The “Active Yield Strategies” framework represents a paradigm shift from simple, passive staking to a dynamic, high-yield ecosystem. While simple staking secures the network, Active Yield Strategies are designed to put those staked assets to work, transforming them into a powerful engine for on-chain economic growth. This is achieved by channeling a portion of emission (20%) to incentivize users who deploy their staked assets in sophisticated DeFi strategies that directly increase EGLD’s utility, on-chain velocity, and market demand.
The cornerstone of this ecosystem is Liquid Staked EGLD (lsEGLD), a derivative token representing a user’s staked EGLD. It continuously accrues staking rewards while remaining liquid and usable across DeFi, serving as the primary collateral asset for all Active Yield Strategies.
To channel rewards effectively and offer users clear, specialized choices, the Growth Dividend fund will not reward individual users directly. Instead, it will supplement strategy rewards to a series of onchain Strategy DAOs which are selected and approved by the DAO management team.
Each Strategy DAO is a decentralized, autonomous entity with a singular, focused mandate to execute a specific, high-impact economic strategy. This creates a competitive marketplace of strategies where users can select their preferred risk and reward profile by depositing their lsEGLD (liquid staked eGLD) into the corresponding DAO to earn additional rewards. The selection of the preferred strategy can be executed in one click directly from all MultiversX wallets.
The flow of incentives is transparent and designed to be self-reinforcing:
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Network Issuance: The MultiversX protocol allocates 20% of its annual emission to the “Growth Dividend” smart contract.
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DAO Allocation: This smart contract distributes boosted rewards to the approved Strategy DAOs based on governance-approved metrics.
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User Participation: Users deposit their lsEGLD and other assets into the Strategy DAO based on their personal risk and reward profile. Or users make their own strategies which are approved by the DAO which oversees the economic activities. The participation does not require in-depth knowledge. Rather, it is accessible to anyone, akin to simply choosing a bonds vs. stocks balance in traditional investment funds.
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Reward Distribution: The Strategy DAO receives its allocation of rewards and distributes them proportionally to all users who have deposited lsEGLD and other assets into its vaults. For more advanced users, rewards can be distributed into their strategies.
b. Safeguarding the Ecosystem: Whitelisting and Security
To ensure that the rewards program supports only high-quality, secure protocols, a clear set of criteria must be met for any LST, DEX, Lending or other DeFi protocols to qualify for the boost. This directly addresses the need to ensure LSTs are in good hands.
Whitelist Criteria for Participating Protocols:
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Fully Open-Source: All code must be publicly available for review.
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Professionally Audited: Must have undergone and passed rigorous security audits from reputable firms.
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Secure Upgradability: All contract upgrades and privileged owner calls must be controlled by a Multi-Signature (MultiSig) wallet, preventing unilateral control by a single entity.
These criteria establish a high standard of security and decentralization, protecting users and the network.
c. The Core Principle: Boosting New Liquidity, Not Staking
Staked EGLD or LSTs act as a prerequisite—a key to unlock rewards on a separate, vital contribution. The boost is a reward calculated on the new, external capital (like USDC or wBTC) that a user brings into the MultiversX DeFi ecosystem or how he uses other capitals in DeFi and how many DeFi activities he does.
- Analogy: Think of your staked EGLD/LST as your membership card to an exclusive club. The card itself has its standard benefits (base staking rewards). The “boosted rewards,” however, are earned only when you use that membership to bring a valuable guest (your USDC/wBTC liquidity) to the party.
Example: If you have 1,000 EGLD staked and separately supply $10,000 USDC to an approved lending pool, you will receive boosted rewards calculated on the amount of EGLD equivalent to that $10,000. The boost is for the USDC, which is a critical component for a thriving DeFi ecosystem.
DeFi Playbook: 15 Strategies to Fuel eGLD’s Demand-Driven Growth
This document outlines 15 distinct DeFi strategies designed to increase the utility, demand, and locked value of eGLD. Each strategy is detailed with a simple hook, an expanded explanation of its mechanics and reward distribution, and the underlying economic principle that drives its value.
Core Strategies: Building the Foundation
1. New Capital Boost (“The Magnet”)
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The Hook: Hold lsEGLD to unlock boosted rewards on other assets you bring to the ecosystem, like $USDC or $wBTC.
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This strategy creates a powerful incentive for external capital to enter the ecosystem. By holding lsEGLD, you essentially gain a VIP pass that boosts the yield you earn on stablecoins or blue-chip assets supplied to approved lending protocols or AMMs. This turns lsEGLD into the foundational key for unlocking the network’s highest returns, tying its value directly to the total yield-generating opportunities available. To manage rewards, off-chain snapshots capture your lending or LP positions. The DAO then calculates boosts proportional to the eGLD-equivalent value of your external liquidity and proposes a Merkle tree for a community vote. Once approved, distributions are claimable from a DAO smart contract weekly or monthly.
2. CLOB Market Making (“The Specialist”)
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The Hook: Provide liquidity like a pro on a Central Limit Order Book (CLOB) exchange by depositing assets into tight price ranges to earn from high-frequency trading.
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Unlike a standard AMM, this strategy enables a more professional and capital-efficient trading environment. lsEGLD holders can deposit their assets to form the foundational collateral layer, while other users provide stablecoins for tight-range market-making. This structure attracts sophisticated traders and deeper liquidity. Incentives are designed to reward tight spreads, making lsEGLD the backbone of a high-performance market. Boosts are distributed via DAO-approved Merkle tree for monthly claims, with snapshots tracking order book depth. The model allocates a majority of rewards (e.g., 60%) to stablecoin providers for their active liquidity, with the rest rewarding the lsEGLD depositors who enable the market’s existence.
3. Perpetual Futures Vault (“The House”)
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The Hook: Deposit your lsEGLD into a vault that acts as the house for a decentralized perpetuals exchange, earning fees from traders.
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This strategy positions lsEGLD holders as the collective counterparty for leveraged traders, creating a massive liquidity sink for the token. The vault earns revenue from trading fees, liquidation penalties, and the net losses of traders, tapping into one of the highest-volume sectors in crypto. By locking up a substantial amount of lsEGLD to back the market, its utility expands far beyond simple staking. Rewards are distributed based on snapshots of pool contributions, with yields from fees paid out in eGLD. The DAO votes on quarterly Merkle distributions, which can include performance-based multipliers to reward long-term depositors.
4. Leveraged Staking (“The Accelerator”)
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The Hook: Use your lsEGLD as collateral to borrow stablecoins, swap them for more lsEGLD, and restake it, repeating the loop to multiply your exposure and amplify staking rewards.
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This is the on-chain “Microstrategy” model, where each loop mechanically creates buy pressure on the open market with borrowed funds. It directly drives up demand while simultaneously locking the newly acquired eGLD in staking contracts, appealing to capital-efficient bulls. To reward this activity, boosts are scaled according to the leverage factor (e.g., a 3x loop receives a 2x boost). The distribution relies on snapshots that track looped positions, with a DAO-governed Merkle tree facilitating claims every two weeks.
5. Real-World Asset (RWA) Backed Yields (“The Bridge”)
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The Hook: Use your lsEGLD holdings as a key to access yields backed by real-world, revenue-generating assets like tokenized US Treasuries or AI compute clusters.
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This strategy connects the eGLD ecosystem to sustainable, external value streams, attracting traditional capital that might otherwise avoid crypto volatility. By making lsEGLD a prerequisite to participate, it forces this new wave of capital to acquire eGLD to access reliable on-chain yields. This creates a durable source of demand tied to real-world economic output. Distributions are managed through on-chain snapshots of liquidity provided, with revenue-sharing from off-chain sources (like AI compute fees) governed by a DAO for full transparency.
High-Growth & Specialized Strategies
6. Auto-Compounding Vaults (“The Optimizer”)
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The Hook: Deposit your assets into smart contract vaults that automatically reinvest your earnings for you, with lsEGLD granting access to the best vaults.
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These vaults appeal to users seeking passive, optimized returns, creating very “sticky” liquidity that tends to remain locked long-term. By positioning lsEGLD as the key to accessing the most efficient vaults—those with the best strategies or lowest fees—it drives demand from users who prioritize convenience and long-term growth. The returns are distributed directly into your position as the vault’s smart contracts automatically compound yields in real-time. Governance over which strategies the vaults use is handled through DAO proposals and voting.
7. Yield Stripping (“The Time Traveler”)
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The Hook: Split your lsEGLD’s future yield from the principal asset, allowing you to sell the yield today for upfront cash or speculate on future staking rewards.
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This creates a sophisticated derivatives market for eGLD’s yield, attracting a new class of traders and fixed-income strategists. By tokenizing yield, it increases the capital efficiency and composability of lsEGLD, requiring more of the asset to be locked to facilitate these advanced financial products. The protocol itself would manage the minting of Principal Tokens (PT) and Yield Tokens (YT), with distributions managed through the trading and maturation of these tokens on the open market.
8. Delta-Neutral Farming (“The Balancer”)
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The Hook: Earn high yields from providing liquidity while hedging away the price risk by pairing your LP position with a short on a perpetuals exchange.
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This strategy is a magnet for risk-averse, institutional-grade capital that seeks to earn fees from market activity without betting on price direction. To run these strategies at scale, these large liquidity providers must acquire and lock up significant amounts of eGLD in liquidity pools. This deepens ecosystem liquidity and makes eGLD a core component for sophisticated, low-risk yield farming. The yield from trading fees and rewards is the primary profit source, collected directly from the AMM and perp exchange protocols.
9. Funding Rate Arbitrage (“The Exploiter”)
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The Hook: Use lsEGLD as a prerequisite to access strategies that profit from funding rate differences between perpetuals exchanges.
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This strategy carves out a niche for sophisticated players who seek consistent, market-neutral returns, forcing them to become eGLD stakeholders to deploy their capital. It positions eGLD as the key to unlocking otherwise siloed arbitrage opportunities. Yields are generated directly from the arbitrage activity, with the protocol’s smart contracts distributing the profits proportionally to depositors. Snapshots are used frequently (e.g., weekly) to ensure claims are fair, often with auto-compounding options available.
10. Digital Asset Treasury (“The Flywheel”)
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The Hook: Deposit lsEGLD into a treasury that mints tokenized shares, then sells them for stablecoins to buy even more lsEGLD in a self-reinforcing loop.
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This strategy creates a programmatic engine for continuous buy pressure, effectively acting as a decentralized index fund for the ecosystem. The treasury’s core function is to constantly accumulate eGLD from the open market, permanently removing it from circulation and locking it into a productive vehicle. Yields from the treasury’s activities are distributed to tokenized share (TSH) with a portion (e.g., 60%) automatically reinvested to fuel the flywheel and the rest claimable via Merkle tree.
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A deeper explanation of the on-chain DAT: On-Chain DAT
High-Risk / “Degen” Strategies
11. Leveraged Yield Farming (“The Degen Box”)
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The Hook: Use lsEGLD as collateral to borrow funds, then dive into high-APY liquidity pools for new, speculative tokens.
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This strategy harnesses speculative velocity by positioning lsEGLD as the go-to collateral for high-risk, high-reward plays. To chase massive gains in the “degen” frontier, users must first acquire and lock lsEGLD, tying its utility to the hype cycles of new tokens. Boosts are heavily skewed towards the external liquidity provider to compensate for extreme risk (e.g., 80% of rewards). Distributions are managed via DAO-voted Merkle trees on a monthly basis, based on snapshots of pool volumes and imbalances.
12. Leveraged Yield Farming with AI Optimization (“The Guardian”)
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The Hook: Amplify your yield farming positions with leverage, but with an AI co-pilot that monitors the market 24/7 to help prevent liquidations.
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By offering a layer of AI-powered risk management, this strategy makes leveraged positions safer and more appealing to a broader audience, encouraging more users to lock up lsEGLD as their core collateral. It broadens the market for leveraged products by selling sophisticated risk management as a service. Yields from fees and emissions are distributed with multipliers for leverage, all executed on-chain according to DAO-configurable rules that the AI agents follow.
13. Casino Bankroll (“The Whale”)
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The Hook: Become the house by depositing lsEGLD into a liquidity pool that funds on-chain casinos and gambling dApps to profit from the house edge.
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This strategy creates a large, passive sink for lsEGLD, as casino bankrolls require substantial liquidity to be seen as trustworthy and functional. It gives eGLD utility in a sector with constant volume and a predictable statistical edge. Boosts and profits are distributed via a DAO-governed Merkle tree for weekly claims. Snapshots capture pool size and game volumes, with risk-adjusted caps to protect the pool from being drained by a single large win.
14. High-Leverage Options Vaults (“The Oracle”)
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The Hook: Deposit lsEGLD into vaults that automatically sell options contracts, earning the premiums from traders betting on price movements.
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This establishes a deep and active options market built on lsEGLD as the foundational collateral. The vaults attract traders looking to hedge or speculate, allowing lsEGLD holders to earn income directly from market volatility. It makes eGLD the fundamental settlement layer for a new class of derivatives. Rewards are distributed quarterly via a DAO-approved Merkle tree, with boosts calculated based on the premium volume generated by the vault, subject to a cap (e.g., 15% APR).
15. Arbitrage & MEV (“The Hunter”)
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The Hook: Run automated bots that exploit tiny price differences across exchanges or manipulate transaction ordering (MEV) to generate profit.
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While an indirect strategy, a thriving ecosystem for arbitrageurs and MEV searchers is a sign of a mature, high-volume market. These highly technical activities increase overall DEX efficiency and trading volumes, reinforcing the value of eGLD as the essential gas token required to execute millions of high-frequency, profitable transactions. The profit is captured directly by the bot operators, but the health and demand for the network’s blockspace grows as a result.
The Economic Flywheel: How LSTs and DeFi Drive EGLD Value
This boosted rewards program creates a virtuous cycle that enhances EGLD’s core economics. LSTs are fundamentally beneficial because they lock up EGLD, removing it from the immediately available circulating supply while keeping it productive and securing the network. This proposal amplifies that effect.
By incentivizing users to pair their “locked” EGLD (via staking or LSTs) with fresh liquidity, we create deep, liquid markets. This deep liquidity is the foundation for a vibrant DeFi ecosystem.
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More Liquidity → More Advanced DeFi: Builders can create more sophisticated financial products (derivatives, leverage, complex strategies) when they can rely on deep liquidity.
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More DeFi → More Asymmetry: A richer DeFi landscape creates more arbitrage and trading opportunities.
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More Opportunities → More Transactions: This attracts bots and sophisticated traders, dramatically increasing on-chain transaction volume and the velocity of value transfer.
More Transactions → More Value: Increased activity leads to a more robust fee market, the creation of “big, beautiful blocks,” and ultimately, a more valuable and utilized network.
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it is also behavioral. As Daniel Kahneman wrote in a book i love… Thinking, Fast and Slow