veQI — Supercharging Avalanche Validators

Published by AVAX on

veQI — Supercharging Avalanche Validators

BENQI Liquid Staking launched 6 months ago to present Avalanche with a seamless means of unlocking liquidity from staked AVAX used to secure the Avalanche network. Since then, the Avalanche community has warmly welcomed Staked AVAX (sAVAX), helping it grow from strength to strength. The continued support from community members — founders, developers, validators, analysts and twitter threadors have propelled sAVAX forward with figures shown as a reflection of the community’s strength — Vires in Numeris.

Today we are thrilled to announce the release of Phase 1 of veQI. Through veQI, Avalanche Validators can now benefit from the pool of liquidity from BENQI Liquid Staking (BLS).

What is veQI?

Vote-escrowed QI or veQI is a representation of a user’s voting power for AVAX delegations through BENQI Liquid Staking (BLS). It is obtained through staking the QI token on the BLS app.

With veQI, users will be able to vote for specific Avalanche validators to receive additional delegations. This voting power determines the amount of AVAX delegations directed to the specific validator node from BLS.

💡 Amount of delegations is based on the validator’s aggregate voting power of veQI

AVAX delegations from BLS to Avalanche Validators with veQI voting power

veQI mechanism

Staking

All user’s veQI balance start from zero. When QI is staked, veQI accrues linearly over time to a maximum of 100 times the QI staked (eg: 1 QI = 100veQI).

Unstaking

Any amount of QI unstaked resets a user’s accumulated veQI holdings.

Claiming

There is no need to claim veQI upon staking QI. It automatically accrues over time.

Voting

In the BLS app, there is a “Vote” tab for users to vote for their Avalanche Validator(s) of choice using their veQI balance. All users have a total of 100% voting power which can be used to direct votes to single or multiple NodeIDs. Amount of delegations is based on the validator’s aggregate vote count of veQI.

Delegations

veQI Pool — 30% of total delegations from BLS allocated to veQI holders.

veQI holders allocate AVAX delegations from BLS to their validator of choice by voting for it. Only validators that meet the validator minimum criteria with 2% to 5% delegation fee are eligible for delegations from this pool.

Open Pool — 70% of total delegations from BLS randomly allocated to all Avalanche Validators that meet the validator minimum criteria with 2% delegation fee.

💡 Validators with 2% delegation fee are eligible to receive delegations from both veQI (30%) and Open (70%) Pool

Why veQI?

Before veQI, BLS delegations were randomly selected based on a set of validator minimum criteria. Users have benefitted from it, hitting full utilization of their validator nodes and reaping the benefits of additional delegation rewards.

Validator reaping the benefits of BLS delegations. (Source: https://twitter.com/avax_forever/status/1551114238860607490)

The launch of veQI aligns Avalanche validators with BENQI, opening up a portion of delegations from BLS to veQI holders. By locking up QI on BLS to accrue veQI, users will be able to direct AVAX delegations from BLS to any validator of choice by simply voting for it on the BLS app.

As validators accumulate veQI vote count, they receive additional AVAX delegations from BLS, gaining additional AVAX rewards.

There will be two pools for delegations — the veQI Pool and the Open Pool.

veQI Pool — 30% of total delegations from BLS are opened up to veQI holders for delegations. For a validator to qualify for delegations from the veQI pool, validators have to meet the validator minimum criteria with delegation fees set from 2% up to 5%.

Open Pool — The remaining 70% of total delegations from BLS will be randomly delegated to validators that meet the validator minimum criteria with a 2% delegation fee set. Validators with or without veQI qualify for this pool.

💡 Validators with a 2% delegation fee set are eligible for delegations from BOTH the veQI and Open Pool.

💡 Validators with >2% to 5% delegation fee set are not eligible for delegations from the Open pool.

More information on BLS’s Delegation Strategy: https://docs.benqi.fi/benqi-liquid-staking/delegation-strategy

Join us

We will be setting up a dedicated channel on our Discord for veQI related questions. Please feel free to also chat us up on Telegram. A friendly reminder that veQI is only available on the BENQI Liquid Staking app and information on veQI and the delegation strategy is now available on our docs. Lastly, we’d like to thank the Avalanche community for the continued support 🔺

About BENQI

BENQI is a liquidity protocol on Avalanche consisting of the BENQI Liquidity Market and BENQI Liquid Staking. BENQI’s Liquidity Market allows users to earn yield on their supplied assets, and borrow any available asset from the platform in an overcollateralized manner. BENQI’s Liquid Staking protocol is a liquid staking solution for AVAX. It provides users with a yield-bearing asset (sAVAX) that represents each user’s ownership of the staked AVAX. The yield-bearing asset grants users the ability to remain liquid and participate within other DeFi applications.

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