Factor Scale is an innovative and essential component of the Factor ecosystem, designed to optimize the allocation of rewards and boost the performance of Factor vaults. By taking into account multiple factors, such as the total value locked (TVL), performance metrics, and community governance, Factor Scale ensures a fair and efficient distribution of rewards
The Factor Scale is designed to optimize the performance of Factor vaults by allocating reward boosts based on each vault's scale weight. This scale weight is determined by a combination of factors such as TVL, performance metrics, and community governance voting results. Each week, a predetermined amount of boost rewards is emitted, and the allocation is influenced by veFCTR (staked FCTR) holders who vote for their preferred vaults. The voting process results in higher scale weights for more popular and high-performing vaults, leading to larger reward boosts for those vaults.
veFCTR holders participate in a weighted voting process that takes place weekly to determine the distribution of boost rewards across the vaults. Users can allocate their votes to multiple vaults by specifying the percentage of their votes they want to assign to each vault (e.g., 50% of their votes to vault X and 50% to vault Y).
The on-chain snapshot of the votes is taken every Friday at 12pm UTC. Increasing a vault's scale weight by voting for it results in more reward boosts being allocated to that vault.
To maintain fairness and discourage low-quality vaults from receiving rewards, a minimum vote threshold is implemented. Vaults must surpass this threshold to be eligible for receiving boost rewards. This encourages users to carefully evaluate their choices and maintain the overall quality of the ecosystem.
The Factor Scale system uses a holistic approach to calculate each vault's eligibility for reward boosts, taking into account the following components: