Fundamentals/JunHao LEE

Valkyrie Protocol Report


Valkyrie is an activation protocol that helps other protocols launch effectively by creating social campaigns and offering social referral rewards for the campaigns built on the Terra blockchain. Users can participate in the campaigns and be exposed to new projects and be incentivized to experiment and also refer the campaigns to others. The protocol allows any user to design a ‘campaign’ with a specific target goal and disseminate pre-allocated rewards to users depending on their level of participation.

3 Key Highlights

  1. Valkyrie is an innovative referral protocol that distributes rewards designed to incentivize user participation and content sharing.
  2. A campaign is predefined by a budget, a goal, reward weights, and participation requirements, which allows the products to achieve a variety of goals, depending on their needs. The protocol provides rewards to campaign participants and referrers.
  3. The Valkyrie Token ($VKR) is required for a deposit fee when creating campaigns and increasing the limit on referral rewards, on top of its governance features.


Why is the protocol valuable?

Unlike typical referral programs, Valkyrie provides a robust methodology to encourage participation by granting rewards to not only participants in the campaign but also to those who induce further participation through content sharing i.e. referral rewards.

Valkyrie is also a fully customizable tool that allows users to define action-based campaigns the achieve their marketing goals. It constructs a sustainable ecosystem by matching incentives of user participation and content sharing.


Objective 1: Build a rewardable ecosystem in projects by aligning the reward structure of players in the field by utilizing referral codes, and providing VKR incentives.

Objective 2: Improve marketing and advertising efficiency for protocols

Objective 3: Deliver greater transparency and trust to users involved in campaigns


Systematic Risks & Constraints

  • Terra ecosystem is relatively small with limited protocols on the chain, with few projects developing within the space.
  • Campaign creators have to spend additional UST on $VKR tokens — as opposed to funding through their own native token. This represents an additional cost for protocols to utilize Valkyrie when they can distribute their own native tokens at no extra costs.
  • Lack of utility for $VKR tokens could be disincentive for campaign creators and participants alike to utilize the platform. Participants have no reason to stay and hold $VKR tokens apart from just collecting the token rewards.
  • Adverse selection of users resulting from the nature of business. This can lead to a misalignment in VKR holders, participating in partner protocols, which does not contribute positively to the growth of the ecosystem.

Potential Solution

  • The launch of Terra’s Columbus-5 main net and the enabling of IBC on Terra makes it interoperable with the Cosmos network. This will bring more projects and campaigns onto Terra, which can drive demand and use case for Valkyrie Protocol for campaigns to launch on the space.
  • Valkyrie could come up with more and better use case for their native token aside from as a means to collect even more participation and referral rewards.

Token High-Level Summary

Token Summary

$VKR is a native token of the Valkyrie Protocol.


  • Terra

Market Design

Design of the environment in which the tokens and users exist in

1. Thickness of Market

Valkyrie is quickly gaining popularity in the Terra ecosystem as it is relatively innovative and introduces a new concept of a “Share to Earn” social platform protocol on Terra. It has reached a TVL of 77.34M UST within the first week of launch. As of writing, campaigns are yet to be live.

Campaign Creator

A campaign creator is a user who utilizes the Valkyrie Protocol to achieve a specified goal as defined by a campaign with a participation reward pool, denominated in VKR. The campaign creator is able to freely adjust and confirm various campaign parameters before activation. Once finalized and live on the protocol, the campaign becomes visible to all protocol participants.

The following information below is required for the creation of a campaign.

  • Campaign Title
  • Campaign Page URL
  • Campaign Description
  • Parameter key
  • Participation Reward: The specific token that will be distributed as a reward
  • Referral Reward Scheme: Rewards received when a referral is made
  • Participation Deposit
  • Qualifier Contract

Campaign Participant

A campaign participant is a user who has performed some sort of action and therefore receives a reward that is specified in the campaign. As an action-based reward protocol, campaign participants are able to earn rewards by fulfilling the action requirements specified in the campaign. For example, this can be staking the governance token in the campaign to raise awareness of the platform. As a result, continuous campaign participation is encouraged through a continuous sharing and distribution of rewards.

Campaign Referrer

The Valkyrie Protocol allows campaign participants to earn rewards through referrals. The additional rewards given to successful referrals are unlimited. To prevent cases of abuse, the campaign creator can set minimum requirements that a wallet must have before being eligible for rewards.

2. Reduce Congestion

Valkyrie Protocol is built on the Terra Blockchain, which uses a Delegated PoS consensus — enabling batches of transactions to occur in seconds.

3. Safety

  • Valkyrie has been audited by Halborn
  • Valkyrie has a bug bounty program to reward whitehat hackers that discovers vulnerabilities on their platform.

4. Ease of Use

Currently, campaigns are yet to be launched on Valkyrie. User can instead trade $VKR tokens and stake the $VKR token to bootstrap liquidity for the protocol. This is similar to swapping tokens on a DEX and likewise, staking your tokens on a protocol.

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Mechanism Design

Rules of the game that people have to follow


1. Decision Making

$VKR token holders can vote on polls such as:

  • Modify Campaign Parameters
  • Modify Governance Parameters
  • Community Grants
  • Any Text Proposal

Additionally, campaign creators are able to apply for the Booster Program through Valkyrie governance. Valkyrie has a community grant program that provides support to campaign creators. If the vote passes, the relevant campaign budget will be augmented with the Booster Program rewards.

2. Implementation

There are no admin keys with privileged access to the smart contracts. Successful proposals passed on the DAO are implemented automatically by the submitted text proposals.

3. Resolution mechanisms

The Valkyrie Protocol has security measures in place to mitigate the risk of misbehaviour. For example, a campaign can require VKR to be “locked” as a mandatory criteria to make a wallet eligible for participating in the campaign. Security mechanisms like locking VKR can make campaign abusing economically inefficient and minimize bad behaviour.

Market Structure

1. Bargaining Protocol/Pricing Model 

Reward Structure

Currently, there is 3 layers of referral to the reward structure. There are 2 types of rewards through participation (direct) and content sharing (indirect). The first layer is the direct incentive from participating in the campaign. The next two layers are indirect rewards from referring other users to the campaigns.

For example, a campaign with a participation reward scheme of 100 token, and a referral reward scheme VKR [50,30] will result in the reward structure described below:

  • VKR[50,30] represents the second and third layer reward incentive respectively.

Since the current scheme is currently restricted to only three layers, any participation by users further down in the tree will not be considered when calculating Participant A’s rewards.

2. Community information

Valkyrie runs on the Terra blockchain and thus uses oracle feeders, which is a Terra account responsible for providing the price feed data. The oracle feeders are validators of the Terra blockchain, where every validator is required to submit a vote for the current prices of the asset.

Valkyrie also provides the on-chain data with regards to the performance of campaigns executed on Valkyrie. This will provide campaign creators with useful analytical data to manage the performance of their DApp activation.

3. Idiosyncratic Risks

Campaign creators run the risks of players in the ecosystem exploiting loopholes in a referral program. Although this can be mitigated by adjusting predefined parameters before qualifying for $VKR rewards, bots can still repetitively drain the rewards of the campaigns, leading to failure of the campaign’s goal to spread awareness of its protocol.


1. Voting Protocol

Users have to stake $VKR tokens on the protocol. For every staked $VKR, users are entitled to 1 vote in the governance process.

Any user can create a poll by paying an initial deposit of 100 $VKR tokens. The minimum quorum is 10% of all staked $VKR and the threshold for a successful proposal is 50%. If the poll fails to pass the minimum voting quorum or minimum threshold, the deposited $VKR is not refunded but distributed pro-rata to $VKR stakers. Note that $VKR utilized for voting will not be withdrawable until the end of the poll.

2. Allocation mechanism

Deposit Fee Rate

When a campaign creator wants to create a campaign, it needs to deposit a 1% fee on the total reward pool in order to do so. 50% of the fees generated is used to exchange VKR and reward governance stakers, while the other half of the $VKR token is burned.

Remove Pool Fee Rate

A 10% withdrawal fee is also incurred when a campaign creator wishes to withdraw from a campaign. Similar to the add to reward fee above, a half of the fees generated is used to exchange VKR and reward governance stakers, while the other half is burned as part of the burn mechanism’s schedule.

Referral Reward Cap

As a default, the total possible referral reward that a user can receive is limited to a predetermined cap. A user’s referral reward compensation is proportionally correlated to the amount of VKR staked. In order to increase their limit, a user can stake more VKR onto governance. The current total limit increase is 30% of the $VKR staked.

Referral Ratio

This refers to the minimum percentage of referral reward pool from the total reward pool in a campaign. The current minimum is 20% (this percentage and the floor minimum can be changed by governance).

Auto-Deactivate Period

If a campaign is inactive for over 1 month, it is automatically deactivated.

Token Design

Rules of the game that tokens have to follow

Token Policy

1. Monetary Policy

There is a maximum supply of a total of 1 billion $VKR tokens. The emission schedule of $VKR tokens are outlined as such:

2. Token Valuation 

A campaign reward pool must consist of at least 20% $VKR tokens as referral rewards, so a campaign creator must purchase $VKR on the market and deposit it alongside the participation rewards in their native token. Thus, the value accrual of $VKR is proportional to campaign creations and designed to linearly capture a portion of the protocol’s fees.

Financial Incentives

1. Platform Activities 

There are 4 main tabs on the Valkyrie Protocol.

  • Campaigns: Users can take part in campaigns and earn $VKR tokens depending on the requirements of the campaigns
  • Trade: Users trade $VKR tokens here
  • Stake: Users can stake their $VKR tokens to capture protocol revenue as well as increase their limit on referral rewards
  • Governance: Users can govern the protocol and submit polls and text proposals to enact changes in the protocol

2. Financial Returns

Campaign Participant

A campaign participant is a user who has performed some sort of action and therefore receives a reward that is specified in the campaign. For example, this can be staking the governance token in the campaign to raise awareness of the platform.

Campaign Referrer

Users can earn rewards in the ecosystem from referrals.

Liquidity Provider

VKR liquidity providers are those who provide liquidity to the VKR-UST Terraswap pool to facilitate liquidity of the $VKR token.

Staking Rewards

Users can also stake the $VKR tokens on the platform to capture a proportion of revenue earned from campaigns on Valkyrie Protocol

1. Token structure

The Valkyrie Token ($VKR) is a CW20 standard token.

2. Token distribution

Foundation: 100M (10%) tokens will be reserved for the Valkyrie foundation. The Valkyrie Foundation helps to support future campaigns and bootstrap initial liquidity.

Investors: 100M (10%) tokens are allocated to investors of Valkyrie, 2-year linear vesting schedule is applied.

Team: 100M (10%) tokens are allocated to the creators of Valkyrie, with a 6-month lockup period. Afterwards, a 4-year linear vesting schedule is applied.

LUNA staking airdrop: 50M (5%) tokens are airdropped to LUNA stakers on launch.

LUNA staking rewards: 50M (5%) tokens are linearly distributed to LUNA stakers over a period of 2 years.

Valkyrie LP staking rewards: 300M (30%) tokens are linearly distributed to the VKR-UST pair liquidity providers over a period of 4 years.

Valkyrie governance staking rewards: 100M (10%) tokens are linearly distributed to the governance stakers over a period of 4 years.

Community fund: 200M (20%) tokens will be reserved for the Valkyrie Community Fund.


Whilst Valkyrie Protocol is one of the first few protocols that launched with a concept of “Share to Earn”, its business model can definitely use an improvement before the launch of the token.

The largest risk for Valkyrie would be the lack of utility for $VKR tokens outside of acting as an incentive mechanism for campaign creators and participants. Firstly, this is considered as a real expenditure for partner protocols instead of nominal expenditure in its native token. Secondly, the nature of business adversely selects for a value extraction nature of users, looking to gain free tokens. This is unlikely to contribute to a real value growth to protocols who use Valkyrie. Lastly, the deflationary token structure, paired with the lack of value creation could see real risk in the long-run.

If Valkyrie can come up with more and better use case utility for $VKR tokens, then campaign creators would have stronger incentive to utilize the platform to promote their protocol. Participants would also have a reason to stay and hold $VKR tokens apart from just collecting the referral rewards.

While it was launched only recently, it has seen a lot of hype surrounding the protocol, with players in the Terra ecosystem excited for its first live campaign with Pylon — a loss-less investment platform cum launchpad for Terra. It will be worthwhile monitoring campaigns that launched on Valkyrie and compare the success of the campaign’s outreach against traditional ways to market a product to players in the Defi space.


JunHao LEE

Economics Design

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