How to Bet on Utility: Why Should Users Hold [Insert Your Crypto]?

Everything everywhere all at once

One of our earliest success stories is with the Aurora ecosystem; the EVM built on top of the NEAR blockchain. In a matter of only a few months, AlphaGrowth brought over 30 new DeFi protocols into the ecosystem. There was only one problem: the Aurora token was given 30+ new Defi utilities within 6 weeks of launch. In this short time period of ecosystem growth, the token price went from 30 cents to 30 dollars. And then the music stopped, integrations slowed and then halted. Without rolling out new use cases, sales pressure jumped, and token fell hard.

What did we learn?

People want new things to do with the tokens they hold. They want new games to play. Imagine trying to convince someone to buy (and hold onto) chips at a casino that has no table games. They would quickly cash out and leave the casino. And in the case of Aurora, they did.

Putting this into action

A well thought out DeFi roadmap is what we call DeFi Operations (DeFi Ops). Depending on the goals of a particular protocol, an AlphaGrowth-led DeFi Ops Strategy may include sourcing the protocol grants and incentives, deploying onto new chains, increasing protocol revenue, diversifying and growing the treasury, bringing new assets and/or markets, expanding protocol reach through partnerships and integrations, deploying and deepening on-chain liquidity, and giving extensive utility to your token.

There are two opportunities to build a successful brand in crypto; product-market fit, and token-market fit. We are here to help you with the latter.

Getting Started

Right out of the gate, the goal should be to build deep liquidity. If you shy away from this goal, virtually any significant sell pressure will bleed your token dry. High FDV low float has become the meme that you do not want to be. The more liquidity pools you have, the less volatility you will experience. Reducing volatility will increase confidence.

Additionally, if you’re looking for more revenue and control of your token’s liquidity, your project can leverage and deploy its own Protocol Owned Liquidity (POL).

What if you don’t have ETH or Stables to build liquidity with?

Don’t worry, you aren’t alone. A majority of tokens are in the exact same boat.

Our solution? Build liquidity with our partner tokens.

Let’s say Uniswap and Compound both wish to increase their on-chain liquidity, but neither one of them has a significant supply of ETH or Stables. In a strategic liquidity partnership, they create a series of UNI <> COMP pools on various networks. Instead of giving away the fee revenue to Centralized Exchanges and Market Makers, Uniswap and Compound, as the Liquidity Providers (LPs), will earn the fee revenue as people trade across the pairs. Additionally, both UNI and COMP will be more accessible to more people, and their brands will get more exposure. It also gives each protocol a great excuse for a co-marketing event each time they deploy a new pool together.

If you need help building on-chain liquidity, we are here to introduce you to our extensive network of vetted liquidity partners.

Beyond Speculation

Ideally, your token needs real utility. Most tokens can only really be used to vote on proposals, held for speculation, or traded for something else. What else should be considered?

The people want yield. They want to earn.

Thankfully, there are several ways to give the people what they want.

Staking

Staking involves locking up tokens to secure and support network operations through economic security. Users earn rewards in exchange for locking up their tokens. Staking incentivizes security and stability of a network, and gives holders the opportunity to contribute and earn.

Yield

Yield platforms generate returns on tokens through various strategies like lending and staking. It gives holders an easy way to earn with their tokens. The more places you offer users yield, the more likely they are to continue holding.

The North Star of real token yield comes from sharing protocol revenue with token holders.

Voter Escrow Dexes

A veDEX enables users to lock up tokens for a time period in exchange for voting power that determines the emissions (inflation) of the DEX token. veDEXes incentivize long-term liquidity provision and active participation, aligning the interests of both traders and LPs.

With this flywheel, you can bribe veNFT holders to vote on your token’s liquidity pools to receive emissions, incentivizing people to buy and LP your token to farm the incentives.

Money Markets

Money Markets allow users to borrow and lend their tokens. This enables token holders to trustlessly earn interest through lending, and gives borrowers access to strategic liquidity. Listing your token as collateral unlocks a new echelon of utility and confidence for your token holders.

Perpetuals (Perps)

Perpetual contracts are a type of derivative similar to options and futures, however there is no expiration date. Traders can hold onto perps indefinitely, allowing them to long or short your token without actually having to own it.

Perps are attractive for traders that seek leverage or wish to hedge risk.

Structured Products and Indexes

Structured products offer pre-packaged investment strategies that offer users returns based on a specific risk profile. One example of a valuable structured product is a delta-neutral vault, which enables users to protect against volatility. Indexes allow holders to have exposure to your token without having to purchase and hold it outright. Indexes and structured products typically reduce risk through diversification.

Token Utility Roadmap

Creating a comprehensive token utility roadmap is essential for the sustained growth and adoption of your token and DeFi ecosystem. By strategically rolling out the utilities we discussed above, you’ll attract a diverse user base, enhance liquidity, and foster long-term engagement.

By thoughtfully planning and executing this roadmap, you can position your token as a versatile and valuable asset in DeFi.

Who is running DeFi Operations for your token?

If you need support or guidance to execute your Token Utility Roadmap, the AlphaGrowth team is at your disposal as the premier DeFi Operations Firm. Schedule a discovery call with us by emailing strategy@alphagrowth.io.