Unlocking the Power of Autobribes: Unveiling the Mechanism behind $DUB in Dubble DEX
Greetings from Dubble DEX!
Autobribes play a crucial role in the operations of DEXs like Dubble, where veToken holders govern token emissions. Dubble DEX has a competitive edge in this aspect, as its yield-generating stablecoin index, $DUB, can automatically distribute bribes to LP pairs that involve $DUB.
Since the concept of auto-bribing is still emerging, the team has been deliberating on the distribution of $DUB autobribes. The allocation of $DUB rebases for $DUB paired in an LP is as follows:
Let’s analyze the rationale behind this modification. In essence, providing $1 in bribes to a pair usually results in more than $1 in emissions to that pair. This is due to the fact that voters are attracted to vote for the pair to claim the bribe. Therefore, although liquidity providers earn less $DUB yield, they are likely to earn more yield in $DUBBL emissions, resulting in a net benefit for them.
The second group that benefits from this change is $veDUBBL holders. With more bribes in the ecosystem, $veDUBBL holders can earn more bribe income by voting for their preferred $DUB pair. This creates more incentive for individuals to lock up additional $veDUBBL to receive a larger share of the bribe income, as well as trading fees, $DUBBL emissions, and $DUB rebases for being a $DUBBL/$DUB LP holder.
By locking up more $veDUBBL, more $DUBBL is taken out of the market, which deepens liquidity for the $DUBBL token. This is advantageous for the protocol since a strong $DUBBL price equals high liquidity pool APRs. This attracts more liquidity to the DEX, resulting in more $DUB in the ecosystem and even more bribes, which encourages more $veDUBBL locking, creating a flywheel effect with increased velocity.
In summary, this change is a net benefit for liquidity providers, $veDUBBL holders, and Dubble DEX itself.