# ve-Mechanism & Utility V2

### ve-Mechanism

<figure><img src="https://3038127767-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FHdS59PJdwI8kEK3vLZuH%2Fuploads%2Fzw2Vxb9tA6ui7KBEGUfc%2Fveextra%401x.png?alt=media&#x26;token=74a88f16-5a8a-4f17-898e-0b671f8fe5bc" alt=""><figcaption></figcaption></figure>

In Extra Finance, governance and utility are managed through two types of tokens: EXTRA and veEXTRA.

* **EXTRA** is an ERC-20 utility token used to reward liquidity providers through token emissions.
* **veEXTRA** is an ERC-20 governance token. It is obtained by locking (vote-escrowing) EXTRA tokens for a specified period.

When you lock EXTRA to receive veEXTRA, the amount of veEXTRA you receive depends on how long you choose to lock your EXTRA. The lock period (also known as vote-escrowed period, hence the ve prefix) can be up to 1 year (52 weeks), following the linear relationship shown below:

```
100 EXTRA locked for 52 weeks will become 100 veEXTRA

100 EXTRA locked for 13 weeks will become 25 veEXTRA
```

The longer the lock period, the more veEXTRA you get, which corresponds to a higher voting power and reward factor.&#x20;

{% hint style="info" %}
As time passes, the locked period shortens, leading to a gradual decay in the amount of veEXTRA. Here's why:

* When you first lock EXTRA, the amount of veEXTRA you get is directly proportional to the duration of the lock. For example, locking 100 EXTRA for 52 weeks (1 year) results in 100 veEXTRA.
* As the lock period decreases over time, the corresponding amount of veEXTRA diminishes. This reduction is linear. Continuing the example above, locking 100 EXTRA for 13 weeks (1/4 year) results in only 25 veEXTRA.
  {% endhint %}

### Governance

#### **Vote & Governance in the Community.**

`$veEXTRA`is the voting power in Extra Finance's on-chain governance process. Users could use it to initialize a proposal, or cast for/against community proposals.

`$veEXTRA` holders can participate in governance through Snapshot. By holding >1 `$veEXTRA`, holders can participate in voting. By holding >30,000 `$veEXTRA`, holders can initiate proposals.

#### Extra Finance Snapshot Space

{% embed url="<https://snapshot.org/#/extradao.eth>" %}

[Review the historical proposals.](https://extrafi.notion.site/3ce97097ee264661b2eb3b308882da3c?v=9eec99ec3b6544e1ae4b966b82f3d470)

### Utility

By holding `$veEXTRA`, users can unlock the following benefits and features:

#### **1. APR rewards, sourced from both protocol fees and `$EXTRA` token incentives.**

The protocol fee comprises various tokens collected into the treasury and is shared once per epoch. It is used to buy back `$EXTRA` tokens from the market and then distribute them to holders of `$veEXTRA` tokens.

A portion of the `$EXTRA` tokens allocated to the community will also be assigned to `$veEXTRA` token holders, subject to a specific emission plan.

At the end of each epoch, rewards will be collected for distribution.

#### **2. Unlock higher leverage for yield farming pools.**

#### **3. Gain access to lending pools with a high utilization rate.**

Lending pools may experience high demand and potential shortages when implementing leverage farming. However, holders of $veEXTRA will have the privilege to borrow from these pools.

#### **4. Priority to more coming features and benefits,** including:

* Advanced facilities including one-click position-rebalance tool.
* Automatic strategy vaults.

<table><thead><tr><th width="455">Utility &#x26; Governance</th><th>Minimum veEXTRA Required</th></tr></thead><tbody><tr><td>Higher Leverage for Yield Farming Pools</td><td>10,000 veEXTRA</td></tr><tr><td>Premium Borrow for High Utilization Lending Pools</td><td>10,000 veEXTRA</td></tr><tr><td>One-click Rebalance Feature</td><td>4,000 veEXTRA</td></tr><tr><td>Propose a Governance Proposal</td><td>30,000 veEXTRA</td></tr><tr><td>Voting Power in Governance</td><td>1 veEXTRA</td></tr></tbody></table>