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Fix #1378: [DF] Passive DF page readability opportunities #1379

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Nov 21, 2023
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Fix #1378: [DF] Passive DF page readability opportunities #1379

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71 changes: 28 additions & 43 deletions data-farming/passivedf.md
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Expand Up @@ -13,32 +13,44 @@ description: >-

Here, Data Farmers earn OCEAN rewards by locking their OCEAN for veOCEAN for a period of time. That's it! It's low effort, ie passive.

The amount of rewards you get is pro-rata to the amount of veOCEAN you hold, compared to other veOCEAN holders.
veOCEAN is non-transferable. You can’t sell it or send it to other addresses.

### veOCEAN Time Locking
**Yield** is gross income minus costs, divided by OCEAN locked up.
- **Gross income** comes from passive DF rewards. This in turn depends on how much veOCEAN you hold compared to others. veOCEAN depends on:
- how much OCEAN you've locked. More OCEAN -> more rewards.
- how long you've locked it for. Longer lock -> more rewards. 4 years for max rewards.
- how recently you've refreshed your locked OCEAN. More recent -> more rewards.
- **Costs** are gas fees for transactions (txs) on Ethereum mainnet (where veOCEAN runs).
- In Passive DF, txs include: locking OCEAN, claiming rewards, and withdrawing rewards.
- Costs should not be under-estimated. If you lock a small amount of OCEAN for a short time, costs may exceed your gross income.
- To compound returns, these txs need to be repeated. The ideal frequency to compound rate is whatever maximizes your yield - which depends on how much OCEAN you've locked, tx fees, etc.

Users can lock their OCEAN for different lengths of time to gain more veOCEAN **voting power**. The Data Farming dApp is designed to lock OCEAN for **a minimum of 2 weeks and a maximum of four years** (for max rewards). The longer you lock your OCEAN, the more veOCEAN + OCEAN rewards you get!
**APY** is "Annual Percent Yield". Where the [DF app](https://df.oceandao.org) shows APYs, these values are calculated assuming an initial 4-year lock up period with a weekly schedule of compounding rewards into an updated 4-year lock. This estimate works provided current: number of users, reward emissions, and other reward parameters stay constant while excluding all tx fees. See the [APYs](apys.md) page to understand APYs better.

On the dApp's [veOCEAN page](https://df.oceandao.org/veocean), the "Lock Multiplier" represents the percentage amount of veOCEAN received per OCEAN locked.
The rest of this page has details.

When users commit to locking their OCEAN for an extended time duration, they are rewarded with an increased amount of veOCEAN. This incentivizes users to have act with strong network support and confidence in the ecosystem.
### veOCEAN Time Locking

| Year | Lock Multiplier | veOCEAN |
The longer you lock OCEAN for, the more veOCEAN you get. You can lock OCEAN for as short as two weeks, and as long as four years. (On the DF dapp [veOCEAN page](https://df.oceandao.org/veocean), "Lock Multiplier" represents the percentage amount of veOCEAN received per OCEAN locked.)

| Years | Lock Multiplier | veOCEAN |
| ---- | --------------- | ------- |
| 1 | 0.25x | 0.25 |
| 2 | 0.50x | 0.50 |
| 3 | 0.75x | 0.75 |
| 4 | 1.00x | 1.00 |

After choosing your lock period and locking up your OCEAN into the vault, you will be credited with veOCEAN.
veOCEAN cannot be transferred or sold.

veOCEAN is non-transferable. You can’t sell it or send it to other addresses.
At the end of your 4 years, your OCEAN is unlocked. **You will not be able to retrieve your locked OCEAN until the Lock End Date you selected on the dApp!**

After the Lock End Date, then you can withdraw your principal OCEAN on the [veOCEAN page](https://df.oceandao.org/veocean) on the left side panel.

### Linear Decay

Your veOCEAN balance will slowly start declining as soon as you receive it.

veOCEAN balance decreases linearly over time until the Lock End Date. When your lock time has lapsed by 50%, you will have 50% of your original veOCEAN balance.
veOCEAN balance decreases linearly over time until the Lock End Date. For example, when your lock time has lapsed by 50%, you will have 50% of your original veOCEAN balance.

When your lock time ends your veOCEAN balance will hit 0, and your OCEAN can be withdrawn.

Expand All @@ -51,56 +63,29 @@ If you lock 1.0 OCEAN for 4 years, you get 1.0 veOCEAN at the start.
| 3 years | 0.25 |
| 4 years | 0.00 |

At the end of your 4 years, your OCEAN is unlocked.

veOCEAN code is a fork of Curve's battle-tested [veCRV](https://curve.readthedocs.io/dao-vecrv.html) contracts that safeguard billions (veCRV). With this model there is no liquidity risk. You can’t lose your OCEAN through Impermanent Loss (IL). It is merely locked.

# veOCEAN and your APY

Here are some good mental models to improve the outcome of your APY.
1. The longer you lock, the more you'll earn.
1. To improve yield, you will need to make good decisions for how long you'll choose to lock. The best way to do this is to learn how [Time Locking](#veocean-time-locking) and [Linear Decay](#linear-decay) function.
1. APYs are always calculated by dividing the amount of OCEAN received from rewards, by the relative amount of OCEAN locked up.
1. As a rule: _wherever APYs are provided to the user in the app (df.oceandao.org), they are calculated assuming an initial 4-year lock up period with a weekly schedule of compounding rewards into an updated 4-year lock. This estimate works provided current: number of users, reward emissions, and other reward parameters stay constant while excluding all tx fees._
You can’t lose your OCEAN through Impermanent Loss (IL). It is merely locked.

To understand APYs better, please see the [APYs](apys.md) page.
### Replenishing veOCEAN

### Replenishing your veOCEAN
To achieve optimal APY, you would want to periodically update your 4-year lock back to 4 years, where there is no veOCEAN decay.

To achieve optimal APY, participants would need to update their 4-year lock while considering costs and other variables to maintain an optimal amount of veOCEAN over time.
You can also add more OCEAN to your vault when updating an existing vault.

Participants are also able to add more OCEAN to their vault when updating an existing vault.
### Passive DF Reward Distrubtion

At any time, participants can choose to update their lock and continue from where they are or increase their lock duration.
Passive DF rewards are claimable on the Ethereum mainnet.

### veOCEAN Earnings

All earnings for veOCEAN holders are claimable in the Ethereum mainnet.

To be eligible for Data Farming Data assets for DFing may be published in any network where Ocean’s deployed in production: ETH Mainnet, Polygon, etc.)

Data Farming rounds occur weekly; in line with this, there’s a new [`ve`](https://github.com/oceanprotocol/df-py/tree/main/contracts/ve) distribution “epoch” every week. This affects when you can first claim rewards. Specifically, if you lock OCEAN on day x, you’ll be able to claim rewards on the first ve epoch that begins after day x+7.
DF rounds are weekly. In line with this, there’s a [`ve`](https://github.com/oceanprotocol/df-py/tree/main/contracts/ve) distribution “epoch” every week. This affects when you can first claim rewards. Specifically, if you lock OCEAN on day x, you’ll be able to claim rewards on the first ve epoch that begins after day x+7.

Put another way, from the time you lock OCEAN, you must wait at least a week, and up to two weeks, to be able to claim rewards. (This behavior is inherited from veCRV. Here’s the [code](https://github.com/oceanprotocol/df-py/tree/main/contracts/ve)).

### Locks & Withdrawal

veOCEAN is architected to be locked (i.e. 'staked') for a certain period of time and cannot be transferred or sold during the lock time that is determined by each user.

So it's important to note that: **"you will not be able to retrieve your locked OCEAN until the Lock End Date you selected on the dApp!**

After the Lock End Date, then you can withdraw your principal OCEAN on the [veOCEAN page](https://df.oceandao.org/veocean) on the left side panel.

### Flow of Value

The image below illustrates the flow of value. On the left, at time 0, the staker locks their OCEAN into the veOCEAN contract, and receives veOCEAN. In the middle, the staker receives OCEAN rewards every time there’s revenue to the Ocean Protocol Community (top), and also as part of Data Farming rewards (bottom). On the right, when the lock expires (e.g. 4 years) then the staker is able to move their OCEAN around again.

<figure><img src="../.gitbook/assets/data-farming/flow_of_value.png" alt=""><figcaption><p>Flow of Value</p></figcaption></figure>

The veOCEAN design is in accordance with the Web3 Sustainability Loop, which Ocean uses as its system-level design.

The veOCEAN code was forked from the veCRV code. veCRV parameters will be the starting point. To minimize risk, tweaks will be circumspect.

### Background of veOCEAN Idea

It's been a long-held goal to reconcile near-term and long-term incentives. This is not an easy task.
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