Analysis of Four Strategies to Increase TVL in DeFi Applications

Increasing the total locked value ( TVL ) is a key goal for many Decentralized Finance ( DeFi ) projects. Here are four main strategies to enhance TVL:

1. Token Issuance Expectations

This is the most direct and cost-effective way. The project team does not need to invest a large amount of money upfront; they only need to provide users with the expectation of obtaining tokens in the future through point activities. This method can effectively attract the "haircut" user group in the primary market, who participate in the project early to obtain potential token airdrops.

For projects with unreleased tokens, this is a highly attractive marketing strategy. Through various airdrop activities and points rewards, users can be quickly attracted to participate and build a community, laying the foundation for future token issuance.

2. Cross-Project Collaboration

This approach mainly relies on the resources and channels of the project itself, and is essentially a form of resource exchange. By collaborating with other projects, it is possible to achieve asset interoperability and liquidity, thereby attracting more users.

For example, allowing users to use tokens from other projects as collateral or payment methods on the platform. This collaborative model can help projects quickly gain liquidity while also providing users with more options and convenience.

3. Yield Incentives

Liquidity mining is a typical yield incentive method. Project parties establish liquidity pools and attract users to contribute assets to the pool through transaction fee rewards. This mechanism can quickly increase TVL, but it requires careful design of the reward mechanism to avoid excessive inflation and related risks.

4. Create New Assets

Liquid staking and re-staking are typical ways to create new assets, which not only release the liquidity of staked assets but also attract incremental funds. For example, stETH( is a certificate for staking ETH ), a new type of financial instrument that improves the liquidity of staked assets while creating new investment opportunities.

However, this method also carries the risk of accumulation. If a certain link in the chain encounters a problem, it may affect the stability of the entire related ecosystem.

From the perspective of the project party, the priority of these four strategies can be ranked as follows: token issuance expectations, project collaboration, yield incentives, and creating new assets. However, in practice, the project party needs to flexibly adjust the strategy mix based on its own situation, market environment, and specific goals.

Each strategy has its advantages and potential risks. Project parties should carefully evaluate and choose the plan that best suits their development stage and goals. At the same time, these strategies are not mutually exclusive and can be flexibly combined according to needs to achieve optimal results.