Detailed strategy to grow TVL via new customer acquisition channel

Summary

  • The role of a DAO is to maximize value for native token holders
  • Long-term value accrual to native token holders is driven by growth in ecosystem TVL
  • Onboarding institutional DeFi investors into the dHedge ecosystem is the fastest way to grow ecosystem TVL
  • Creating a custom revenue-share opportunity will get institutional yield investors into the dHedge ecosystem
  • A strategic revenue-share partnership provides numerous benefits to dHedge
    • Onboard a whale customer that is highly sticky
    • Raise dHedge awareness via promotable partnership
    • Gain a brand ambassador with aligned incentives
    • No DHT dilution or cost to treasury

Motivation and scope

Creating value for native token holders should be the goal for every DAO.

This proposal outlines a specific strategy to grow ecosystem TVL: a custom revenue-share agreement to attract institutional capital.

Why growing TVL is important

Given dHedge’s business model, higher TVL results in higher revenue. TVL growth is also critical because of the benefits of scale. There are huge advantages to dHedge reaching critical scale: network effects (especially important given dHedge’s business model), brand recognition, talent attraction, partnership attraction, and profitability. Reaching critical scale is difficult, but the benefits far outweigh the costs.

Focusing on institutional customers to accelerate TVL

The fastest way to grow TVL is to onboard institutional capital to dHedge. A few large customers can materially increase TVL. Institutions are also usually much stickier than retail capital.

Compounding effect of institutional capital: positive signal to the market

The same way having blue-chip DeFi investors like Almeda, BlockTower, and Framework is important to dHedge’s success as a company, onboarding institutional customers to dHedge’s ecosystem would provide promotable content and positive signaling to the DeFi market.

Partnering with institutional yield investors represents a clear opportunity to drive ecosystem TVL growth.

The problem is that institutional investors are difficult to access: identifying the right institutions, getting access to them, and convincing them to trust dHedge is a difficult and lengthy process.

Partnership opportunity: Cinch Protocol

We are putting forward our platform, Cinch Protocol, as the intermediary to connect dHedge to the right institutional customer. Some of the funds we know are looking to deploy capital include BlockTower, Crypto Yield Fund, Outlet Finance, LedgerPrime, Stablecorp, and Strixleviathan to name a few.

Protocols and DAOs create custom revenue-based incentives through our platform. This provides incremental real-yield to the investor and acts as a powerful customer acquisition strategy for DAOs and protocols.

Partnering with institutional yield-seeking investors through Cinch Protocol addresses the three problem areas in acquiring institutional capital customers:

Identifying 🗸
Accessing 🗸
Establishing trust 🗸

Benefits & risks

Benefits to dHedge

  • Customer acquisition / go-to-market leverage

    • Partnership can be promoted by dHedge
    • Signals confidence in the underlying investment pool
    • Singlas confidence in the contract risk
  • The institutional partner becomes a brand ambassador with aligned incentives

    • Higher dHedge revenue leads to higher IRR for investor
      • Investor partner is incentivized to promote dHedge
  • Nothing from the treasury is sold/issued to onboard new partner(s)

    • No DHT dilution or sell pressure
  • Requires little to no active involvement from dHedge team

    • Cinch Protocol will manage every step of the process
    • Implementing a custom revenue-share is simple, secure, and can be accomplished by a non-technical team member

Benefits to institutional partner

  • Sustainable, “real yield” opportunity
  • “Alpha” in the form of additional yield from revenue-share
  • Incentive to promote dHedge ecosystem to drive faster repayment via revenue-share
  • Easier to trust DeFi project when introduced via intermediary (Cinch Protocol)

Benefits to Cinch

  • Further demonstrate the usefulness of our application

Risks

  • Unable to find an investor that is willing to partner with dHedge
  • Revenue generated by dHedge during revenue-share period is lower than anticipated

Next steps

Cinch Protocol is currently working with multiple DeFi protocols that offer yield products and that want to accelerate TVL growth via custom revenue-share incentives.

We spend all of our time building a network of institutional capital partners looking to deploy into real yield DeFi opportunities.

We provide DAOs and protocols with a brand new customer acquisition channel for large, sticky TVL. There is no cost to listing the revenue-share opportunity on Cinch Protocol.

We look forward to working with the dHedge team to see how we can help grow TVL.

Cheers,
MaxLS / Habs4lyfe