Primer on Yield Assets & Liquidity Incentive
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Curve introduced the vote escrow mechanism (ve) to power the incentive for stableswap liquidity of stablecoin pairs. The concept of ve can be applied more generally to enhance the liquidity experience and added yield where it is needed.
Typically, the following areas are identified where liquidity should be incentivized, as utilization in these cases is high:
Stablecoin liquidity
To become a medium of exchange, the issuer of a stablecoin is incentivized to enable as much liquidity for its stablecoin with other assets and media of exchange as possible.
Example: Curve stableswap's veCVE.
DEX Swap TVL
Asset issuers with DEX pairs for their assets need liquidity for their pairs (e.g. xxx/ETH) to optimize trading experience for their asset holders.
Example: Balancer BAL/ETH's veBAL.
Yield trading liquidity
Yield-bearing assets such as stETH, sUSDe want to incentivize their holders to lock in their yield-bearing assets with PT-YT yield trading.
Example: Pendle's vePENDLE for PT/YT pairs.
TownSquare has found ve to be the perfect fit for liquidity & yield enhancement while maintaining a decentralized governance model of its institution-backed yield infrastructure.
TownSquare's vote escrow implementation leverages the success of all these examples to power liquidity for:
Crosschain pools;
as well as added yield for
Institutional vaults.
In addition, the veTOWN will also dictate the governance of pool addition and vault addition as a governance utility for progressive protocol decentralization.
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