How the gauge voting system works with Angle
- veANGLE holders are able to decide where weekly ANGLE emissions go through gauge votes
- The fact that veANGLE holders are responsible for such vote aligns incentives within the protocol
Besides voting on governance proposals, veANGLE owners can vote for ANGLE gauge weights with their veANGLE balance. The gauge system implemented by Angle is similar to that of Frax and of Curve.
A gauge corresponds to a contract where incentives are sent. By voting for a gauge, veANGLE holders increase the amount of ANGLE tokens sent to the related contract with respect to the others. veANGLE holders therefore vote for the gauges they think should receive more rewards.
This allows veANGLE holders, who are the most long term users of the protocol, to have complete control over the future ANGLE emissions.
The gauge system lowers the influence of LPs selling off their ANGLE rewards since those LPs do not necessarily have veANGLE to continue voting for the gauge they are providing liquidity to.
This system strongly favors LP who continually lock their rewards into veANGLE to increase their pool's gauge weight. Essentially, Angle gauges align incentives of veANGLE holders so that the most long term oriented holders control where ANGLE emissions are distributed.
Gauge weights are updated weekly, every Thursday at 2am CET. This means that the ANGLE distribution rate for each pool is constant for 1 week and then updates to the new rate at this time.
Users with veANGLE can allocate their voting power to the available gauges to influence the reward distribution. Then, the sum of all the veANGLE assigned to each gauge by all holders determines the quantity of rewards to be distributed. Once this is done, users don't have to vote again every week except if they want to change them. Votes for a given gauge can only be changed every 10 days, so that each vote applies for at least two weeks.
A person can also decide not to allocate all their available voting power.
When updating gauge weights and putting more weight on one gauge with respect to another, users should be wary of doing decreases first then increases.
When increasing the veANGLE balance by locking more tokens or extending a lock, this new veANGLE balance is not taken into account in the current vote allocation. Be careful to apply this new voting power. More info on the Increasing veANGLE balance page.
Note that gauges can be "killed" after having been whitelisted. This requires a DAO vote. Rewards that are voted for killed gauges are simply not issued, which means veANGLE tokens voting for a gauge that has been removed are not actually providing useful votes.
Essentially, the weekly decrease factor of 1.007827 of the ANGLE emissions is guaranteed onchain.
With such a decreasing factor, distribution with this system is bound to continue and to remain significant for a period of over 10 years.
veANGLE stakers can therefore feel confident staking the maximum duration of 4 years knowing that the gauge program is not temporary and won't be deprecated any time soon.
The idea with Angle gauges is to incentivize liquidity pools for Angle stablecoins that are useful to the protocol, like pools on Curve or Uniswap.
The gauge system can also be used to incentivize different things than just pools directly. For instance, incentives for Curve voters can be linked to a gauge for which received emissions are placed on bribing platforms like Votemarket.
Overall, there is no restriction on which pools or pairs can have a gauge other than that they should pass the gauge governance vote. The idea is however that all gauges should have a link with an Angle Protocol stablecoin (like agEUR) or the Angle protocol more generally, as the governance token of the protocol is being distributed as incentive.
Given that a wide range of contracts can be considered Angle protocol gauges, the system distinguishes several gauge types.
Each gauge type has its own weight, which can be set to shift the distribution of rewards in favor of one or another type of gauges. At the moment, the weights are all set equally so it has no impact. Governance can vote to change these gauge type weights.
Example Assuming an inflation rate
changing with every epoch (1 week), a gauge weight
and a gauge type weight
, then the stream of inflation going to a gauge is:
Every week, depending on gauge votes, the weight
can change. Governance can also vote to update the weight