Tokenomics

Inspired by the ve(3,3) tokenomics model, Colend is designed to align user interests with those of the ecosystem, optimizing the protocol’s growth and long-term health. You can convert your CLND into xCLND to gain voting power and influence borrowing costs across the various pools.

Why two tokens ?

Many traditional DeFi systems rely on a single-token model to manage rewards, governance, and ecosystem incentives. Continuously creating new tokens to reward users dilutes the token’s value, which can undermine long-term sustainability and discourage meaningful participation. Colend takes a different approach with a dual-token model designed to minimize inflation, reward active users, and maintain a robust, balanced ecosystem over time.

Reducing Token Circulation to Prevent Inflation

Unlike inflationary models, Colend’s approach rewards users without compromising the token’s long-term value. When users lock CLND, those tokens are temporarily removed from circulation. This reduces the available supply without creating additional tokens, helping to stabilize the token’s value over time.

Discouraging short-term behavior that could harm CLND value.

The dual-token system ensures that users who actively engage with the protocol by holding xCLND and voting are the ones who receive rewards. This approach prioritizes contributors who support the ecosystem through active governance.

The benefits of converting CLND into xCLND

Reduced borrowing costs

Voting for a pool reduces its borrowing cost. By holding xCLND, you unlock voting power that can be used to lower the borrowing cost of the pool you’ve borrowed from, allowing you to smartly optimize your net APY (the combined effect of all your supply and borrow positions on Colend).

Bribe rewards

When you vote, you earn extra rewards from participants who offer bribes to encourage votes for specific pools.

Aligning user and protocol goals

By directing token emissions to specific pools through votes and bribes, Colend creates a system where lenders, borrowers, and token holders all benefit from attractive yields and rewards, while simultaneously strengthening the overall health of the ecosystem.