Originally published on: December 16, 2024
Ether.fi, a decentralized finance (DeFi) protocol, is shaking up the game by proposing a new initiative to reward its stakers. The protocol plans to allocate a percentage of its revenues to buy back its native token, ETHFI, and distribute it to stakers as a token of appreciation.
The proposal, outlined in Ether.fi’s community governance forum, aims to allocate 5% of protocol revenue for this purpose. The goal is to not only enhance the utility of ETHFI but also boost its market strength and align user incentives with the growth of the Ether.fi ecosystem.
The Ether.fi team views this 5% revenue allocation as a starting point and has set an initial requirement for stakers to have held their ETHFI tokens for at least one month to be eligible for rewards. A tokenholder vote will determine the fate of this proposal by the end of the week.
Ether.fi, currently the fourth most popular DeFi protocol with nearly $10 billion in total value locked (TVL), specializes in liquid restaking. This process involves using staked tokens to secure other protocols simultaneously, creating liquid restaking tokens (LRTs) that are tradeable assets.
Since its launch in 2023, Ether.Fi has generated close to $60 million in cumulative income from fees and other revenue sources. The DeFi industry overall is experiencing a surge in TVL, with restaking and LRT protocols like EigenLayer gaining traction.
With the competition heating up in the DeFi space, projects are under pressure to share protocol revenues with tokenholders. Ethena, Sky, and Aave are among the projects experimenting with mechanisms to distribute value to their native token holders.
As DeFi continues to evolve, Ether.fi’s innovative approach to rewarding its stakers through buybacks is a significant step towards engaging and incentivizing its community for mutual growth and success. Subscribe to the Finance Redefined newsletter for more insights and updates on the latest DeFi developments.
