The d(3,3) Model
A dynamic economic model that adapts NAMI emissions to real activity and allows the protocol to expand across chains as one coordinated market.
Why does d(3,3) exist?
The classic ve(3,3) model was introduced to address a recurring challenge for DEXs: effectively coordinating liquidity provision incentives while aligning the organic growth of the protocol with the returns earned by long-term participants.
The model aligns liquidity providers, partner protocols, and voters within a shared and coordinated incentive structure.
Many ve(3,3) implementations have demonstrated that the model can effectively direct incentives toward productive liquidity that generate swap fees.
Over time, recurring structural limitations have emerged.
Inflation tends to become unsustainable. An architecture confined to a single blockchain ties the protocol's growth, liquidity, and resilience to the fate of that ecosystem. Operational complexity discourages users, particularly those looking for a low-maintenance approach.
Research and Analysis
To design a more efficient model, Nami analyzed several major ve(3,3) implementations, including Aerodrome, Velodrome, Kingdom DEXs, Thena, and Blackhole.
The research examined efficiency of incentive mechanisms, historical performance, emission structures, user behavior, strengths, and structural issues that emerged overtime.
In parallel, models and architectural choices that showed weaknesses were examined to identify recurring patterns, understand their causes, and determine which mechanisms could be improved.
This process formed the design of the d(3,3), preserving elements of the ve(3,3) model while addressing several observed inefficiencies: structural inflation, operational complexity, dependence on a single blockchain, inefficient incentive allocation, and value leakage toward external infrastructure.
d(3,3) emerged from this work as an evolution of ve(3,3), designed to improve the economic sustainability of the system and reduce operational complexity.
The model translates these design principles into a new economic and operational architecture, supported by a redesigned codebase and a multi-layer security review process combining independent audits, manual review, and iterative AI-assisted analysis.
From Fixed Emissions to a Dynamic Policy
Many ve(3,3) models use emission schedules defined in advance, making emissions predictable over time.
A fixed schedule assumes that incentive requirements can be estimated in advance, even though protocol activity and market conditions can change significantly across different market cycles.
Volume, liquidity, swap fees, and usage can rise or fall rapidly, while a fixed curve continues distributing tokens according to parameters established under conditions that no longer apply.
Over time, this misalignment can make emissions less efficient, unnecessarily increasing the number of tokens required to sustain the same level of economic activity and creating inflationary pressure that is not justified by protocol performance.
The d(3,3) model introduces a dynamic monetary policy designed to adapt emissions to the economic performance of the protocol.
Emissions become an economic management lever.
They can expand when activity and efficiency justify it, and decrease when the cost of incentives grows faster than the value they help generate.
Dynamic Emissions
In the d(3,3) model, the emission level is evaluted each epoch based on the economic state of the protocol.
The model combines a set of indicators describing different aspects of its economic performance.
Each metric represents a specific economic signal and is interpreted together with the others, preventing a single variation from independently influencing monetary policy.
The evaluation makes it possible to distinguish between growth supported by real usage and incentive efficiency, and conditions where an increase in emissions would not be economically justified.
The result determines the proposed adjustment for the following epoch, allowing emissions to progressively adapt to the evolution of the protocol.
Key Economic Signals
How much economic value is DEX activity generating?
Swap fees represent the value generated through the use of pools across the Nami ecosystem.
Persistent growth in swap fees can indicate higher economic activity and a greater ability for the system to support emissions.
Growth in swap fees does not automatically result in higher emissions. The model also checks whether the observed growth reflects a real increase in activity or is influenced by changes in the price of the assets that generated the fees.
Swap Fee Growth: Real vs Nominal
Since swap fees are expressed in USD, their value can increase because of rising asset prices without an equivalent increase in trading activity.
For this reason, d(3,3) compares nominal fee growth with a price-adjusted reading that accounts for movements in the assets that generated those fees.
If nominal growth is not confirmed by real growth, it cannot by itself justify an increase in emissions.
Emission Efficiency
How much emission is required to sustain that specific amount of value in swap fees?
Emission Efficiency measures the economic productivity of emissions by comparing the value of swap fees generated with the net economic cost of the newly issued NAMI during the epoch.
The total amount emitted does not necessarily correspond to actual dilution.
For calculation purposes, what matters is how many NAMI remain in circulation and how many are permanently removed through wveNAMI distributed via Dual Liquidity Rewards, new Infinite veNAMI positions, Rebase, and RBE buybacks.
NAMI permanently removed does not represent future dilution and is excluded from the cost of emissions.
The model also monitors the Burn Ratio, defined as the percentage of minted supply permanently removed during the epoch. This helps distinguish changes in how much of the Net Emission Cost comes from burn activity.
Price
How easily can the market absorb new token supply?
NAMI price is the third signal used to determine the level of emissions.
Unlike Swap Fees and Emission Efficiency, the Price Signal is intentionally asymmetric.
An increase in price cannot push emissions higher.
A significant decline can slow down or prevent an expansion and, under more severe conditions, contribute to triggering a defensive response.
Price can slow emissions down. It can never push emissions higher.
This asymmetry prevents the model from interpreting token appreciation as an automatic justification for introducing more supply.
How d(3,3) Responds
During each epoch, d(3,3) processes economic signals through a sequence of checks designed to distinguish structural changes from short-term noise, anomalies, or temporary movements.
The latest data is combined with observations from previous epochs, reducing the impact of isolated variations. Smaller movements may be treated as noise, while meaningful signals are evaluated together with the other economic indicators.
The model then evaluates whether the indicators tell an economically coherent story.
An improvement in Emission Efficiency, for example, is not sufficient on its own if swap fees are deteriorating. Similarly, nominal fee growth may not support an emission increase when it is primarily driven by appreciation in the underlying assets.
Additional checks monitor stress conditions such as sudden price deterioration, prolonged drawdowns, or situations where apparent efficiency growth is not supported by real economic activity.
The result identifies the economic regime applied to the epoch and determines the direction and applicable limits of the proposed emission adjustment.
The response requires favorable conditions to be confirmed over time, while significant deterioration can produce a faster response.
Emission Adjustment Rules
Emissions are allowed to expand gradually, while deteriorating conditions can trigger faster reductions.
An increase requires positive economic signals to remain confirmed for two consecutive epochs and is limited to a maximum of +10% per epoch.
Reductions do not require the same two-epoch confirmation period and can reach -25% in a single epoch.
Under Defense conditions, the model applies a reduction of at least 10%.
Standard Emission Adjustment
Standard Emission Adjustment
Each approved emission becomes the reference point for the following epoch, so adjustments compound progressively rather than being recalculated from the initial emission.
The standard policy operates within a reference emission envelope anchored to the initial emission baseline (E0).
Under the standard policy, emissions remain between E0 / 4 and 4 × E0.
Emission Envelope
Within the standard policy, confirmation requirements, asymmetric adjustment limits, and the reference emission envelope constrain rapid expansion during short-lived periods of growth and allow faster reductions when protocol conditions deteriorate.
Policy and Enforcement
d(3,3) defines Nami's monetary policy. Each epoch, the model produces an emission proposal that is validated before being applied through the protocol's emission engine.
Extraordinary policy is reserved for exceptional circumstances and allows adjustments beyond the standard adjustment rules and reference emission envelope.
All adjustments remain subject to hard limits enforced by the emission engine: emissions can decrease by up to 95% or increase by up to 100% relative to the previous epoch.
Every allocation, including extraordinary adjustments, is committed on-chain and passes through a publicly observable verification window before becoming executable.