I believe we will once again witness a yield war. If you have been long-term involved in DeFi, you would know that total value locked (TVL) is just a surface-level indicator until it truly becomes important. Because in a highly competitive, modular world of automated market makers (AMM), perpetual contracts, and lending protocols, the only thing that truly matters is who can control liquidity routing. Not who owns the protocol, not even who distributes the most rewards, but who can convince liquidity providers (LP) to deposit funds and ensure that TVL has stickiness.
This is where the bribery economy begins.
Previously informal vote buying (such as Curve wars, Convex, etc.) has now been professionalized into a comprehensive liquidity coordination market, equipped with order books, dashboards, incentive routing layers, and even gamified engagement mechanisms in some cases. This is becoming one of the most strategically important layers in the entire DeFi stack.
Change: From Emissions to Meta-Incentives
In 2021-2022, protocols typically guided liquidity through traditional methods:
- Deploy a pool
- Issue tokens
- Hope mercenary LPs would stay after yield drops
But this model is inherently flawed and passive. Every new protocol is competing against an invisible cost: the opportunity cost of existing capital flow.
I. Origins of Yield Wars: Rise of Curve and Voting Markets
The concept of yield wars began to take concrete shape during the Curve wars of 2021.
Curve Finance's Unique Design
Curve introduced vote-escrowed (ve) token economics, where users can lock $CRV (Curve's native token) for up to 4 years in exchange for veCRV, which brought:
- Boosted rewards for Curve pools
- Governance power to vote on weights (which pools receive emissions)
This created a meta-game around emissions:
- Protocols want liquidity on Curve.
- The only way is to attract votes supporting their pools.
- So they began bribing veCRV holders to vote for them.
Then Came Convex Finance
Convex abstracted veCRV locking and aggregated user voting power. It became the "behind-the-scenes operator of Curve" with massive influence over where $CRV emissions go. Projects began bribing Convex/veCRV holders through platforms like Votium.
Lesson 1: Who controls the weights controls the liquidity.
II. Meta-Incentives and Bribery Markets
Initial Bribery Economy
Initially manual efforts to influence emissions, evolved into a mature market where:
- Votium became an off-chain bribery platform for $CRV emissions.
- Platforms like Redacted Cartel, Warden, and Hidden Hand extended this mechanism to other protocols like Balancer, Frax, etc.
- Protocols are no longer just paying for emissions but strategically allocating incentives to optimize capital efficiency.
Expansion Beyond Curve
- Balancer adopted the vote-escrowed mechanism through $veBAL.
- Frax, @TokemakXYZ, and others integrated similar systems.
- Incentive routing platforms like Aura Finance and Llama Airforce further added complexity, turning emissions into a capital coordination game.
Lesson 2: Yields are no longer just about APY, but programmable meta-incentives.
III. How Yield Wars Unfold
Here's how protocols compete in this meta-game:
- Liquidity Aggregation: Aggregating influence through wrappers like Convex (e.g., @AuraFinance for Balancer).
- Bribery Campaigns: Budgeting for continuous vote purchases to attract desired emissions.
- Game Theory and Token Economics: Locking tokens to create long-term alignment (e.g., ve model).
- Community Incentives: Gamifying voting through NFTs, lotteries, or additional airdrops.
Today, protocols like @turtleclubhouse and @roycoprotocol guide liquidity: they don't blindly emit but auction incentives based on demand signals to LPs. Essentially: "You bring liquidity, we'll route incentives to the most important places."
This unlocks second-order effects: Protocols no longer need to forcibly attract liquidity but coordinate it.
Turtle Club
A little-known but extremely effective bribery market. Their pools are often embedded with partners, with TVL over $580 million, using dual-token emissions, weighted bribes, and a surprisingly sticky LP base. Their model emphasizes fair value redistribution, with emissions guided by voting and real-time capital velocity metrics. It's a smarter flywheel: LPs are rewarded based on capital efficiency, not just scale. Efficiency is finally being incentivized.
Royco
In one month, its TVL surged to $2.6 billion, with a month-on-month growth of an astonishing 267,000%. While partly "points-driven" capital, what's truly important is the infrastructure behind it:
- Royco is an order book for liquidity preferences.
- Protocols can't just emit rewards and hope for outcomes. They issue requests, and LPs decide to deploy capital, with coordination becoming a market.
The significance of this narrative goes beyond the yield game:
- These markets are becoming the meta-governance layer of DeFi.
- @HiddenHandFi has already routed over $35 million in bribes in major protocols like @VelodromeFi and @Balancer.
- Royco and Turtle Club are shaping the effectiveness of emissions.
Mechanisms of Liquidity Coordination Markets
Bribes as Market Signals
Projects like Turtle Club allow LPs to see where incentives are flowing, make decisions based on real-time metrics, and be rewarded based on capital efficiency rather than just capital scale.
Liquidity Requests (RfL) as Order Books
Projects like Royco allow protocols to list liquidity needs like orders in a market, with LPs filling these needs based on expected returns. This becomes a two-way coordination game, not a one-way bribe.
If you decide where liquidity flows, you influence who can survive in the next market cycle.
