Core Formula
$$
\text{veDUST} = D\_{\text{locked}} \times \frac{t\_{\text{lock}}}{t\_{\text{max}}}
$$
Where:\
$$D\_{\text{locked}}$$ = amount of DUST locked\
$$t\_{\text{lock}}$$ = selected lock duration\
$$t\_{\text{max}}$$ = maximum possible lock (typically 1 year)
Voting power **decays linearly** over time:
$$
\text{veDUST}(t) = D\_{\text{locked}} \times \frac{t\_{\text{end}} - t}{t\_{\text{end}} - t\_{\text{start}}}
$$
At expiration $$(t = t\_{\text{end}})$$, veDUST reaches zero. Extending your lock increases $$t\_{\text{end}}$$ and restores voting power.\
**Permanent locks** grant full voting power indefinitely, without decay.
***
### veDUST as an NFT
Each veDUST position is minted as a **non-fungible token (NFT)**, representing a unique governance stake that you fully own.
The NFT contains:
Locked amount (`amount`)\ Unlock timestamp (`end`)\ Weighted start time (`effectiveStart`)\ Voting weight and reward receiver
NFTs are **fully transferable** — you can trade or sell your position at any time.\
This means you can exit early **without unlocking**, while keeping the entire system liquid and transparent.\
Neverland’s NFT architecture brings **flexibility** to a governance model that traditionally locks users in place.
***
### Early Unlocks & Fair Penalties
If you prefer to **unlock early**, you can. However, to keep things fair, Neverland applies a **proportional penalty** based on how much time remains on your lock. The earlier you withdraw, the higher the penalty — and all penalties are **burned**, reducing total supply and rewarding the rest of the community.
$$
P\_{\text{user}} = D\_{\text{locked}} \times \frac{R}{10{,}000} \times \frac{t\_{\text{end}} - t\_{\text{now}}}{t\_{\text{end}} - t\_{\text{effective}}}
$$
Where:
$$R$$ = maximum early-withdraw penalty (7,500 = 75%)\
$$t\_{\text{now}}$$ = current time\
$$t\_{\text{effective}}$$ = weighted average start\
$$t\_{\text{end}}$$ = unlock time
Penalties **decay linearly** from full at creation to zero at expiry — simple, transparent, and fair.
All penalized tokens are **burned**, benefiting long-term lockers through greater scarcity and value.
***
### Weighted Start
Whenever you **add more DUST**, **extend**, or **merge** locks, Neverland uses a weighted average start time to ensure fairness:
$$
t\_{\text{effective}} = \frac{D\_1 t\_1 + D\_2 t\_2}{D\_1 + D\_2}
$$
*Example:* You lock 100 DUST on Jan 1 and add 50 DUST on Mar 1 → $$t\_{\text{effective}}$$ ≈ Feb 3. Your prior commitment still counts — you don’t lose credit for time already served.
This prevents “refreshing” near expiry from reducing penalties.
#### Lifecycle Behavior
| Action | Weighted Start Behavior | Penalty Impact |
| Create Lock | Set to block.timestamp | Starts fresh penalty period |
| Increase Amount | Weighted average (old + new) | Moves forward slightly, fair adjustment |
| Extend Duration | Unchanged | Reduces penalty (longer commitment) |
| Merge Locks | Weighted average of both locks | Blends time served fairly |
| Permanent Lock | Ignored (no decay or penalty) | Fully committed state |
Governance & Rewards Flywheel
veDUST powers Neverland’s **self-balancing flywheel**, connecting commitment, influence, and rewards.
#### **Governance Power**
Active locks carry real weight. The longer you stay locked, the stronger your vote and your share of rewards. Extending your lock keeps your influence active and your rewards high.
#### **Revenue Distribution**
All protocol revenue — interest spreads and liquidation fees — flows through veDUST governance.
Holders decide how it’s allocated between governance rewards, LP incentives, and DUST buybacks and burns:
$$
\text{Revenue}*{\text{to veDUST}} = \alpha \times \text{Revenue}*{\text{total}}
$$
where $$\alpha \le 0.5$$
Each holder’s share is:
$$
\text{Reward}\_i =
\frac{\text{veDUST}*i}{\sum*{j=1}^{N}\text{veDUST}*j}
\times
\text{Revenue}*{\text{to veDUST}}
$$
Because veDUST decays over time, the share of rewards naturally tilts toward users who **stay locked and engaged**, linking yield directly to participation.
#### **Deflationary Reinforcement**
Penalties from early unlocks permanently **burn DUST**, shrinking total supply and amplifying value for long-term holders. Every early exit strengthens the system by concentrating both governance power and future rewards among those still committed.
#### **Adaptive APR Equilibrium**
The effective APR adjusts automatically to the total DUST locked:
$$
\text{APR}{\text{effective}} = \frac{\alpha \times \text{Revenue}{\text{Total}} \times 12}{D\_{\text{locked}}}
$$
Fewer lockers = higher APR → stronger incentive to lock again. This self-correcting cycle keeps rewards balanced and sustainable.
#### **Self-Balancing Dynamics**
The combination of linear governance decay, weighted-start fairness, and burn-based penalties creates a *living economy*:
$$
\text{Fewer Locks} \Rightarrow \text{Higher APR} \Rightarrow \text{More Incentive to Re-Lock}
$$
veDUST isn’t just a governance token — it’s the engine that keeps Neverland’s ecosystem **healthy, fair, and continuously in motion**.