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Liquidity War 3.0: Bribery becomes the market

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Reprinted from chaincatcher

05/10/2025·15D

Author: arndxt Compiled : Block unicorn

I believe we will witness the war of gains again. If you've been in the Decentralized Finance (DeFi) space long enough, you'll know that total locked value (TVL) is just a vanity indicator until it's no longer.

In a highly competitive, modular world of automatic market makers (AMMs), perpetual contracts and lending agreements, the only thing that really matters is who can control liquidity routing. It’s not who owns the agreement, or even who gives out the most rewards.

It's who can convince liquidity providers (LPs) to deposit and ensure TVL is sticky.

This is exactly the starting point of the bribery economy .

Informal ticket buying behaviors in the past (Curve War, Convex, etc.) have now become a mature liquidity coordination market, equipped with order books, dashboards, incentive routing layers, and in some cases, even gamified participation mechanisms.

This is becoming one of the most strategically important layers in the entire DeFi stack.

Changes: From issuance to meta-incentives

In 2021-2022, the agreement guides liquidity through traditional means:

  1. Deploy the fund pool

  2. Issuing tokens

  3. LP, which is based on profit-oriented, will remain after the yield drops

But this model is fundamentally flawed, it is passive. Each new agreement is competing with an implicit cost: the opportunity cost of existing capital flows .

I. The Origin of the War of Revenue: Curve and the Rise of the Voting

Market

The concept of profit war begins to become concrete in the 2021 Curve war.

Curve Finance 's unique design

Curve introduces the economics of voting locking (ve) tokens, where users can lock $CRV (Curve's native token) for up to 4 years in exchange for veCRV, thus obtaining:

  • Curve Fund Pool Enhancement Rewards

  • Governance rights for voting to determine weights (which fund pools can be issued)

This creates a metagame around issuance:

  • The agreement wants to gain liquidity on Curve.

  • The only way to gain liquidity is to attract votes to their pool.

  • So they started bribing veCRV holders to vote for them.

Then there is Convex Finance

* Convex abstracts veCRV\'s lock-up position and obtains aggregate voting rights from users.

  • It became the "Curve's kingmaker" and had a huge influence on the flow of $CRV distribution.

  • The project began bribing Convex/veCRV holders through platforms such as Votium.

Lesson 1: Whoever controls weight will control liquidity.

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II. Meta-incentives and Bribery Market

The first bribery economy initially only manually affects issuance volume and later developed into a mature market , in which:

  • Votium became the off-market bribery platform for $CRV release.

  • Redacted Cartel , Warden and Hidden Hand appear to extend this to other protocols such as Balancer, Frax, etc.

  • Agreements no longer just pay for issuance fees, they are also strategically allocating incentives to optimize capital efficiency.

Extensions outside Curve

  • Balancer uses voting hosting mechanism through $veBAL.

  • Frax, TokemakXYZ, etc. integrate similar systems.

  • Incentive routing platforms such as Aura Finance and Llama Airforce further add complexity to turn issuance into a capital-coordinated game.

Lesson 2: Returns are no longer about annualized rate of return (APY), but programmable meta-incentives.

III. The way of fighting in profit wars

The following is how the agreement competes in this metagame:

  • Liquidity Aggregation : Aggregate influence through Convex-like encapsulators (such as Balancer's AuraFinance).

  • Bribery Activities : Budget reserved for ongoing voting bribery to attract the required issuance.

  • Game Theory and Token Economics : Locking the tokens to create long-term consistency (e.g., ve models).

  • Community Incentives : Gamified voting through NFT, raffle draw or additional airdrops.

Today, protocols like turtleclubhouse and roycoprotocol guide this liquidity: they are not issued blindly, but auction incentives to liquidity providers (LPs) based on demand signals.

Essentially: “You bring liquidity and we guide the incentives to where it matters most.”

This unlocks the secondary effect: the protocol no longer needs to force liquidity, but coordinates it.

Turtle Club

One of the lesser-known but extremely effective bribery markets . Their funding pools are typically embedded in partnerships with a total locked value (TVL) of over $580 million, using a dual token issuance, weighted bribery, and an unexpectedly sticky liquidity provider (LP) base.

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Their model emphasizes fair value redistribution, meaning that issuance is directed by voting and real-time capital speed indicators.

Here is a smarter flywheel: LPs are rewarded based on the effectiveness of their capital rather than just the scale. This time, efficiency was finally motivated.

Royco

In one month, its TVL surged to $2.6 billion, a month-on-month increase of 267,000%.

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While some of these are “points-driven” capital, what’s important is the infrastructure behind it:

  • Royco is the order book for liquidity preference.

  • Agreements cannot simply provide rewards and hopes. They issue requests, and then the LP decides to invest money, and ultimately coordinate to become a market.

This narrative is not only the meaning of the revenue game:

  • These markets are becoming the meta-government layer of DeFi .

  • HiddenHandFi has sent over $35 million in bribes in major agreements such as VelodromeFi and Balancer .

  • Royco and Turtle Club are now shaping the effectiveness of the distribution .

Mechanism for liquidity to coordinate markets

1. Bribery as a market signal

  • Projects like Turtle Club allow LPs to see where incentives flow, make decisions based on real-time metrics, and receive rewards based on capital efficiency rather than just capital size.

2. Liquidity Request (RfL) as Order Book

  • Projects like Royco allow agreements to list liquidity requirements like orders on the market, with LPs filling them based on expected returns.

  • This becomes a two-way coordination game, not a one-way bribery.

Finally, if you decide the direction of liquidity, you influence who can survive the next market cycle.

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