Crypto Vaults — How to Grow TVL

This is Part Thirteen in the AlphaGrowth series breaking down the problems every blockchain project has and needs to solve to grow and scale. New to the series? Start here.

After your token project has its first public sale, you and your team are officially rolling up your sleeves and rolling out your DeFi operations. These include your launch mechanisms, first DEX partnerships and possibly airdrops (though they’re not a strategy we typically recommend anymore to Alpha Growth clients). It’s time to attract more liquidity to your project to keep it healthy.

Why? Continually creating and increasing token optionality to stabilize growth requires a new product iterations and constant expansion. As you pursue token optionality for your project, you will soon run into the next problem every blockchain project faces you can’t grow the team fast enough, and after launch it is incredibly tough for most teams to keep up the pace.

A couple other ways to increase TVL: marketing, investment, growing community, increasing lock up time, distributing rewards. All of which are expensive endeavors.

Alternatively you can partner with embedded defi projects, yield optimizers and vaults to attract more liquidity and revenue generating opportunities.

Vaults. The Cause and Solution to all projects Liquidity problems.

Vaults are a key part of the financial mechanics and games that you can start to utilize and push to sustain token price.

The challenge is finding the right ones and getting your token or game listed on them.

Unlike traditional finance, decentralized finance has many, many different options for liquidity. And that’s exciting. But it makes DeFi a more difficult, riskier space to navigate.

In TradeFi, you have limited options, but very deep pools of liquidity. In DeFi, you have smaller pools of liquidity, but many more options and a more diversified landscape. The upshot? DeFi is a harder game. If you’re going to play it, you and your team will need to spend more time on it. Navigating and managing your DeFi operations will become a core focus for your team. Once you have the basics covered, it’s vault time.

As DeFi continues to grow, we’re seeing many different plays on vaults. But while they differ in some ways, they are all essentially providing liquidity as a service. These are projects like FEI, Ribbon Finance, Visor Finance, Ichi and Tokemak.

For a post-launch blockchain project, solid business development needs to become a DeFi operations play focused on getting into vaults. Once you’re in, the vaults help more and more people discover your token and, in turn, stabilize your token price. We’ve seen this happen before. Take, Curve. At one point, simply having a presence on Curve was a massive growth mechanic for stablecoins. Similarly, liquidity as a service creates a massive growth mechanic for exposure and distribution of your project’s token.

When you start out, in the vast majority of cases, your token price is going to be low. So the best option is to begin layering on additional services like vaults that increase and extend liquidity.

This will start to drive up the demand of your token price up. As the price moves up into the right, you will eventually achieve a token price you like. When this happens, it’s time to lock in liquidity and offer liquidity as a service. When you get locked in, you’ll deepen the pools and you’ll start to lessen volatility.

In order to make this happen, your team will need to approach vaults and liquidity-as-a-service providers individually and build partnerships as part of your overall strategy. We advise and can make introductions to top liquidity-as-a-service providers for clients all the time.

An added benefit of Vaults and Yield Optimizers is that they are amazing discovery mechanisms. Many projects I Aped into were found from reviewing projects on Reaper Farm.

Establishing your strategy for locking your token’s liquidity into vaults will be your blockchain project’s big step towards successful treasury management. Properly managing your treasury protects your token, which protects your community and leads to a successful project.

If you’re interested in learning about more growth strategies for your project, we encourage you to connect on Twitter @bryancolligan. Join our Telegram for members-only alpha on projects we’re watching and DYOR resources for creating growth, credibility and engagement for your project.