Original Title: Liquidity Wars 3.0 where Bribes Become Markets

Original author: arndxt, cryptocurrency analyst

Original translation: Block unicorn

I believe we will witness the yield war once again. If you have been in the decentralized finance (DeFi) space long enough, you will know that Total Value Locked (TVL) is just a vanity metric, until it is not.

In a highly competitive, modular world of automated market makers (AMM), perpetual contracts, and lending protocols, what truly matters is who can control liquidity routing. It's not about who owns the protocol, or even who distributes the most rewards. It's about who can persuade liquidity providers (LP) to deposit and ensure that TVL is sticky. This is precisely the starting point of the bribery economy.

The previously informal ticket-buying behaviors (such as Curve wars, Convex, etc.) have now been professionalized and evolved into 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 within the entire DeFi stack.

Changes: From Issuance to Incentivization

In 2021-2022, the protocol guided liquidity through traditional means:

1. Deploy the capital pool

2. Issue Tokens

3. Hope that the profit-driven LP will still stay after the yield declines.

But this model is fundamentally flawed; it is passive. Every new protocol competes with an invisible cost: the opportunity cost of existing capital flows.

I. The Origins of the Yield War: The Rise of Curve and Voting Markets

The concept of yield wars began to take shape during the Curve wars in 2021.

The Unique Design of Curve Finance

Curve introduced a voting escrow (ve) tokenomics, allowing users to lock $CRV (Curve's native token) for a maximum of 4 years in exchange for veCRV, thereby obtaining:

· Enhanced rewards for Curve liquidity pools

· Governance rights to vote on weight (which liquidity pools can issue)

This creates a meta-game around the issuance:

· The protocol aims to gain liquidity on Curve.

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

· Therefore, they began to bribe veCRV holders to vote in their favor.

Then there is Convex Finance

· Convex abstracts the locking of veCRV and obtains aggregated voting power from users.

· It has become the "Kingmaker of Curve", having a significant influence on the distribution of $CRV.

· The project starts by bribing holders of Convex/veCRV through platforms like Votium.

Lesson 1: Whoever controls the weight controls the liquidity.

II. Yuan Incentives and Bribery Market

The First Bribery Economy

Initially, it was just a manual influence on the issuance volume, which later developed into a mature market, including:

· Votium has become an over-the-counter bribery platform for $CRV issuance.

· Redacted Cartel, Warden, and Hidden Hand emerge, expanding this to other protocols like Balancer and Frax.

· Agreements no longer just pay issuance costs; they also strategically allocate incentives to optimize capital efficiency.

Expansion Beyond Curve

· Balancer adopts a voting escrow mechanism through $veBAL.

· Frax, TokemakXYZ and others have integrated similar systems.

· Incentive routing platforms like Aura Finance and Llama Airforce have further increased complexity, turning issuance into a capital coordination game.

Lesson 2: Returns are no longer about Annual Percentage Yield (APY), but rather programmable meta-incentives.

III. Strategies of the Profit War

The following is the competitive approach of the agreement in this metaverse game:

· Liquidity aggregation: Aggregating influence through wrappers similar to Convex (such as AuraFinance of Balancer).

· Bribery Activities: Reserve a budget for ongoing voting bribery to attract the desired issuance.

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

· Community incentives: Gamified voting through NFTs, raffles, or additional airdrop.

Today, protocols like turtleclubhouse and roycoprotocol are guiding this liquidity: they do not issue blindly, but auction the incentive mechanisms to liquidity providers based on demand signals (LP).

Essentially: "You bring liquidity, and we will guide incentives to the most important places." This unlocks the secondary effect: the protocol no longer needs to forcibly acquire liquidity, but rather coordinates it.

Turtle Club

One of the lesser-known yet extremely effective bribery markets. Their funding pool is often embedded in partnerships, with a total locked value of (TVL) exceeding 580 million dollars, utilizing dual token issuance, weighted bribery, and surprisingly sticky liquidity providers (LP) as the foundation.

Their model emphasizes fair value redistribution, meaning that issuance is guided by voting and real-time capital velocity indicators. This is a smarter flywheel: LPs are rewarded based on the effectiveness of their capital rather than just its size. This time, efficiency is finally incentivized.

Royco

Within a month, its TVL surged to 2.6 billion USD, with a month-on-month growth of 267,000%.

Although some of them are capital driven by "points", the important thing is the infrastructure behind them:

· Royco is a liquidity-preferred order book.

Protocols cannot just provide rewards and hope. They issue requests, and then LPs decide to invest funds, ultimately coordinating into a market.

This narrative is not just the meaning of profit games:

These markets are becoming the meta-governance layer of DeFi.

· HiddenHandFi has sent over $35 million in bribes across major protocols such as VelodromeFi and Balancer.

· Royco and Turtle Club are now shaping the validity of the issuance.

Mechanism of Coordinated Liquidity Market

1. Bribery as a market signal

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

2. Liquidity Request (RfL) as Order Book

Projects like Royco allow protocols to list liquidity needs like orders in the market, with LPs filling them based on expected returns.

This has become a two-way coordination game rather than a one-way bribery.

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

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