veDUST Mechanics

veDUST is the vote-escrowed version of DUST, representing your commitment and influence in the Neverland ecosystem.

When you lock DUST, you mint veDUST — gaining voting power, governance rewards, and priority influence over how protocol revenue is used. The longer and larger the lock, the more powerful your vote.

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.

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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.

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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 (default 5,000 = 50%) $t_{\text{now}}$ = 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.

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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

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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.