As Helium transitions to the Solana blockchain, it is introducing major changes to its governance system. Central to these changes is the ability for users to lock up their HNT tokens for a selected period and receive voting power in the form of "vote escrowed HNT" (veHNT).
Understanding HNT Lock-Ups
Locking up HNT means making a commitment to hold a specified amount of HNT for a minimum period. Once the tokens are locked, they cannot be traded or moved out of the wallet that initiated the lock-up. veHNT is also non-tradeable and cannot be transferred.
When locking up HNT, users need to set a minimum duration for the lock-up, which can range from 1 day to 48 months. The countdown to release the locked HNT does not begin automatically in 'constant' mode; users must activate it themselves. As a result, the total lock-up duration can be longer than the chosen minimum duration. You can delegate and vote as long as you have veHNT, regardless of whether you started the countdown or not.
For example, a user locks 1 HNT for a minimum duration of 12 months and starts the countdown after 6 months. The countdown will take 12 months, and the user will get their HNT back after a total of 18 months.
The initial amount of veHNT a user receives per locked HNT depends on the length of the minimum lock-up duration chosen.
To calculate the initial veHNT amount per HNT:
1. Multiply the number of lock-up days by 100
2. Divide by 1461.
One day of lock-up equates to approximately 0.0684 veHNT per HNT, and 48 months corresponds to 100 veHNT per HNT.
As the countdown progresses, the amount of veHNT a user has gradually decreases. When the lock-up period ends, all veHNT will be gone.
Limited Time "Landrush" Bonus
For users who lock up HNT during the first 10 days after the transition to Solana (which took place on April 18th, 2023), the initial veHNT amount will be tripled for a limited time. This bonus period is the same as the chosen minimum lock-up duration and starts immediately. The bonus remains at 3x throughout the entire period and disappears completely afterward.
For instance, if a user locks HNT within the first 10 days for a minimum duration of 12 months, their veHNT will be tripled for the first 12 months. Starting the countdown during these 12 months only affecst the veHNT that gets tripled.
By introducing this new governance system, Helium seeks to create a more inclusive and decentralized ecosystem. With the added incentive of time-limited bonuses for early adopters, users now have an opportunity to gain greater influence over the network's future.
Governance Implications of veHNT
The introduction of vote escrowed HNT (veHNT) as part of Helium's governance system aims to promote active participation from users in the decision-making process. By locking up HNT tokens and receiving veHNT, users gain voting power proportional to their commitment to the network, thus fostering a more democratic and decentralized environment.
With veHNT, users can participate in the governance process by submitting proposals, discussing ideas, and voting on key decisions affecting the network. This includes decisions related to network upgrades, consensus rules, and other critical aspects that shape the future of Helium.
When locking up HNT tokens, it is crucial to use a secure wallet that will remain safe for the entire duration of the lock-up period. Since both HNT and veHNT tokens are non-transferable during the lock-up, ensuring the security of the wallet is of utmost importance.
Users should consider hardware wallets, multisignature wallets, or other secure storage solutions to protect their assets and ensure that they can access their tokens once the lock-up period ends.
The new governance system introduced by Helium, alongside its transition to the Solana blockchain, empowers users to actively participate in the decision-making process by locking up HNT tokens and receiving veHNT as voting power. The limited-time "Landrush" bonus offers an added incentive for early adopters to lock up their tokens and gain a more significant influence over the network's future.
As more users engage with this system, Helium's governance will become increasingly decentralized and democratic, aligning the network's development with the interests and vision of its users. This new approach to governance has the potential to strengthen the Helium ecosystem and foster innovation, as it moves forward on the path of growth and expansion.
Locking 1 HNT for 24 months initially gives 50 veHNT. After waiting for 12 months, the countdown begins and during this period, veHNT shrinks daily. After 18 months, only about 12.5 veHNT is left.
- Read more about Helium's veHNT system on the official Helium Docs website. docs.helium.com
- Need a clear breakdown with examples? @ZwigoZwitscher does a great rundown of the information here:
1/ With the transition to @solana, @helium introduces changes to its governance system.— siegfried.arweave.dev 🐘 🎈 🧬 (@ZwigoZwitscher) April 17, 2023
At the center of it will be the possibility to
✅lock HNT for a period of your choosing and
✅get voting power for doing so, represented as "vote escrowed HNT" (veHNT).
A few basics: 🧵⬇️