Lybra Wars

What Are The Lybra Wars?

The move to a DAO governance structure empowers Lybra governance token holders to take control of key decisions on the protocol’s future. esLBR holders can now vote on matters related to any LST pool on the Lybra protocol, encompassing topics such as the acceptance of a specific LST asset, the mint limit of the chosen LST pool, and the emissions allocated to each LST pool.

This lays the groundwork for the Lybra Wars, as each LST pool can incentivize esLBR holders to cast their votes in the pool’s favor by bribing them with token rewards. The incentives that holders receive align with the amount of voting power they pledged in support.

Here’s how this might work in practice, using the WBETH pool as an example:

These bribing and incentive dynamics are known as the “Lybra Wars” as they motivate the different LST pools to battle for the votes of Lybra governance token holders.

How Lybra V2’s New Vaults & Pools Mechanisms Will Work

A New Governance Model With New Possibilities

The vision for Lybra has always been to be a fully decentralized protocol, involving governance token holders in key decisions. V2 allows for the full realization of this vision with the introduction of a DAO governance model. Holders of esLBR, Lybra’s governance token, will now have voting power to govern the protocol’s direction. By holding esLBR, users can steer the Lybra community, treasury, and protocol’s course while modifying its parameters. Users can utilize esLBR to vote on matters related to any LST pool, encompassing topics such as the acceptance of a specific LST asset, the mint limit of the chosen LST vault, and the emissions allocated to each LST. The voting power of a user is directly proportional to the quantity of esLBR they hold and the duration for which it is locked. Even those who do not possess esLBR can participate in the voting process using their LBR holdings. The protocol seamlessly converts their LBR into esLBR, empowering them with the corresponding voting power.

So, with an understanding of the pools and vaults mechanisms and the new governance model in place, we can now explain how this can deliver the interplay of votes and incentives that we are calling the Lybra Wars…

So, as discussed earlier in the article, one power that esLBR governance token holders will have in the new DAO model is that they will be able to vote on what share of total esLBR emissions get directed to which pools. But importantly, the protocol will allow for a brand new bribing mechanism. This will allow individual LST pools to incentivize esLBR holders to cast their votes in the pool’s favor by providing token rewards. The incentives that holders receive align with the amount of voting power they pledged in support. An increase in esLBR votes for a pool enhances its weight within the system. As a result, the esLBR emission to this pool escalates, attracting more deposits.

Whilst the word “bribing” may sound nefarious, it is in fact a legitimate and tried and tested mechanism used by many protocols to further expand the decentralization of decision-making by involving additional third-parties. It is also a new way for esLBR token holders to generate income and so further incentivizes active participation in the new DAO model.

This is how the Lybra Wars will unfold! Different LST pools will be able to compete for esLBR emissions by bribing esLBR token holders to direct them towards their pool, creating a thriving new ecosystem of incentives and rewards for both the governance token holders and the LST pools.

So, the Lybra Wars will provide a win-win situation for both governance token holders and individual LST pools, whilst expanding the decentralization of decision-making power. All in all, it will provide an exciting and rewarding way to drive engagement from multiple stakeholders in using the platform and deliver further incentives for participating in governance decisions.