> For the complete documentation index, see [llms.txt](https://docs.townsq.xyz/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.townsq.xyz/vetown-governance/primer-on-yield-assets-and-liquidity-incentive.md).

# Primer on Yield Assets & Liquidity Incentive

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.

### veTOWN to incentivize liquidity for leveraged yield experience

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.