Ether.Fi, a decentralized finance (DeFi) protocol, has proposed allocating a portion of its protocol revenues to buying back native ETHFI tokens and distributing them to stakers, according to a post on Ether.Fi’s community governance forum.
Ether.Fi allocates 5% of protocol revenue to purchase ETHFI and distribute it as rewards to ETHFI stakers “to strengthen the utility of ETHFI, strengthen the marketplace, and align user incentives with the growth of Ether.” .Fi ecosystem,” he said in a December 16 post.
The Ether.Fi team described the 5% revenue allocation as a “starting point” and noted that rewards will initially only be available to token holders who have staked ETHFI for at least one month.
According to the post, the proposal will be voted on by token holders and will be decided by the end of this week. Ether.Fi already uses protocol revenue to buy back tokens from ETHFI’s native liquidity pool.
Ether.fi Fees and Earnings. source: Dipilama
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Liquid Restaking Tokens
Ether.Fi, a liquidity re-staking protocol, is the fourth most popular DeFi protocol, with total value locked (TVL) of nearly $10 billion, according to DefiLlama.
Re-staking involves taking tokens that have already been staked (posted as collateral with validators in return for rewards) and using them to secure another protocol at the same time.
Liquid Re-Staking Tokens (LRT) represent tradable ownership of a pool of re-staking assets.
Since its launch in 2023, Ether.Fi has generated nearly $60 million in cumulative revenue through fees and other revenue sources, according to DefiLlama.
Total TVL in DeFi is approaching all-time highs in 2021, in part due to the popularity of re-staking and LRT protocols.
EigenLayer is the most popular re-staking protocol, accounting for approximately $18.5 billion in TVL. Ether.Fi competes with LRT protocols including Renzo and Kelp.
“The total (ETH) TVL of the top five LRTs currently stands at approximately 3.38 million ETH, worth approximately $12.5 billion,” Kairos Research said in a December note.
DeFi protocols are under increasing pressure to provide token holders with a share of protocol revenues, with projects including Ethena, Sky (formerly Maker), and Aave experimenting with value creation mechanisms for their native tokens.
On November 15, yielding stablecoin issuer Ethena agreed to share a portion of approximately $200 million in protocol revenue with token holders.
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