Long-Term Incentives

In addition to the "Fair Claim Mechanism" which safeguards the vesting pool from disproportionate draining, Colony introduces the "Long-Term Incentives" mechanism. This feature, incorporating Bonus/Penalty dynamics, aims to encourage long-term investment behavior among users. By incentivizing investors to claim project tokens later in the vesting period rather than immediately, this helps mitigate selling pressure from early-stage project investors at TGE. Moreover, this mechanism fosters an environment conducive to attracting projects to fundraise on Colony, given the encouragement of long-term investor behavior.

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Fee/Bonus: How does it work exactly?

Initially, ceTokens are minted in the same quantity as the project tokens provided to the vesting contract. With each claim of a project token made during the vesting period, a portion of the ceTokens used for the claim is burned as a fee. This fee is utilized to provide bonus tokens for late claimers. Over time, the fee gradually decreases, reaching zero by the end of the vesting period. Consequently, claiming tokens later results in a higher quantity of project tokens received in exchange. Therefore, it is advisable to wait until a later stage to claim project tokens in order to maximize the amount received.

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Reminder: CeTokens holders can provide liquidity by pairing their ceTokens with AVAX on Colony's DEX. By staking their LPs, they unlock a boosted APR in ceToken rewards. Through this process of providing liquidity and claiming ceToken rewards, users can maximize their ceTokens allocation, thereby increasing their ability to swap for additional native project tokens over time.