Current situation
The Dynamic Base Allocation (DBA) implemented in late 2025 is beneficial but suffers from specific structural issues that need addressing to scale with the growing number of applications.
- Incentive Misalignment: Low quality dApps have little incentive to increase quality to gain votes. Currently, dApps with minimal voting support receive a significant share of the DBA, making it more lucrative to launch multiple low-effort dApps than to pursue quality.
- Arbitrary Limits: The 7.5% upper limit creates perverse incentives. An app near that limit might benefit from reducing votes to secure a share of the DBA rather than pushing for more.
- In addition, the dApps adding funds to the DBA (i.e. dApps above the max allocation) now also receive their share of the DBA, provided they meet all the other requirements. For dApps above the current 20% max allocation today, this still means a net reduction in allocations received.
- Treasury Stagnation: Shifting 100% of the surplus to the DBA has neglected the treasury. With VeChain pushing for grants, a strong treasury is required.
- Outdated Max Cap: The 20% max allocation worked well when there were fewer dApps, but with over 50 listed today, it is too high. Lowering this cap increases the DBA amount available to the wider ecosystem.
Proposal
I propose a modification to the distribution logic that balances fairness with performance:
- Reduce Max Cap: Lower the maximum allocation per app from 20% to 17.5%.
- Flat Distribution with Merit Cap: The DBA Pool is distributed evenly among all eligible dApps, but with a strict limit: an appâs DBA reward cannot exceed 2x its Vote Allocation.
- Example: If a dApp receives 1,000 B3TR from votes, its max DBA reward is 2,000 B3TR.
- Example: If a dApp receives 10,000 B3TR from votes, it receives the full flat share (approx. 9,700 B3TR).
- Treasury Overflow: Any funds exceeding the 2x Merit Cap flow to the VBD Treasury.
- Remove the 7.5% upper limit and the max allocation threshold for eligibility in the DBA share.
Data Reference: To see how these calculations affect distribution based on Round 81 allocations, please view the Analysis Spreadsheet here.
Technical Implementation
To implement this logic, the DBAPool.sol (https://github.com/vechain/vebetterdao-contracts/blob/main/packages/contracts/contracts/DBAPool.sol) contract requires an upgrade.
- Current State: The
distributeDBARewardsfunction currently forces an equal split of the pot among provided App IDs. - Required Change: Update the function to accept an array of
amountsalongside theappIds. - Workflow: The specific reward amounts are still calculated off-chain using the 2x rule and passed directly to the contract during the distribution transaction.
Benefits
- Quality over Quantity: dApps must secure votes to unlock the DBA reward. The incentive to launch multiple low-quality dApps is severely diminished.
- Ecosystem Growth: Reducing the max allocation increases the total DBA distributed to the broader ecosystem, benefiting average to highly voted dApps.
- Treasury Funding: The treasury receives a consistent influx of B3TR from the overflow (approx. 150k B3TR per round based on current data), ensuring sustainability for future grants.
Risks and Counter-points
-
Risk: Vote manipulation risks increase.
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Counter-point: This is already a risk. It is trackable on-chain and requires capital. By linking DBA reward limits to votes, we ensure that obtaining rewards requires genuine stake.
-
Risk: Decreasing max allocation punishes top-performing dApps.
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Counter-point: The slight reduction allows for a healthier, more diverse ecosystem which nurtures the overall value of B3TR.
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Risk: Niche high-quality dApps with low vote counts will struggle.
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Counter-point: Grants are the appropriate avenue for these projects. The grant process allows for tighter quality control than the algorithmic DBA.
Added
- Merit Cap: A rule where an appâs DBA reward cannot exceed 2x its Vote Allocation.
- Treasury Overflow: A mechanism to route excess funds (from the Merit Cap) back to the VBD Treasury:
0xD5903BCc66e439c753e525F8AF2FeC7be2429593
Modified
- Max Allocation %: Reduced from 20% to 17.5%.
- Distribution Logic: Moves from a pure equal split to a âFlat Distribution with Merit Capâ system.
- Contract Upgrade:
DBAPool.solupdated to accept specific reward amounts rather than forcing an equal on-chain split.
Removed
- Previous Cap Mechanism: The limit to receive from the DBA at 7.5% and the threshold at the max allocation (20% today) removed.
All other DBA functionality regarding proof requirements, endorsement status and distribution remain as-is.

