What is the ve33 model? Why is this model soaring in the bull market? Why does it spiral to death when the market goes bad?

Before understanding this, we need to know what is the 33 model? (Because the 33 model later evolved into the ve33 model)

The earliest 33 model originated from a project called Olympus. Its gameplay is very novel and is called defi2.0. Its gameplay is to provide a pledge pool with a very high annualized rate, allowing retail investors in the market to buy the project's coins without selling them, and then all pledge them. The annualized rate is as high as 1000000000%

You may be thinking, with such a high annualized rate, wouldn’t it be possible to get your money back in just one day? But its calculation formula is based on compound interest. For example, if the daily interest rate is 3%, then the one-year interest rate is 1.03 raised to the 365th power, which is an annualized rate of 4848272%. If you sell every day, it will take 30 days to pay back the capital at 3% interest every day. If you choose not to sell and hold it for one year, even if the currency price remains unchanged, your assets will double 48,482 times in one year.

So, this involves a game theory issue. If you choose not to sell, you will keep it in the pledge pool. Others also choose not to sell. Then everyone will make money together. (Of course, this is just a number on paper.) If you choose not to sell and others choose to sell, then others may make a small profit and you will lose money. If you choose to sell and others choose not to sell, you will make a small profit and others will lose money. If you choose to sell and someone else chooses to sell, the project will collapse.

Therefore, the real optimal solution is that no one sells and continues to enjoy very high annual interest rates. At the same time, such high interest can attract many people to come in, so everyone will choose to buy coins from the exchange and then withdraw them. As a result, less than 10% of the tokens of this project may be circulating in the market, and the pledge pool The circulation rate exceeds 90%. Then, only a little bit of capital is needed to drive up the price of the currency.

Then, the official will also set up bonds and other methods to avoid the side effects of paper-dropping on the project through arbitrage.

33 model, the important thing is that everyone has reached a consensus, they are all diamond players, insist not to sell, and then attract more people to enter the market.Therefore, Olympus created the myth of defi2.0 back then.

But because this method is too violent. When it goes up, it goes up like crazy, and when it goes down, it goes down like crazy. Later, the ve33 model was derived. Many projects currently use the ve33 model. For example, snx velo on the op. gmx rdnt grail on arb including cruve on the ethereum chain.

If you want to know what happens next, please listen to the next analysis. #veDAO #DeFi趋势 #BTC!💰 #ARB， #ai