Crypto glossary
Vote-escrowed tokens (veTokenomics)
Vote-escrowed tokens (veTokenomics) give extra voting power and rewards to holders who lock a governance token for a fixed period, as with Curve's veCRV.
In a vote-escrow model, holders lock a governance token in a contract for a chosen period and receive a non-transferable balance in return. The longer the lock, the bigger that balance. Curve Finance introduced the design with veCRV: CRV can be locked for up to four years, and the voting power decays steadily as the unlock date approaches.
Locked holders typically earn a share of protocol fees, boosted rewards and the right to vote on gauges, which decide how token emissions are split between liquidity pools. That made veCRV votes valuable enough to trigger the so-called Curve Wars, in which protocols such as Convex accumulated CRV and other projects paid bribes to direct emissions to their pools. Many DeFi projects later copied the model.
The model rewards long-term commitment but locks capital that cannot be sold during a crash. It can also concentrate power in a few large holders or aggregators.
Example
Locking 1,000 CRV for four years gives roughly 1,000 veCRV of voting power, while locking the same amount for one year gives about 250, and both balances shrink over time.
