Proposal: Implement vote-escrowed OPIUM (veOPIUM) mechanics and start liquidity mining on Opium Finance Pools


Implement vote-escrowed OPIUM (veOPIUM) mechanics and start liquidity mining on Opium Finance Pools.

veOPIUM holders by sharing risk / return will:

  • Have their voting power in Opium DAO governance multiplied
  • Have exclusive rights to vote on $OPIUM rewards distribution between Opium Finance Pools
  • Have ability to boost (multiply) their own rewards within Opium Finance Pool depending on the time they lock their tokens

veOPIUM holders will receive additional benefits and exclusive features as tokenomics and protocol stats evolve in time.


You may all agree that our beloved OPIUM needs more utility. Currently OPIUM token governs Opium DAO, which controls the protocol and Ecosystem fund. Besides this governance and possibility to stake OPIUM into AMMs and Options Selling pool there are no other utilities, however protocol got the traction and we need more utility.

One of the most successful, already audited and battle-tested mechanics for token was introduced by Curve (veCRV) and it looks like it’s very well suitable for Opium Finance Pools.

Let’s rewind the current progress of Opium Finance Pools. According to Opium Finance Pools started to generate tremendous volumes since November 2021, thanks to the set of Market Makers using the protocol and utilizing 100% of the pools every Friday. By receiving premiums from Market Makers pools are generating attractive yields with clear risks. (Kudos to the Opium Team and other contributors!) Bringing more TVL into the pools will increase the volumes, users engagement and future fees.


Agreeing with @alirun on their proposal for “Incentivized long term DAO participation” Proposal: Incentivized long term DAO participation implementing veCRV mechanics will definetely give OPIUM holders incentives for long-term engagement by giving them more voting power and additional exclusive features.

What I propose here is to introduce veOPIUM smart contract which allows locking OPIUM tokens and receiving veOPIUM non-transferable tokens in return.

Locking OPIUM may be done for time periods from 1 week to 2 years. Unlocking OPIUM in full amount may only be done after the whole period passes. However, if veOPIUM holder will decide to unlock it’s tokens before the period passed, it may do so by paying the penalty (giving away part of it’s OPIUM to the remaining veOPIUM holders.

The longer you lock your OPIUM for, the more voting power you have (and the bigger boost you can reach). You can vote lock 1,000 OPIUM for a year to have a 500 veOPIUM weight. Each OPIUM locked for two years is equal to 1 veOPIUM.

Voting power in Opium DAO is multiplied in a similar way. You can vote lock 1,000 OPIUM for a year to have a 1,500 OPIUM voting power. Each OPIUM locked for two years is equal to 2 OPIUM voting power.

Here is the example:

Locked OPIUM Period veOPIUM Balance OPIUM Voting power
1,000 2 years 1,000 2,000
1,000 1.5 years 750 1,750
1,000 1 year 500 1,500
1,000 0.5 years 250 1,250
1,000 0 years 0 1,000

Liquidity Mining

In order to target 15M$ in TVL and having 5% APR in rewards we need to distribute 100k OPIUM/month. I’d suggest we start with these assumptions, actively monitor the outcome and evaluate the rates. We can initiate voting to increase / decrease distribution rate anytime.

Initial list of pools participating in rewards distribution:

  • Polygon: Weekly Turbo ETH
  • Polygon: Aggressive Weekly Turbo ETH
  • Polygon: ETH Dump Protection
  • Ethereum: Weekly Turbo 1INCH

List of the pools participating in rewards distribution may be adjusted later by additional voting.

Implementation details

I think that on-chain voting and usage of Curve’s Gauge contracts for this proposal is infeasible and is an overkill, thus I propose to use the technical setup already common to Opium Community - DR.OPIUM.

What I suggest here is that we create a separate new Snapshot page for veOPIUM holders voting only, where on monthly basis we will be performing voting on:

  • Distribution of $OPIUM among listed pools
  • Adjust list of participating pools

Rewards calculation for all pools will be performed by open sourced off-chain tool which will then be used as a source for DR.OPIUM rewards deployed on Polygon with a 50% charity fee decaying in 3 month period (same params were used for other liquidity mining programs) over the last year.

Signaling voting on rewards distribution snapshot will be a source of rewards distribution between the pools. Main Opium DAO will execute the rewards distribution on a monthly basis according to rewards calculation script.

Future steps

In the future we can form proposals for more features exclusive to veCRV holders by sharing risk / return

  • Boosting Delegation - Will allow veOPIUM holders that doesn’t participate in pools to delegate their boosting to other address to increase their rewards and receive part of it
  • Fees sharing - Will allow to partially stream fees generated by pools to veOPIUM holders
  • Protocol backstop mechanisms - Will allow veOPIUM holders to take a risk of protocol exploit or pools losses for a return
1 Like

I still have some concerns I’d like to discuss:

  • Whether rewards should be distributed to Opium Finance pools stakers that don’t lock OPIUM?

  • Calculate the math in the rewards more percisely and make sure it makes sense?

  • Should the DR.OPIUM’s charity fee decay for 12 months instead of 3 months?

  • Should we discuss rewards in a separate proposal and only implement veOPIUM for now?