What is the best way to retain capital?

All successful DeFi projects must accomplish two things -first, they must attract capital, and then they must retain that capital. With $500 Total Value Locked (TVL), Badger DAO has attracted capital. The next major step for our community is a discussion of how best to retain TVL locked and ensure that long-term capital is rewarded.

The current Ethereum economy and the cost of transactions favors large asset holders against small investors. For example, a small investor might have to spend $45 to move and stake $500. On the other hand, a whale will spend the same $45 to move and stake $20,000. The whale only needs marginally better returns to cover the switching costs, while the small investor needs very large returns. These economics makes protocol switching very expensive for small investors and very cheap for large investors.

While whales always have a big incentive to move, small investors have a strong incentive to stay with the protocol. The cost of entering and exiting the position means that significant capital appreciation must occur within the protocol to make the investment worthwhile.

Many of the current debates in our community reflect this tension. Whales are under constant pressure to switch protocols to pursue the optimal ROI, while small holders are under constant pressure to stay with the protocol until ROI surpasses both entry and exit costs.

Whales push for a Badger emission increase to the liquidity pools to match the APY of competing protocols. At the same time, smaller stake holders prefer that the capital is re-invested in the Badger pools. Essentially whales are driven by APY, while the price of the asset drives smaller investors.

To be successful as a community we need to recognize that this tension exists, and discuss how our long-term economic structure rewards both types of stakeholders.

Our current system of determining staking rewards based on time-locked in the protocol is a great first step. Generous Badger emissions support both large and small investors. Badger DAO currently does the best job of ANY DeFi protocol of attracting and rewarding investors of all sizes

We should have a longer discussion of how our long-term economics and incentives are designed to attract and retain capital.

I would be interested to hear what people think about this problem, and what potential compromises we can create that ensure maximum community success, wealth creation, and badger dominance.

Semper Badger!


I have been mulling this exact concept. Safe zones of investment for the crypto space. I posted it here but it was flagged as spam. I also didn’t realize I posted it on the intro to general discussion, so a proper lack of discretion on my part.

I really didn’t mean to sound self-promoting or advertising myself. I don’t gain anything from the concept, it’s a concept.

The idea is a gentlemen’s bank. Transparent crypto banks for the new age of finance. Equity reserves that allow anyone to own a portion of a vault via tokenization of the reserves. Integrating a DAO structure to make purely ‘public’ reserves would be ideal of course. This same idea can be abstracted for private fund management as well.

If you add NFT’s in the mix, now you have the potential for composite baskets of tokenized assets.

Hello, everyone!

As I was exploring this really cool forum earler I couldnt help but notice the small but really nice details. And now an hour later I see this submission. There is one really nice project working to address this problem partially which has simmilar features to this forum.

I dont want to state any names without permission so I will mention couple things about the project for now. They aim to reward unique blockchain users after a short video-KYC solution called ‘‘verification parties’’ . They are trying to teach how to earn ownership and how to respect it all while using rpg elements in their interface.

I would like to think there is a solution to this. I, myself, am really interested in this topic on ‘‘how to / why to’’ separate/combine average joe`s interesets with those of the whales so both benefit.

A tough one, for sure.(: