Originally published: Oct 30, 2024

Demether is a DeFi protocol which blockchain foundations can deploy to attract and retain capital at zero cost. Demether offers a suite of yield bearing tokens that users can bridge over to partner blockchains to supplement TVL and receive an enhanced yield in return for their loyalty to the ecosystem.

Our mission is supported by some of the biggest names in the industry including SkyVision Capital, Formless Capital, Gandel Capital, M Capital & 15+ other partners. We are live on Morph and Movement and will be launching on Superposition, a DeFi-native L3 and LightLink soon.

The first product to be launched is a synthetic liquid restaking token, $demETH.

The Demether deep-dive series offers readers a close look at our progress and the principles that guide us as we head toward launch.

🌾 Demether Deep Dive: Enroute to Onboarding the Next Billion
🌾 Demether’s security practices

In DeFi, bootstrapping capital is only half the battle. Retaining it is where true sustainability lies.

The majority of blockchain ecosystems typically witness a rapid influx of capital during initial phases when the incentives are high. The real struggle begins when they have to hold onto the acquired liquidity, long-term. Liquidity tends to chase yield and frequently migrates between platforms, making capital retention a major challenge for many ecosystems.

Blockchain ecosystems often face three critical challenges when it comes to retaining capital. They are:

• Unsustainable rewards:
  Foundations offer sky high rewards to incentivise early adoption and motivate user onboarding. Such rewards are not sustainable in nature and must eventually taper. Active users typically dwindle with rewards.

• Liquidity migration:
  Users often chase yields, continuously moving capital between protocols which promise the highest income. This “liquidity hopping” (yes it’s a real term) leads to constant churn and unstable TVL, making it harder for foundations to build a stable on-chain economy.

• User disengagement:
  Without constant value (regular incentives) or engagement, users withdraw their assets, leaving the ecosystem underfunded and inactive. Not only this, the learning curve in DeFi is steep. Complex interfaces and technical processes often discourage new users, with significant drop-offs happening every step of the way.

This capital flight leads to instability in liquidity pools, foundation treasuries, and overall growth, making it hard for ecosystems to thrive. This is where Demether’s role in capital retention comes into action.

At Demether, we recognize that keeping liquidity within ecosystems requires more than just initial incentives — it needs long-term rewards and deep alignment between the users and the foundations.

Here’s how we approach capital retention with a focus on sustainability and loyalty:

• Loyalty-based rewards: Our core focus is to reward users for their long-term commitment to an ecosystem. Instead of relying on short-term airdrops or heavy initial incentives that quickly dry up, Demether constructs a stream of loyalty bonuses through its weekly rewards. These rewards help significantly amplify yields in proportion to the duration of users’ participation in a given ecosystem. The longer users stay, the greater their share of the rewards, driving users to hold onto their capital rather than seeking other farming/yield-generating opportunities.

• Stake for incentivised governance: Another powerful capital retention mechanism is Demether’s incentivised governance staking model. Users can stake their protocol tokens into vaults, voting to boost the rewards entering the ecosystem. This staking mechanism turns passive participation into active engagement, ensuring that capital remains within the ecosystem and users see ongoing benefits from their contributions.

• Aligning users and ecosystems: To retain capital, there must be alignment between the protocol and its users. Both blockchain foundations and users are incentivised to stake, creating alignment between the parties. While the foundation kick-starts the growth flywheel on a given chain, the community is incentivised to vote and take over collective control from the foundation to decide the quantum of rewards entering the ecosystem. This ensures that capital retention is driven through collective long-term goals.

By combining loyalty-based rewards, staking incentives, and community-driven governance, Demether creates a flywheel effect where:

• Users are motivated to stay engaged due to the continuous flow of rewards.

• Liquidity remains stable as users continue to stake and participate.

• Ecosystem growth is sustained as the community is regularly engaged in deciding the future.

As capital stays within the ecosystem, the protocol becomes more robust, further attracting participation and increasing overall value.

Retaining capital in DeFi is no easy task, but Demether’s innovative approach lays the foundations to sustainably bootstrapping a nascent ecosystem.

Stay tuned for more updates as we continue to reshape the future of DeFi and prepare for our mainnet launch!

Follow us on DemetherDeFi Official X or Telegram today!

Originally published: Oct 30, 2024

Demether is a DeFi protocol which blockchain foundations can deploy to attract and retain capital at zero cost. Demether offers a suite of yield bearing tokens that users can bridge over to partner blockchains to supplement TVL and receive an enhanced yield in return for their loyalty to the ecosystem.

Our mission is supported by some of the biggest names in the industry including SkyVision Capital, Formless Capital, Gandel Capital, M Capital & 15+ other partners. We are live on Morph and Movement and will be launching on Superposition, a DeFi-native L3 and LightLink soon.

The first product to be launched is a synthetic liquid restaking token, $demETH.

The Demether deep-dive series offers readers a close look at our progress and the principles that guide us as we head toward launch.

🌾 Demether Deep Dive: Enroute to Onboarding the Next Billion
🌾 Demether’s security practices

In DeFi, bootstrapping capital is only half the battle. Retaining it is where true sustainability lies.

The majority of blockchain ecosystems typically witness a rapid influx of capital during initial phases when the incentives are high. The real struggle begins when they have to hold onto the acquired liquidity, long-term. Liquidity tends to chase yield and frequently migrates between platforms, making capital retention a major challenge for many ecosystems.

Blockchain ecosystems often face three critical challenges when it comes to retaining capital. They are:

• Unsustainable rewards:
  Foundations offer sky high rewards to incentivise early adoption and motivate user onboarding. Such rewards are not sustainable in nature and must eventually taper. Active users typically dwindle with rewards.

• Liquidity migration:
  Users often chase yields, continuously moving capital between protocols which promise the highest income. This “liquidity hopping” (yes it’s a real term) leads to constant churn and unstable TVL, making it harder for foundations to build a stable on-chain economy.

• User disengagement:
  Without constant value (regular incentives) or engagement, users withdraw their assets, leaving the ecosystem underfunded and inactive. Not only this, the learning curve in DeFi is steep. Complex interfaces and technical processes often discourage new users, with significant drop-offs happening every step of the way.

This capital flight leads to instability in liquidity pools, foundation treasuries, and overall growth, making it hard for ecosystems to thrive. This is where Demether’s role in capital retention comes into action.

At Demether, we recognize that keeping liquidity within ecosystems requires more than just initial incentives — it needs long-term rewards and deep alignment between the users and the foundations.

Here’s how we approach capital retention with a focus on sustainability and loyalty:

• Loyalty-based rewards: Our core focus is to reward users for their long-term commitment to an ecosystem. Instead of relying on short-term airdrops or heavy initial incentives that quickly dry up, Demether constructs a stream of loyalty bonuses through its weekly rewards. These rewards help significantly amplify yields in proportion to the duration of users’ participation in a given ecosystem. The longer users stay, the greater their share of the rewards, driving users to hold onto their capital rather than seeking other farming/yield-generating opportunities.

• Stake for incentivised governance: Another powerful capital retention mechanism is Demether’s incentivised governance staking model. Users can stake their protocol tokens into vaults, voting to boost the rewards entering the ecosystem. This staking mechanism turns passive participation into active engagement, ensuring that capital remains within the ecosystem and users see ongoing benefits from their contributions.

• Aligning users and ecosystems: To retain capital, there must be alignment between the protocol and its users. Both blockchain foundations and users are incentivised to stake, creating alignment between the parties. While the foundation kick-starts the growth flywheel on a given chain, the community is incentivised to vote and take over collective control from the foundation to decide the quantum of rewards entering the ecosystem. This ensures that capital retention is driven through collective long-term goals.

By combining loyalty-based rewards, staking incentives, and community-driven governance, Demether creates a flywheel effect where:

• Users are motivated to stay engaged due to the continuous flow of rewards.

• Liquidity remains stable as users continue to stake and participate.

• Ecosystem growth is sustained as the community is regularly engaged in deciding the future.

As capital stays within the ecosystem, the protocol becomes more robust, further attracting participation and increasing overall value.

Retaining capital in DeFi is no easy task, but Demether’s innovative approach lays the foundations to sustainably bootstrapping a nascent ecosystem.

Stay tuned for more updates as we continue to reshape the future of DeFi and prepare for our mainnet launch!

Follow us on DemetherDeFi Official X or Telegram today!