Defi Liquidity Incentive Program
The Open Network (TON) is a layer-one blockchain developed as an open internet for decentralized applications. Decentralized finance, also known as DeFi, is one of the more popular applications of blockchain technology. On June 6, 2023, TON announced the launch of an incentive program called the DeFi Liquidity Incentive Program (DLIP). Before this, TON had launched a similar program called the Open Challenge Liquidity Scheme, which had limitations like a lack of accountability and an unhealthy focus on Total Value Locked (TVL). However, DLIP is more than an improved version of the previous liquidity program. It is a more robust approach to liquidity provision to achieve sustainable growth for projects within the TON ecosystem organically.
The DeFi Liquidity Incentive Program is better than the previous scheme for the following reasons:
- Milestone-based Funding: Unlike the one-time funding practiced during the former scheme, this program makes funding available based on milestones reached. This approach helps the Ton Foundation keep the teams in check and ensures accountability while delivering user benefits.
- Qualification Criteria: The DLIP introduces comprehensive criteria for eligibility. This move raised the entry bar, making sure that only the best projects get access to the funding.
- TVL Focus Shift: Total Value Locked (TVL) was the focus of the previous scheme. In the DeFi Liquidity Incentive Program, the focus shifted to how projects reinvest the revenue generated into ecosystem growth, attracting new users.
Three popular DeFi projects in the TON ecosystem include STON.fi, DeDust, and Storm Trade.
Criteria
As one would expect, there are criteria that a project must meet to be eligible to benefit from the incentive program. They include:
- Business Plan: Any project that hopes to qualify for this incentive must provide a feasible plan showing how the team will use the funds to facilitate the project's growth. This plan should contain details, from building a thriving community to improving user experience.
- Potential Impact: The TON Foundation demands excellence. As a result, they expect projects that will make it into the DeFi liquidity incentive program to demonstrate their significance to the ecosystem.
- Innovation: Another criterion to consider when applying for the incentive is how innovative the project is. The application review team will prioritize projects that add innovation to the DeFi ecosystem on TON.
- Fund Tracking: The TON Foundation also prioritizes projects that show how to track their fund utilization for transparency and accountability.
Since these criteria became the standard for deciding which project gets funding from the TON Foundation, the ecosystem has experienced an increase in the daily users of various projects.
Funding Mechanism
The TON Foundation uses milestones to determine when to release additional funds. Projects get an initial fund after they qualify and the foundation accepts their plan. The TON Foundation sets milestones based on key performance indicators (KPIs) like daily, weekly, and monthly active users (DAUs, WAUs, and MAUs), volume of transactions, and TVL.
These milestones help projects focus on what is crucial for sustainable growth. The TON Foundation has also created healthy competition among these projects in a gamified system called The Open League (TOL).
The pilot season of TOL delivered good results, with an impressive record of 347% increase in Daily Active Wallets (DAWs), 252% increase in Weekly Active Wallets (WAWs), and 137% increase in Monthly Active Wallets (MAWs). Liquidity providers increased by 550%, daily trading volume increased by 628%, and daily traders increased by 710%. The launch of the DLIP marked the start of a new step towards enhanced user experiences and sustainable growth within the DeFi ecosystem. This development ensures that the reinvestment of funds to benefit the entire community becomes the norm.
Applications to the DeFi Liquidity Incentive Program opened on June 6, 2023, as evidence of the TON Foundation's determination to follow the TON roadmap. The TON Foundation has made the application process straightforward and fast. The business development team reviews submitted applications and informs applicants about their acceptance within a few days.