1/ incentives drive behavior, and yield comes with risk.
In #DeFi, financial incentives drive market development, liquidity, and collateral.
This can lead to mercenary behavior, and unsustainably high returns.
here are five such DeFi incentives ⬇️
In #DeFi, financial incentives drive market development, liquidity, and collateral.
This can lead to mercenary behavior, and unsustainably high returns.
here are five such DeFi incentives ⬇️
2/ lock-ups
pay interest or a share of trading fees for immobilizing digital assets to serve as liquidity or collateral.
pay interest or a share of trading fees for immobilizing digital assets to serve as liquidity or collateral.
3/ liquidity mining
pays interest in the form of tokens issued by the service itself, typically governance tokens.
pays interest in the form of tokens issued by the service itself, typically governance tokens.
4/ yield farming
optimizes returns from liquidity mining and lock-up yields by moving funds among services in an automated way.
optimizes returns from liquidity mining and lock-up yields by moving funds among services in an automated way.
5/ liquidation fees
pay market makers a % of the value of under-collaterized loans that they successfully liquidate.
pay market makers a % of the value of under-collaterized loans that they successfully liquidate.
6/ airdrops
reward wallet addresses with tokens for using the protocol.
reward wallet addresses with tokens for using the protocol.
can you think of any other financial incentives in DeFi?
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