Original Author: arndxt, Crypto KOL
Original Translation: Felix, PANews
The earnings war may be staged again. If you have been in the DeFi field long enough, you will understand that total value locked (TVL) is just a vanity metric. Because in the modular world of competitive AMM, perpetual contracts, and lending protocols, what truly matters is who can control the flow of liquidity, not who owns the protocol, or even who offers the most rewards. Instead, it's about who can persuade liquidity providers (LP) to deposit funds and ensure TVL stability. This is the origin of the bribery economy.
What was once an informal vote-buying behavior (Curve Wars, Convex, etc.) has now been professionalized into a mature liquidity coordination market, equipped with order books, dashboards, incentive routing layers, and even gamified participation mechanisms in some cases.
Today, this is becoming the most strategically significant layer in the entire DeFi stack.
Change: From Issuance to Meta-Incentives
During 2021 to 2022, protocols guided liquidity in a traditional manner:
Deploy a pool
Issue tokens
Hope that profit-driven LPs would stay even after yield drops
But this model has a fundamental flaw: it is passive. Each new protocol is competing with an invisible cost: the opportunity cost of existing capital flow.
I. Origin of Earnings War: Curve and the Rise of Voting Markets
The concept of earnings war began with the Curve Wars in 2021 and gradually took shape.
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 gives users the following advantages:
Boost rewards for Curve pools
Governance rights with voting weight (which pools receive earnings)
This created a meta-game around earnings:
Protocols want liquidity on Curve
The only way to get liquidity is to attract votes to their pools
So they began bribing veCRV holders to vote in support
Thus, Convex Finance was born (a platform focused on enhancing Curve protocol earnings):
Lesson 1: Whoever controls voting weight controls liquidity.
II. Meta-Incentives and Bribery Markets
First Bribery Economy
Initially just manual operations to influence issuance, it gradually evolved into a mature market where:
Votium became an off-chain bribery platform for CRV issuance.
The emergence of Redacted Cartel, Warden, and Hidden Hand extended this model to other protocols like Balancer and Frax.
Protocols no longer just pay issuance fees but strategically allocate incentives to optimize capital efficiency.
Expansion Beyond Curve
Balancer adopted the vote-escrowed mechanism through veBAL
Frax, Tokemak, and other protocols integrated similar systems
Incentive routing platforms like Aura Finance and Llama Airforce further increased complexity, turning issuance into a capital coordination game
Lesson 2: Earnings are no longer about Annual Percentage Yield (APY) but about programmable meta-incentives.
III. How Earnings Wars Unfold
Here's how protocols compete in this game:
Liquidity aggregation: Aggregating influence through wrappers like Convex (e.g., Aura Finance for Balancer)
Bribery activities: Reserving budgets for ongoing vote-buying to attract issuance when needed
Game theory and token economics: Locking tokens to establish long-term alignment (e.g., ve model)
Community incentives: Gamifying voting through Non-Fungible Tokens, lotteries, or reward airdrops
Today, protocols like Turtle Club and Royco are guiding liquidity: no longer blindly issuing, but auctioning incentive mechanisms to LPs based on demand signals.
Essentially: "You bring liquidity, we'll guide incentive mechanisms where they're most needed."
This releases a second-order effect: Protocols no longer need to forcibly acquire liquidity but coordinate it.
Turtle Club
Turtle Club has quietly become one of the most effective bribery markets, yet rarely mentioned. Their pools are typically embedded in partnerships, with a total locked value (TVL) exceeding $580 million, using dual-token issuance, weighted bribes, and surprisingly sticky LP base.
Their model emphasizes fair value redistribution, meaning earnings distribution is determined by voting and real-time capital turnover rate.
This is a smarter flywheel: LPs' rewards are related to their capital's efficiency, not just capital size. This time, efficiency is incentivized.
Royco
Royco's monthly total value locked (TVL) surged over $2.6 billion, a quarter-on-quarter growth of 267,000%.
While some funds are "points-driven", the underlying infrastructure is crucial:
Royco is a liquidity preference order book.
Protocols can't just issue rewards and hope for capital inflow. They post requests, and LPs decide to invest, forming a market.
Here's why this narrative is more than just an earnings game:
These markets are becoming the meta-governance layer of DeFi.
Hidden Hand has accumulated over $35 million in bribes between major protocols like Velodrome and Balancer.
Royco and Turtle Club are shaping effective issuance schemes.
Mechanism of Liquidity Coordination Markets
1. Bribes as Market Signals
Projects like Turtle Club enable LPs to understand the flow of incentives, make decisions based on real-time metrics, and receive rewards based on capital efficiency rather than just capital size.
2. Liquidity Requests (RfL) as Order Books
Projects like Royco allow protocols to list liquidity needs, like placing orders in a market, with LPs executing these orders based on expected returns.
This becomes a two-way coordination game, not a one-sided bribe.
If you can decide the flow of liquidity, you can influence who survives in the next market cycle.
