What is the voting escrow?
Voting escrow is a smart contract that stores locked user BANK tokens and grants veBANK. Algofi users lock BANK in the Voting Escrow for two key reasons.
- 1.Voting power on governance proposals
- 1.The only way to be able to vote on proposals via veBANK is for the Algofi protocols is to lock BANK tokens in the voting escrow.
- 2.Boosted rewards
- 1.Locking BANK can yield up to 2.5x boosted rewards APR in Farm and Lend & Earn contracts.
Locking BANK results grants users veBANK (short for voting escrow BANK), which is used to compute both the boost values and the governance voting power.
Bank can be locked for a fixed time between 1 week and 4 years. Locked BANK tokens can never be retrieved from the contract before the lock expires. Users have to wait until the lock expires to claim their tokens. Locking BANK for longer periods will give you more veBANK, i.e. a user locking for 2 weeks gets 2X as much veBANK as the user who is locking for 1 week.
Users can extend their lock time to top up their veBANK balance, as well as adding more BANK tokens to the existing lock.
The formula for veBANK is:
Thus, locking 1 BANK for 1 year yields 1 veBANK which can alternatively be thought of as BANK-years.