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An Economic Model of Vite
My opinion on the economic model & incentives of the Vite network.
Vite is a feeless blockchain, because of its feeless nature, Vite must finance its operation through an inflation of 3% annually. This 3% inflation funds the rewards for running Snapshot Block Producers (SBPs) / validators.
The first SBP to share rewards with its voters (delegators), was the SwissVite.org SBP. They shared rewards in VITE and then eventually in VCP and VICAT.
By sharing rewards, SwissVite created an incentive to vote or delegate your VITE to them. SwissVite weren't aware, but they unlocked a whole world of opportunities for the Vite ecosystem.
The reward distribution by SBPs has created an incentive for Dapp developers to create protocols that utilize VITE, and lock it.
The developer that creates the best protocol, that has the most VITE locked, will profit most heavily from SBP rewards.
A great example of this, is the Dapp VITCSwap: VITCSwap uses VITE as its base pair, so whenever someone adds liquidity to any coin, that VITE is being voted for the VitaminCoinSBP and generating yield.
diagram
Vite through its liquid "staking" of VITE to generate yield, will inadvertently create an arms race between Dapp developers to create more efficient yield bearing protocols that lock VITE.
Vite's unique network has created an amazing opportunity for developers to build more and more creative yield generating applications. These Dapps will drive demand for the VITE token, while also rewarding the devs greatly.
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