The introduction of bribes adds a new dimension to the already innovative Beethoven-X protocol. With its smart order routing, weighted pools and now bribing mechanism the average user might be a bit confused. The purpose of this article is to demystify the new bribe system and make clear how you, the individual, can use them to your advantage. You can learn more about Beethoven-X, here.
Bribing as a Concept
Some background before we get into a definition:
The vast majority of DEXs have a token that they emit to incentivize liquidity providers. This is to capture more TVL which in turn creates deeper liquidity pools and results in smoother trades. Users want these tokens for several reasons but primarily these are governance tokens. These are tokens users have to own in order to participate in a protocol’s governance and vote on proposals.
What kinds of things are they voting on?
Usually they are voting on the rate at which these same governance tokens are emitted to each of the protocol’s liquidity pools. Beethoven-X’s governance token is $fBEETS and is created by staking their emitted token $BEETS. You can read more about the tokenomics of $BEETS and $fBEETS here.
The weighted pools on Beethoven-X are an opportunity for other protocols to capture liquidity for their tokens. For example, if the Byte Masons wish to create deep liquidity for their governance token, $OATH, they could create a weighted pool (be that 50/50, 80/20, 33/33/33) to facilitate a smoother trading experience for their token holders. The users who deposit assets into the $OATH pool on Beethoven-X earn fees from trading and if the governance vote goes in their favor, a substantial number of BEETS. For this reason, protocols with a token listed on Beethoven X want to win these votes to give more opportunity value to the token holders.
This is where bribes come into play. Protocols that wish to maximize emissions to their pools can “bribe” holders of the governance token. This is done by posting public rewards for users that vote for their token. When holders of the governance token vote on which pools receive which emission rates, they can claim a portion of the posted reward. This process of voting on emission rates is called a gauge vote. It happens bi-weekly for Beethoven-X, with the following two weeks of emissions dictated by the percentage of the gauge vote that the pools receive.
The gauge vote and the bribing system are a large draw for both protocols and users. Users flock to the gauge and bribe system, as it represents a notable increase in their potential yield. Protocols are excited by the opportunity to increase liquidity depth. Additionally, these sorts of votes indicate a move to decentralization as the core reward mechanism of the protocol is being controlled by user vote.
A wide range of protocols have already successfully implemented a bribing model. The most notable example being Curve.
Qualifying for $BEETS Bribes with $fBEETS
To qualify for a bribe, users need to hold the $fBEETS token – either in their wallet, or staked on Beethoven-X itself. Currently, fBEETS in vaults, including Reaper Farm crypts, do not receive bribe rewards as they do not vote. $fBEETS tokens fulfill a few roles – they are a unique twist on a more traditional fee sharing model as they represent a staked LP token (in this case, an 80/20 weighted pool called the Fidelio Duetto).
Staked $fBEETS receive yield from three sources:
- Swap fees from the underlying LP position
- 30% of Beethoven-X revenue distributed to $fBEETS holders
- Additional farming incentives
A snapshot is taken randomly but at the minimum every two weeks. This is to identify which wallets have qualifying $fBEETS and how many they have. The more $fBEETs, the more voting power the user has. The gauge vote is run on Snapshot and normally lasts from Thursday until Sunday. Users can then select the percentage of their vote they wish to allocate to different pools, likely the ones with the most appealing bribes. Users can vote for one protocol or split their vote across as many as they like. The Snapshot vote is always posted in the announcements channel on the Beethoven-X discord, which you can find here.
Choosing your Bribes
Now we know what a bribe is and how to claim one. The next piece of the puzzle is deciphering which bribes are the best value. This will differ across individuals – protocols can bribe with whatever they wish. A bribe might be their own governance token, or $BEETS, NFTs, USDC any crypto asset. These are then dispersed in a variety of ways: lottery, proportional to number of votes, to the top X voters, etc. It is at the discretion of the briber.
When deciding how to maximize bribe reward BEETS Wars Bribes is a good place to start. It is a third party service that does a good job of detailing the estimated dollar cost return on your $fBEETS voting power. Bribes often change over the course of the voting window as protocols will compete to offer the best incentives. This can come down to the wire, so holding off on casting your votes until the final day can be prudent. However, you can change your vote as many times as you like up until the vote closes.
Once the gauge vote finishes, it is up to the bribing protocols to distribute the bribes via airdrop to the addresses used to vote.
There are some alternatives to voting via SnapShot. VoteHoven is another third party service that some protocols might use as their method to distribute bribes. This allows for bribes to be held inside of a smart contract and distributed via claim once the voting ends, with no need for an airdrop. You can find more about how VoteHoven works here.
Fresh Beets Beethoven-X Crypt on Reaper.Farm
Additionally, Reaper.Farm has announced plans to integrate $fBEETS bribes into their vaults which will increase the auto-compounding return. They will vote using the $fBEETS power that has been effectively delegated to them by the vaults and return the resulting bribes to the vault as part of their yield. This greatly simplifies the process for the end user.
In order to vote, users need $fBEETS. $fBEETS can be acquired off the open market at Beethoven-X, but slippage makes this option less appealing. The most capital-efficient way to get $fBEETS is to enter the Fidelio Duetto Pool (80/20 BEETS WFTM) and use the received LP receipt (Called BPTs) to mint $fBEETS. These can then either be staked, kept in your wallet or set to work in the auto-compounding crypt at Reaper.Farm.
Beethoven-X uses governance to direct the emissions of their token to specific pools. Other protocols have taken to bribing Beethoven-X governance voters to ensure that their pools on Beethoven-X receive the maximum return. Users can claim these bribes by participating in governance votes. Users receive voting power by holding $fBEETS on Beethoven-X or in their wallet at the time of the Snapshot. Users can vote by accessing Snapshot during a voting window. Snapshots and voting times are announced in the Beethoven-X Discord’s Announcement Channel.
Congratulations – you are now well on your way to becoming a $BEETS bribe beneficiary!