In the midst of the ongoing bear market, which has been in session for the better half of the past year, the decentralized finance (DeFi) market has struggled mightily to maintain its former momentum. To this point, the volatility pervading the digital asset sector has caused investors to flee toward more “stable” investment avenues. Therefore, in order for the DeFi market to make a comeback, it needs to win back the trust of its users, something which can be achieved by focusing on aspects such as a committed focus on rewarding its users more.
To elaborate, we can see that one of the main advantages of DeFi is its ability to provide users with high yields on their investments. However, these yields can often be reliant on the existing market conditions. For example, during a bear market, yields tend to become negative, causing people to lose money rather than gain it. This creates a disincentive for them to continue employing DeFi protocols, as they are not being rewarded for their participation.
The DeFi rewards paradigm is evolving. Fast.
One of the biggest innovations to emerge from the crypto market is that of stablecoins, an asset class that has its value pegged to various fiat currencies. In this regard, a chunk of the innovation stemming from the DeFi sector is tied to these currencies. For example, protocols like Fluidity Money afford their clients the ability to wrap their stablecoins in return for substantial rewards.
To elaborate, deposited stablecoins are utilized for lending on monetary markets such as AAVE and Compound, and the resulting interest is accumulated in a reward pool. However, the rewards offered are dynamic and significantly depend on the blockchain’s variables. As an illustration, projects associated with higher transaction volumes and total value locked (TVL) tend to yield greater rewards.
Therefore, to help alleviate any such bottlenecks, a number of new solutions have emerged in recent months. For example, the Atlantean Embassy, an initiative launched by Fluidity, brings key partners together to increase market volume and drive utility-based incentives for its associates.
Here’s how the Atlantean Embassy could spur a market trend reversal
The Atlantean Embassy offers a five-tier reward framework, such that whenever a transaction is yield-bearing, it is split between sender and receiver on an 80-20% split, respectively. While this distribution setup may not sound like much at first glance, it serves as the foundation for the project, one that can help revive the DeFi market.
For instance, in the event of a user executing a trade, they receive 80% of the yield, and the remaining 20% is redirected to the pool. If there is no LP token to retrieve the 20% yield, it becomes fuel for bots. However, due to the Embassy members’ whitelisted treasuries, transactions occurring in Fluid’s token pool can be turned into potential revenue streams.
Additionally, members of the Atlantean Embassy have access to the “Subnautical Subsidy,” which is a passive income opportunity generated from the 20% yield gained from non-Embassy pools. If that wasn’t enough, the Atlantean Embassy fosters collaboration between different protocols, providing unique interactive community activities which offer a thrilling adventure to all participating protocols. The employment of fluid assets across member protocols during these initiatives results in added exclusive rewards.
Such measures cannot only help spark the revival of the DeFi market again but also allow investors to regain some of their lost confidence in this space. Not only that, it can also help bolster the long-term viability and growth of the industry, enabling more innovation in the future.
As people all over the world gravitate toward the use of decentralized technologies, the continued maturation of the DeFi market has showcased a major shift in the way investors think about finance and money. This is because DeFi offers an innovative economic framework that leverages the power of blockchain technology, offering a more accessible, transparent, and inclusive financial ecosystem for everyone.
By removing some of the roadblocks that exist today within this space — such as the lack of sustained, long-term rewards — it stands to reason that the DeFi sector will continue to grow and evolve, paving the way for a more democratized and decentralized financial system, one that makes high-quality monetary tools more affordable, efficient, and accessible for individuals irrespective of their location or economic status.