Why We Are Building Enhancer

The DeFi boom has revealed a major problem: many protocols have been chasing short-term liquidity through massive token incentives, which often leads to inefficient and unsustainable outcomes. Projects frequently offer high APRs by distributing large amounts of their tokens to attract TVL without generating equivalent real economic value (such as trading fees or interest). This imbalance can create negative cycles – token prices crash from inflation, liquidity quickly exits, and protocols are left struggling ("zombie protocols").

For example, one blockchain distributed roughly $727 million in token rewards to attract liquidity, but its actual annual fee revenue was only about $29.5 million – a Reward Multiple of ~24.6x, which proved unsustainable. Once the rewards dried up, over $2 billion of liquidity left within months.

We are building Enhancer to reconstruct the DeFi liquidity market and put it on a healthier footing. Instead of perpetuating these inefficient incentive wars, Enhancer introduces a systematic way to evaluate and price liquidity. It asks critical questions: How much liquidity is appropriate for a protocol’s stage? Are rewards being overpaid or underpaid? Is the liquidity actually being used to generate revenue?

By using standardized metrics – like TPS (TVL per $1 of reward), RYR (Real Yield Ratio), and Reward Multiple – protocols can gauge the efficiency of their incentives in real time. For instance, if a protocol sees that for each $1 in rewards it's only attracting a few dollars of TVL (low TPS), it’s a sign to adjust its strategy. These insights, combined with dynamic reward policies, help protocols avoid overpaying for liquidity and encourage them to foster organic growth (higher fee revenue) over pure token handouts.

In short, Enhancer exists to bring transparency, efficiency, and sustainability to DeFi incentives. By aligning the interests of protocols and liquidity providers, Enhancer aims to end the cycles of mercenary capital and instead support long-term, real value creation in the ecosystem.