Definition
veTokenomics is a token incentive and governance mechanism in which users lock a base token for a defined period to receive a non-transferable voting-escrowed representation, typically called veTokens. Voting power and reward weight are mathematically linked to both the amount locked and the lock duration, shaping governance influence, reward distribution, and emission allocation across a protocol’s ecosystem.
In Simple Terms
veTokenomics is a design where tokens are locked for time in exchange for special, non-tradable tokens that represent commitment. The longer and larger the lock, the more of this representation is received. This representation is then used to determine how much influence and reward share a participant has within a crypto protocol.
Context and Usage
veTokenomics is discussed in the context of governance and incentive design for DeFi protocols and other tokenized systems. It appears in debates about aligning long-term participants with protocol control, structuring reward weights, and directing emissions across pools or products. The mechanism is often referenced when analyzing governance power distribution, liquidity incentives, and the interplay between lockup structures and token emission schedules.