veTENET owners have voting power within the native gauge system of Tenet.
New TENET tokens are continuously emitted to various reward sinks to ensure healthy operation of the blockchain and the infrastructure built on top of it, as well as third party protocols on other chains that utilise Tenet's products.
veTENET owners decide where these newly created TENET tokens are distributed to.
A gauge represents a reward sink where TENET tokens are sent to.
At the top level of the system, we identify the following reward sinks:
- Block Rewards
- DeFi Protocol Incentives
Within this reward sink, there exists another round of voting.
Each holder of a tLSD (and the validator to which they are delegated) will get TENET tokens allocated to it depending on his share of this second voting round and the original amount of TENET assigned to Block Rewards
DeFi Protocol Incentives
DeFi protocols work better if they have sufficient liquidity. TENET tokens are used to incentivize capital to move to DeFi protocols, eother built on top of Tenet network or utilising Tenet's products on other networks. Liquidity providers and other users are rewarded with newly emitted TENET tokens as directed by veTENET holders.
On launch, the following native protocols are eligible for Protocol Incentives in the following way:
- Tenet Stablecoin Protocol
- Stability Pool Depositors
- Tenet DEX
- Liquidity Provider Rewards - A secondary gauge vote is needed here to vote between the different liquidity pairs.
The gauge voting power that veTENET holds opens up the possibility for external protocols and Staking Providers to 'bribe' veTENET holders for their vote. This is an additional way for veTENET owners to earn income while creating a market for purchasing liquidity incentives on Tenet.