Dilution Protection (Rebase)

A key function of the ve(3,3) model is the dilution protection rebases, which occur per epoch, to incentivize users to lock their tokens early on. The rebase is a nod to the OHM (3,3) model that was popularized the past couple years.

A practical example to give you a better understanding of how the system works:

EXAMPLE: 25% Dilution Protection:

Note: Cleopatra has a 25% rebase, increasing 1% per epoch until 50%

• You have 1000 CLEO, which is 10% of the total supply of 10,000 CLEO at the time.

• During this epoch, another 10,000 CLEO was emitted to gauges, pushing the total supply of CLEO to 20,000

• You can claim your rebase after the epoch ends and receive 250 extra CLEO added to your position. This makes you now have 6.25% of the total supply, at 1250 CLEO out of 20,000 CLEO

The above is a crude but straightforward example that should simply explain the ideology and functionality of the rebase.