Fully Explanation of Ribbon Finance Governance Token $RBN Economic Model

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A summary of the key points about Ribbon's latest token economy model.

Options-based structured product Ribbon Finance announces its long-term development plan for its governance token $RBN. TokenInsight summarizes the full highlights as follows.

  • New staking structure: $RBN holders stake to receive $sRBN, which will be used for voting and governance.
  • Incentives for users to vote: similar to Curve, the longer a user stakes $RBN the higher the weight of $sRBN votes they receive.
  • A large percentage of the protocol revenue will be used to reward $RBN holders, in addition to new programs that will be introduced in the Ribbon ecosystem in the coming months (details not specified).
  • Vault Deposit Incentives: the Ribbon team will announce a new $RBN incentive program where $sRBN holders will decide which vault these incentives will be awarded to, which also means that depositors of a particular vault will have an incentive to buy and pledge $RBNs for more voting power, which will close the loop in the economic model of $RBNs.
  • Permissionless vaults: anyone will be able to create their own Ribbon vault in the future, backing any asset or any strategy.

Regarding the security of the Ribbon, the stakers of $RBN will act as the protector of the protocol.

  • Stakers of $RBN will be held accountable in case of an attack on the smart contract, modeled in part on Aave's security model.
  • If the vault is lost due to dramatic market fluctuations, the holder of $RBN will be compensated for losses above a certain threshold (example: 10%). Thus, as a bonus for securing the agreement, the stakers of $RBN will also receive some additional $RBN.

Roadmap

Ribbonomics plans to launch in two phases, with the first phase expected to be the launch of the new $sRBN token in Q4 and the protocol security feature in Q1 2022.

Conclusion

The Ribbonomics program combines some of the best ideas from other DeFi projects to provide $RBN holders with more sustainable and long-term utility. Vote lock creates an incentive for $RBN holders to lock in their tokens for the long term, have more influence in the Ribbon ecosystem, and receive the majority of the protocol revenue.

The Protocol Guarantee mechanism creates a way for $RBN holders to earn additional rewards in the game while providing a better product for vault depositors. Combined, Ribbon Finance believes these and other future efforts can create a positive impact for both Ribbon and $RBN, with more depositors > more revenue > more depositors, and $RBNs being locked in for longer and longer periods of time as people try to hold as many $sRBNs as possible.

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