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Nektar DAO governance

What is veNET?​

veNET, short for vote-escrowed NET, is required to participate in Nektar DAO governance. The only way to obtain veNET is by locking NET tokens in a non-custodial smart contract on the Nektar protocol for a predetermined period. The longer the lock duration, the greater the amount of veNET received and the more governance rewards can be earned.

Inspired by the veToken mechanisms of Curve and Balancer, veNET incentivizes long-term commitment and active participation in governance. The only way to obtain veNET is by locking NET.

NET to veNET conversion rate​

Users can lock NET tokens for a minimum of one week and a maximum of one year. The amount of veNET received is proportional to the lock period:

  • 1 NET locked for 1 year = 1 veNET
  • 1 NET locked for 9 months = 0.75 veNET
  • 1 NET locked for 6 months = 0.5 veNET
  • 1 NET locked for 3 months = 0.25 veNET
  • 1 NET locked for 1 month = 0.08333 (1/12) veNET
  • 1 NET locked for 1 week = 0.01923 (7/365) veNET

veNET formula

note

Locking NET tokens is irreversible; tokens can only be reclaimed after the lock period expires. The lock period cannot be shortened.

A users’ veNET balance, also called ‘voting power’, decreases linearly since the moment of locking, until it reaches 0 after the lock period ends. Holders cannot create multiple locks with different expiry dates. However, an existing lock can be extended, and additional NET tokens can be added to it at any time. This will increase a user’s veNET balance.

How to lock NET for veNET?​

Below you will find a step-by-step guide on how to lock NET for veNET.

1. Access locking UI​

veNET formula

2. Specify terms​

  • Your deposit: Amount of NET tokens to be locked. Use MAX button for quick entry.
  • Period: Lock period in days (will be rounded to weeks in smart contract). Use month buttons for quick entry.

3. Lock NET tokens​

  • Review the amount of veNET that you will receive in return in the text below (e.g. 177.9 veNET)
  • Click Approve NET to lock NET for veNET
    • Approve transaction with your wallet
    • Execute the approved transaction with your wallet

veNET utility​

veNET token can neither be transferred nor traded. It is critical for securing the Nektar protocol.

  1. Securing the protocol
    • Whitelisting new Networks: veNET holders play an important role in onboarding new Networks to the protocol. Through the Nektar DAO they assess and approve Networks to ensure compatibility, security, and ecosystem alignment.
    • Approving new assets: veNET holders can whitelist new assets used within the protocol, ensuring they meet necessary standards and align with the protocol's goals.
  2. Active governance participation
    • Dispute resolution: The DAO, representing veNET holders, actively resolves disputes among Delegators, Distributed Asset Managers (DAMs), and Networks, ensuring fairness and strengthening trust within the ecosystem.
    • Proposal submission and voting:
      • Proposal creation: veNET holders can propose upgrades to the protocol, such as new integrations, parameter changes, or treasury usage, provided they meet a minimum voting power threshold.
      • Governance voting: veNET holders vote on proposals with voting power proportional to their veNET balance and NET tokens lock duration.
  3. Governance rewards
    • veNET holders who actively participate in governance are eligible for rewards, including rewards from Networks directed to the NektarDAO treasury.
    • Rewards are exclusively for active participants, incentivizing meaningful contributions and discouraging passive holding.

veNET purpose​

Utility structure positions veNET as a powerful tool to:

  • Secure the protocol
  • Resolve disputes
  • Drive ecosystem growth
  • Incentivize long-term alignment among stakeholders and the protocol’s objectives

veNET limitations​

While veNET holders significantly influence governance, they do not:

  • Control the protocol
  • Execute individual transactions