New Project Preview | Interpreting Convergence: A Governance Aggregation and Profit Redistribution Layer Similar to Convex.

New Project Preview | Interpreting Convergence: A Governance and Profit Redistribution Layer Similar to Convex.

The protocol issues billions of dollars in native tokens every year, and in order to capture a portion of the emissions, Convergence is launching a layer similar to Convex that aggregates governance and redistributes earnings to stakers. Crypto analyst DeFi Made Here has written an analysis of the protocol mechanism and its token economics.

Convergence aims to create a governance black hole, starting with Tokemak and then focusing on the Curve ecosystem. Overall, Convergence will: 1) aggregate protocols and run meta-governance (governance of underlying protocols) like Convex; 2) run its own governance and direct emissions like Curve; 3) establish a POL like Olympus by issuing discounted bonds with $CVG.

Convergence issues cvgAsset (liquid wrapper) for every deposited asset at a 1:1 ratio. The underlying assets will be permanently pledged/locked, and their governance will be delegated to the $CVG (native token) locker. The native yield from pledging/locking assets will be boosted and redirected to cvgAsset pledgers. Similar to users providing Curve liquidity on Convex for higher yields, Convergence will allow them to stake their LP for each aggregated protocol. LPs will earn higher yields depending on the design of the underlying protocol.

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One notable feature of Convergence is its treatment of POL. The protocol will issue bonds instead of liquidity mining to accumulate governance power in the treasury. The bond program is designed to last for 4.5 years/30% of supply. The treasury is not meant to provide any support or redemption. Instead, it will be used to generate revenue, further allocated every three months in the form of $CRV, $CVX, $FXS, $SDT, and $CNC to the $CVG locker. The $CVG locker will also manage the protocol, run meta-governance, and direct $CVG emissions. $CVG can be locked for up to 96 weeks and has a very unique locking design.

Reference: https://twitter.com/DeFi_Made_Here/status/1665711633870585859

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