perceived value by the industry.
For example, Bitcoin is the #1 coin by marketcap, and some of the reasons for this are name recognition, eminent perceived trustworthiness (including among TradFi elements at this point), and scarcity which makes it unique in the cryptosphere as a perceived store of value.
The #2 coin by marketcap is Ethereum, which holds value in the eyes of the market for some of the same reasons like trustworthiness and name recognition, but also additional factors like its perceived utility as the security layer for numerous layer 2 and sidechains, among other things.
The #9 coin by marketcap is Dogecoin, which cannot boast of characteristics that would make it a good store of value or give it much utility. Thanks to past celebrity endorsements, however, it enjoys strong brand recognition and as the top memecoin it holds value for the same reason that all memecoins hold value — as a pure speculative asset. People buy memecoins because they believe their entry price is a good one, and more people will come after them and buy the same asset. Unlike an asset like Bitcoin, where the strategy of HODLing through even macromarket swings is favored by the community, memecoiners will sell at a higher exit price for profit, because there is little reason to do anything else (besides wait for an even higher exit price).
All of these coins could be studied individually, and each coin characteristic could be studied at length, to determine how that value is created for others. Many more characteristics could also be determined for each of these coins. To summarize: value is created for the market in myriad ways, and there are many paths to a “successful” coin or token in Web3.
ve(3,3) token value
So given the above nature of value creation among cryptocurrencies, how then does a typical ve(3,3) emissions token have value? What makes people want to buy the token, or keep farmed emissions instead of selling them?
The primary ve(3,3) token utility is to lock it into a veNFT, vote on gauges, and collect the rewards from those gauges. This creates weekly income for the veNFT holder, and besides pure speculation is often the singular value driver for ve(3,3) tokens.
veNFT holders are the only ones who have access to this pool of rewards, and growing the size of a veNFT gives greater access to this pool. Locking veNFTs can only be done by buying the ve(3,3) token on the open market or farming emissions on the DEX itself, both of which remove tokens from circulation, increasing scarcity (assuming lock pressure exceeds inflation) and marketcap/value. Therefore, users are incentivized to lock veNFTs when there are abundant rewards to gain access to in the gauges. DEX rewards and token price tend to correlate fairly closely.
These rewards come from trading fees and bribes.
Bribes as a ”value accelerator”
Bribes are generally placed by actors who have liquidity on a gauge’s LP and expect the value of emissions that they will receive to exceed the value of the bribe placed, which requires a token price that is strong relative to the rest of the ecosystem. So while bribes add value to a ve(3,3) token by increasing weekly rewards for veNFT holders, you’ll only find bribers when the token is worth bribing for. If the token’s value appears to be waning, bribes will dry up. So bribes are more of a ve(3,3) “value accelerator,” but value is not derived from bribes as a core driver.
Trading fees as the foundation of ve(3,3)
This leaves trading fees as the foundational value driver for any given ve(3,3) token. Without trading fees, there will be no (profitable) bribes on the protocol and no reason to lock veNFTs as there are no rewards to be had from them. The result is sell pressure, as the only remaining utility of the token is to trade it for an asset with more promise (disregarding speculation of a turnaround in the protocol’s prospects, of course).
Trading fees come from the liquidity on the DEX capturing its share of the activity onchain. The more onchain trading on the DEX’s native blockchain and the more liquidity the DEX has relative to total onchain liquidity to capture that trading, the greater trading fee rewards there are for the DEX to pass along to its veNFT holders. With more rewards, there is greater reason to acquire veNFT power to capture those rewards for oneself, raising price. A higher price means more lucrative emissions, leading to greater levels of liquidity, and so on. As with DEX rewards, liquidity in productive pools also tends to have a positive correlation with rewards and token price.
All of this is chain-dependent, however. If there is little activity onchain, then there are not many fees to be captured regardless of liquidity.
ve(3,3) value summation
Therefore, a ve(3,3) DEX is dependent on its native chain for driving value and success as its primary value creator is capturing trading fees on the native chain. A successful chain does not necessarily ensure a successful ve(3,3), but an inactive chain certainly endangers a DEX’s success.
Having reviewed the concept of value creation among ve(3,3) DEXs, we could now discuss how to increase the efficacy of the primary value driver among ve(3,3)s — things like choosing the right chain to deploy on, how to attract and retain liquidity, etc. Such pursuits are well worth our time and always on the minds of ve(3,3) core teams.
Let’s instead re-examine the core principles of ve(3,3) value creation.
For instance, what if there was a way to capture activity outside of the native chain with the same liquidity?
What if there was a way to introduce additional utility for the same ve(3,3) token besides locking for a veNFT?
Introducing Beam: the first all-in-one omnichain liquidity layer
Beam — two protocols in one
Beam is not simply a ve(3,3) DEX, but an entire omnichain liquidity layer thanks to ZetaChain’s unique technology.
Phase 1
Phase 1 of Beam is an omnichain bridge.
This piece of the DEX will not have ve(3,3) elements but follow the traditional UniSwap revenue model: users deposit liquidity and earn trading fees directly. These interchain pools are called Beam Pools, as they enable users to “Beam” assets from one native chain or L2 to another.
Beam will be one of, if not the only concentrated liquidity omnichain bridge in Web3, ensuring maximum capital efficiency and fee revenue. Beam is launching with Algebra Integral CL pools, which have dynamic fees based on current volume and are one of the most advanced and efficient pools available.
Thanks to ZetaChain’s architecture, all this requires from Beam are native token/ZETA liquidity pools. The omnichain bits are handled at the chain level but Beam still benefits from cross-chain trading activity. A portion of the trading fees are collected by the protocol to be used to support the success of Beam. This support could come in the form of protocol-owned liquidity to increase fee capture, $BEAM buyback and locks to be redistributed to support the token directly, etc. All unique value drivers in the ve(3,3) landscape as there is now a separate pool of rewards to draw from to drive value for the token, instead of merely the onchain trading fees and bribes that other ve(3,3)s have to work with.
Currently supported chains are native Bitcoin, Ethereum mainnet, BNB, Base, and Polygon. Solana is currently being integrated and expected at the end of November according to the Zeta team.
ZetaChain has already committed approximately $700k of protocol liquidity to our Phase 1 launch to kickstart omnichain swapping.
Phase 2
Once Phase 1 is live and stable, we will then finish development of Beam’s Phase 2, which is the ve(3,3) DEX portion. These are the intrachain pools responsible for trading 2 assets that are already on ZetaChain. They will receive $BEAM emissions, have votable gauges, and all of the expected components of a ve(3,3) ecosystem. All airdrops will be delivered prior to the launch of Phase 2.
Zetachain has already committed to deploying liquidity rewards on Beam to encourage liquidity growth and trading activity. More details on this will be released closer to Phase 2 launch.
Phase 3?
Finally, after the launch of Phase 2 we will begin devoting resources to the deployment of Phase 3 — the first omnichain lending protocol. This will not be a standalone protocol but an extension of Beam, so that the Beam model will truly be the hub and landing pad for a blockchain: bridge, DEX, and lending protocol all in one place. This crucial blockchain infrastructure empowers and facilitates other protocols building onchain, and can be the engine that drives both individuals and protocols to deploy there.
As just one example of the power of omnichain lending — there is a demand from Bitcoiners to be able to borrow against their BTC without utilizing L2 wrappers or to risk custody of their native BTC with a CEX to do so. Beam’s lending protocol would come closer to this reality than either of the above options.
While the tokenomics have not been worked out for this phase just yet, $BEAM holders would stand to benefit from the borrow and supply fees earned on this revolutionary protocol. Doing so will create additional utility for the $BEAM token besides locking as a veNFT, further increasing scarcity and driving value.
Conclusion
To recap, ve(3,3) token value is largely derived from the revenue that the DEX can produce for its holders. Excluding bribes which are more of a value accelerator than a value driver, traditional ve(3,3)s rely almost exclusively on 1 source to drive revenue, and by extension value:
- onchain trading activity from the native chain
Beam, on the other hand, has multiple vehicles to drive revenue:
- onchain trading fees from the native chain
- fees from assets being beamed from another chain to zetachain
- fees from assets being beamed from one chain to another (similar to Thorswap or Chainflip)
- Future revenue from lending/borrowing fees
All of these revenue sources will be directed to support Beam as a protocol. The team is receiving allocations of veBEAM only, and will not collect this revenue directly.
With this critical infrastructure in place as well as ZetaChain’s generous grants program, the foundation will be laid to support innovation and building on ZetaChain directly, further driving value to Beam.
These are the first steps to connecting Web3 like never before, and Zetachain has even greater plans for our shared future. This is only the beginning, stay tuned.
Socials:
Website - https://beamdex.xyz
Discord — https://discord.gg/x3W3qhuB2g
X — https://x.com/beam_dex
Medium — https://medium.com/@zetabeam
