The BANK token economic model of @LorenzoProtocol reflects the team's pursuit of long-termism. The total supply of 2.1 billion is a tribute to Bitcoin's supply cap of 21 million. The initial circulation only accounts for 20.25%, with the remaining portion gradually released over a 60-month unlocking period. The benefit of this design is to avoid the selling pressure caused by an excessive early supply, but it also means that the token's liquidity will be relatively limited in the early stages.
From the allocation ratio, 25% is used for BTC staking incentives and liquidity rewards, which are directly distributed to users. 25% goes to investors, 15% belongs to the core team, 13% is used for ecological development, and the remaining is spread across treasury, consulting, market making, marketing, and other aspects. This allocation is relatively balanced, without any party occupying an excessively large proportion.
It is particularly noteworthy that the team, investors, advisors, and treasury have not unlocked any tokens in the first year. This commitment is rare in the current cryptocurrency market environment, as many projects' teams and VCs begin to sell shortly after the TGE, leading to a continuous price decline. Lorenzo's 60-month linear unlocking means that even when releases begin, the selling pressure each month will be relatively smooth.
The governance mechanism of veBANK draws on Curve's veToken model. Users can obtain veBANK by locking BANK, with the amount of veBANK increasing with longer locking periods. veBANK holders can participate in key decisions of the protocol, including fee settings, product direction, incentive distribution, and more. The core logic of this mechanism is to give real long-term holders a greater voice.
The scope of governance covers various aspects of protocol operations, such as how much the minting and redemption fees of enzoBTC should be set at, how to allocate the management fees of USD1+ OTF, and how to adjust the monthly release amount of BANK tokens. These decisions directly affect the protocol's competitiveness and user experience. The veBANK mechanism ensures that these decisions are not made unilaterally by the team but are fully discussed and voted on by the community.
The profit-sharing mechanism is another important function of veBANK. A portion of the income generated by the protocol is distributed to locked users in proportion to their veBANK holdings. This design makes BANK not just a governance token but also has actual cash flow value. From an investment perspective, if the protocol's income continues to grow, the dividends received by veBANK holders will also increase.
The yLRZ reward mechanism is an innovative design used by Lorenzo to incentivize early users. Users can accumulate yLRZ points by participating in staking, providing liquidity, and engaging in OTF products. Each month, a certain amount of BANK is distributed based on the proportion of points. If a user does not claim rewards in a given month, that portion of BANK rolls over to the next month's reward pool. This design encourages users to actively participate in protocol activities.
From the perspective of community building, the contributor program launched by Lorenzo is a noteworthy attempt. This program issues various tasks through the Zealy platform, including writing articles, creating videos, participating in discussions, and submitting product feedback. Completing tasks can earn points and exclusive roles, and outstanding contributors can receive additional BANK rewards.
The Discord server has established a dedicated contributor channel, accessible only to members who have obtained the corresponding roles. This design ensures the quality of discussions while providing contributors with a sense of belonging and honor. From the perspective of community operation practice, this layered management approach is more likely to produce high-quality content and in-depth discussions than a completely open community.
From the data, Lorenzo's community scale already has a certain foundation, with over 200,000 Twitter followers and 57,000 Discord members. However, the actual activity and participation still require continuous operational investment. Many projects have good community data in the early stages, but as market enthusiasm declines, activity can significantly shrink. Whether Lorenzo can maintain the community's long-term vitality depends on its ability to continuously create value for users.
Binance launched the BANK trading pair on November 13, which is an important milestone for Lorenzo. As the largest exchange in the world, listing on Binance itself means that the project has passed strict scrutiny and also provides sufficient liquidity and a broad user base for BANK. The trading volume on the launch day reached $57.5 million, and the market reaction was relatively positive.
$BANK The application scenarios in governance are continuously expanding, such as the future introduction of a proposal staking mechanism. Submitting proposals requires locking a certain amount of BANK. If a proposal is rejected, the staked BANK will be forfeited. This mechanism can filter out low-quality or malicious proposals, making the governance process more efficient.
From the perspective of token empowerment, Lorenzo still has many areas to explore, such as whether BANK holders can enjoy discounts on protocol products or have priority access to beta testing of new products. Although these features may seem insignificant, they can significantly enhance the practical value of BANK when accumulated.
The sustainability of community incentives is an issue that all DeFi projects must face. The 25% supply allocated to staking incentives by Lorenzo seems substantial, but if calculated over five years, it amounts to only 5% of the total each year. As TVL grows, the incentives received per unit of capital will gradually decrease. This requires the protocol's product competitiveness to be strong enough and not rely solely on token incentives to attract users.
Participation in governance is also a challenge. Many DeFi protocols have low participation rates in governance voting, often only large holders and team members vote actively. Ordinary users, because of their small holdings, feel that their voting weight is negligible and thus refrain from participating. Whether Lorenzo can increase governance participation and enable more users to truly exercise their rights requires effort in mechanism design and community education.
#LorenzoProtocol has shown relatively mature thinking in tokenomics and governance design, taking into account both the strength of early incentives and the sustainability of long-term development. The veBANK mechanism provides substantial rights for long-term holders, while the community incentive program injects vitality into ecological construction. Whether these designs can achieve the expected results in practice still requires further market testing.@Lorenzo Protocol $BANK
