Question 1

How do I attract liquidity to my DeFi protocol?

Accepted Answer

Offer a total yield that beats comparable opportunities, then make sure qualified LPs see it. Incentives close the gap with competing rates, and distribution decides how many LPs find you. On Merkl, campaigns go live on the Merkl App, used by more than 200,000 LPs every month, and on partner frontends that reach more than 5 million users.

Question 2

How much TVL will my incentives bring?

Accepted Answer

Divide your yearly rewards by the reward APR the market requires for comparable liquidity: on Merkl, $1,000 of daily rewards typically attracts between $9M and $36M of stablecoin lending liquidity. To size a budget for a target TVL, reverse it: multiply the target by the required APR and divide by 365. Attracting $20M at a 2% reward APR takes around $1,100 of rewards a day.

Question 3

What is the cost of liquidity in DeFi?

Accepted Answer

It is the reward APR you pay, on top of your native yield, to attract and hold a given amount of TVL. On Merkl, most stablecoin lending opportunities run at around 1 to 4%, borrowing at 1 to 3%, liquidity pools at 1 to 6% and token holding at 0.5 to 3.5%. New protocols, riskier assets and crowded markets sit at the high end.

Question 4

How do I retain liquidity after incentives end?

Accepted Answer

Liquidity, including mercenary capital, leaves when your total yield falls below a comparable alternative. To keep it, taper rewards instead of stopping them, benchmark your rate, and use the liquidity to build what stays: integrations, borrow demand, a track record. On Morpho markets on Monad, USDC supply kept growing after rewards were cut by 86%.

Question 5

Can a platform guarantee the TVL my incentives will bring?

Accepted Answer

No. The TVL you attract depends on market conditions and on what every other protocol pays, which no one controls. A platform can help you estimate it, reach qualified LPs and measure results transparently.

Question 6

What does "pay for performance" really cover?

Accepted Answer

Some platforms offer to be paid only on the TVL they bring you, but only their fee depends on it: your rewards budget is spent in full either way, and it is by far the largest cost of a program. Before signing, ask who decides which TVL counts, and compare the total cost per dollar of TVL (rewards plus fee) with what the same budget buys on an open marketplace.

Attract liquidity at the lowest cost

No one can promise TVL.
But you can estimate it

The market decides

Not all liquidity costs the same

You can know today's cost of liquidity

Distribution is the lever you control

Reach lowers your cost

Net new liquidity

Visible from day one

Keep liquidity as rewards decrease

LPs go where yield is best

Locks only delay the exit

Your product keeps the liquidity

Proof from live campaigns on Merkl

Frequently asked questions

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