What is veTokenomics and how does it work?

Users lock their tokens and turn them into veTokens, which control protocol governance, following the veTokenomics model.

All aspects of a token's production and management, including its allocation to different stakeholders, sourcing, token burn schedules, and distribution, are managed by the analysis of tokenomics. Tokenomics helps determine the potential value of decentralized finance (DeFi) projects. Since the law of supply and demand cannot be changed, tokenomics has a huge impact on the value of every non-fungible token (NFT) or cryptocurrency.

Related: What is Tokenomics? A Beginner's Guide to Cryptocurrency Supply and Demand

However, there are various flaws in the design of tokenomics, such as a substantial initial allocation of insider supply, which can be a warning sign of pump and dump. Additionally, there is no playbook on how founders, treasury, investors, community and protocol designers should split tokens optimally.

As a result, the DeFi protocol...