Vesta Finance

Vesta Finance is a multi-collateral lending protocol on Arbitrum. Users will be able to deposit ETH, renBTC, and gOHM (more in the future) and mint VST (Vesta Stable) - a USD-pegged stablecoin.

Vesta Finance enables users to borrow against their crypto-assets without selling them.

VST is a collateralized stablecoin powered by Vesta Finance. Unlike under-collateralized stablecoins, there is more than $1 worth of assets for each unit of VST.

Users can participate in the Vesta Finance ecosystem, by using their borrowed or purchased VST to contribute to the stability pools.

Vesta Finance is a layer 2-first lending protocol that allows users to obtain maximum liquidity against their collateral without paying interest.

How It Works

- Stablecoin: users can deposit collateral to mint VST (Vesta Stable) - a USD-pegged stablecoin.

- Multi-collateral: users can deposit ETH/renBTC/gOHM to mint VST. More types of collateral will come soon.

- Low collateralization ratio: a user's collateral vault is required to be collateralized at a minimum collateralization ratio much lower than that from the competition (e.g. 110% for ETH, 110% for renBTC, and 175% for gOHM).

- Immediately redeemable: VST holders can redeem their VST stablecoins for the underlying collateral at any time. The redemption mechanism along with algorithmically adjusted fees guarantee a minimum stablecoin value of 1 USD.

- Community-oriented tokenomics: 50%+ of the governance token (VSTA) supply will be distributed to the community.

- Governable: parameters in the system, such as minting fees, liquidation fees, and liquidation incentives will be modifiable by governance.

- Natively layer 2: our deployment on Arbitrum will be a fraction of mainnet costs, without sacrificing decentralization as much as possible.

Vesta Finance is a collateralized debt platform. Users can lock up collateral and issue Vesta's stablecoin VST to their own Ethereum address, and subsequently transfer those tokens to any other Ethereum address. The individual collateralized debt positions are called vaults.

1. The stablecoin tokens are economically geared towards maintaining value of 1 VST = $1 USD, due to the following properties:

2. The system is designed to always be over-collateralized - the dollar value of the locked Ether exceeds the dollar value of the issued stablecoins.

3. The stablecoins are fully redeemable - users can always swap $x worth of VST for $x worth of the underlying collateral (minus fees), directly with the system.

The system algorithmically controls the generation of VST through a variable issuance fee.

After opening a vault with some collateral, users may issue ("borrow") tokens such that the collateralization ratio of their vault remains above 110%. A user with $1000 worth of underlying collateral in a vault can issue up to 909.09 VST.

The tokens are freely exchangeable - anyone with an Ethereum address can send or receive VST tokens, whether they have an open vault or not. The tokens are burned upon repayment of a vault's debt.

The Vesta system regularly updates the price of the collateral against USD via a decentralized data feed. When a vault falls below a minimum collateralization ratio (MCR) of 110%, it is considered under-collateralized, and is vulnerable to liquidation.

Governance Overview

Contrasting Liquity’s lack of governance, Vesta will implement governance to allow users to vote on the parameters within Vesta’s lending protocol. Users will be able to vote on parameters such as interest rates, minting fee rate, and new collateral types. Initially, we will make use of Snapshot to conduct all votings.

Current Execution Model

We are starting the governance model with a Genesis DAO similar to the BarnBridge model to prevent malicious actors with a substantial amount of tokens to damage the protocol. The DAO exists solely for executing the decision of the governance proposals.

We'll conduct voting on Snapshot.org. A certain number of tokens will be needed before initializing a vote, and a vote will only be passed if the quorum is reached. The specific number of votes needed for these items have not yet been determined but will be determined soon.

VSTA Tokenomics

Alongside decentralization through community, transparency has been a core tenet Vesta’s core contributors have built the protocol around. The following are the details regarding the distribution of VSTA between our community, contributors, and partners.

Tokenomics

VSTA total supply will be 100 million. Below please find the detailed breakdown of the token distribution.

Pre-Launch Community Distribution

- Treasury bootstrapping event/LBP, 8% of total supply: Tokens that are not distributed by the TBE will be returned to the treasury for distribution via other mechanisms. All tokens sold via this mechanism will be immediately liquid. More details about the TBE can be found here.

- First round of whitelisted community contributors, 2% of total supply: Early supporters of Vesta received the ability to acquire our governance tokens at a discount to the TBE event. Half of the tokens acquired via this method are immediately liquid and the other half are vested along the same schedule as our core contributors, strategic angels, and advisors. Tokens that weren’t sold via this mechanism will be kept in the treasury. More details about the whitelist can be found here.

Community Incentives

Initial farming program, 2% of total supply: To allow the VST stablecoin to reach critical mass quickly, 2% has been allocated to a one-month launch farming program across five pools: VSTA-ETH, a VST-FRAX Curve Factory pool, and our stability pools for our three launch collateral types.

Community treasury, 47% of total supply: The community treasury will be used to bolster the growth of Vesta through yield farming programs, partnerships, and incentivizing community contributions to the protocol.

Grants Council, 2% of total supply: There will soon be the creation of a grants council to incentivize community members to complete marketing and technical tasks. The council will involve key community members, our advisors, and core contributors. More details will be announced at a future date.

Core Contributors

- Current core contributors, 10% of total supply: The founding core team has been allocated this tranche of the token supply.

- Future core contributors, 11% of total supply: To avoid the centralization of supply amongst too few individuals, Vesta’s core contributors have earmarked just under half of the team tokens to future contributors to the protocol. Ensuring developers and builders have “skin in the game” is one key way to make a DeFi protocol tick. Coins allocated to new team members will be vested against the schedule outlined at the bottom of this section.

- Advisors, 4%: Advisors are key partners that proved their value to the Vesta core team early on by helping to ideate product strategy, make critical connections, and otherwise contribute significantly to the protocol despite not being full-time team members. Our advisors include 0xMaki, DCFGod, and the Lau Brothers (through Not3Lau Capital). Over one-third of our advisor tokens have not yet been allocated as we look to onboard others who have been and will continue to be extremely critical in the success of Vesta.

All tokens in this category are vested with a six-month cliff and two years linear vesting through smart contracts.

Partners and Angels

- Strategic Angels, 6% of total supply: In December 2021, Vesta completed an angel raise with a small group of investors who have, and will continue to add a tremendous amount of value through providing liquidity to, introductions for, and overall strategic direction to the protocol. You can read more about this fundraise here. The vesting schedule for the strategic round is the same as that of our contributors.

- OlympusDAO, 6% of total supply: Vesta has formed a close partnership with OlympusDAO as one of the first projects out of the Olympus Incubator program. OlympusDAO’s treasury allocation will be vested alongside our contributors and angels. Details of our partnership have been discussed in our Discord and OlympusDAO’s Discord.

- LQTY stakers, 2% of total supply: Our core contributors acknowledge the inspiration the Ethereum mainnet-based borrowing protocol Liquity had on the development of Vesta. The Liquity team has also been helpful and will continue to be helpful to our core contributors as we roll out the Vesta protocol. Details will be announced at a later date but VSTA will be allocated to LQTY users and vested over a long-term time horizon to best align our two communities.

Vesta has done an angel raise with a small group of investors who have, and will continue to add a tremendous amount of value through providing liquidity, introductions, and overall strategic direction of the protocol. The raise was conducted in December of 2021, selling 6% of total supply of our governance token VSTA. You can read more about this round here.

The vesting schedule of the strategic round is two-year monthly with a six-month cliff.

Plans for Tokenomics

The best protocols in DeFi have established long-term value alignment between the community, contributors, and the utility of the protocol itself. Vesta’s core contributors, alongside our advisors and angels, are currently brainstorming long-term staking and weighted governance utilities for VSTA inspired by models like Curve’s veCRV.

We value the community’s feedback on this matter and will be setting up a tokenomics discussion channel in Discord after the latest tokenomic details are circulated publicly.

Roadmap Overview

Full On-Chain Governance for Parameters

Vesta V1's governance is conducted via Snapshot and is carried out by a multi-sig manually, similar to Barnbridge’s Genesis DAO. In order to further decentralize the protocol, we are looking to integrate full on-chain governance for V2. Users will be able to vote for parameter changes, which the protocol will execute automatically on-chain. The Genesis DAO multi-sig would no longer be needed to execute governance decisions.

More Collateral Types

To support more collateral types, Vesta will host our own Chainlink node and our own oracle contract, allowing more assets to mint VST. We’ll have the flexibility to list not only base tokens, but also more novel tokens such as tokens with high liquidity on Arbitrum, Aave lending tokens, or other assets that make sense to leverage. Please note that parameters will likely differ based on the volatility and the liquidity of the assets.

Layer 2 Dominance

We are starting our deployment on Arbitrum. We plan to extend Vesta to other layer 2 solutions such as zkSync and Optimism as we progress. Eventually we will build Vesta into the biggest lending protocol on all layer 2 networks.

Multichain

We also want to extend the benefits of VST to non-EVM ecosystems such as Solana and NEAR Protocol so we also plan to implement Vesta in Rust natively to support those ecosystems. Allowing VST to freely flow between EVM-compatible blockchains and other ecosystems.

Vesta Finance is a layer 2-first lending protocol that allows users to obtain maximum liquidity against their collateral without paying interest.

• Stablecoin: users can deposit collateral to mint VST (Vesta Stable) - a USD-pegged stablecoin.
• Multi-collateral: users can deposit ETH/renBTC/gOHM to mint VST. More types of collateral will come soon.
• Low collateralization ratio: a user's collateral vault is required to be collateralized at a minimum collateralization ratio much lower than that from the competition (e.g. 110% for ETH, 110% for renBTC, and 175% for gOHM).
• Immediately redeemable: VST holders can redeem their VST stablecoins for the underlying collateral at any time. The redemption mechanism along with algorithmically adjusted fees guarantee a minimum stablecoin value of 1 USD.
• Community-oriented tokenomics: 50%+ of the governance token (VSTA) supply will be distributed to the community.
• Governable: parameters in the system, such as minting fees, liquidation fees, and liquidation incentives will be modifiable by governance.
• Natively layer 2: our deployment on Arbitrum will be a fraction of mainnet costs, without sacrificing decentralization as much as possible.

Vesta Finance is a collateralized debt platform. Users can lock up collateral and issue

Vesta's stablecoin VST to their own Ethereum address, and subsequently transfer those

tokens to any other Ethereum address. The individual collateralized debt positions are

called vaults.

The stablecoin tokens are economically geared towards maintaining value of 1 VST = $1

USD, due to the following properties:

1. The system is designed to always be over-collateralized - the dollar value of the locked Ether exceeds the dollar value of the issued stablecoins.
2. The stablecoins are fully redeemable - users can always swap $x worth of VST for $x worth of the underlying collateral (minus fees), directly with the system.
3. The system algorithmically controls the generation of VST through a variableissuance fee.

After opening a vault with some collateral, users may issue ("borrow") tokens such that the collateralization ratio of their vault remains above 110%. A user with $1000 worth of underlying collateral in a vault can issue up to 909.09 VST.

The tokens are freely exchangeable - anyone with an Ethereum address can send or receive VST tokens, whether they have an open vault or not. The tokens are burned

upon repayment of a vault's debt.

The Vesta system regularly updates the price of the collateral against USD via a decentralized data feed. When a vault falls below a minimum collateralization ratio (MCR) of 110%, it is considered under-collateralized, and is vulnerable to liquidation.