Building Decentralized Applications to Retain Users through Creative and Strategic Design

So I took a different approach when thinking of this DeFi incentive funnel concept. So this whole concept is derived from bartles theory of player types, but rather than players I identified three basic investor types: Long, Med, and short term holders.

So when you look at incentive 1: This incentive is directed towards all users who interact with your Dapp. So this is a universal incentive for everyone.

With each incentive I thought it would be a good idea to create a disincentive to support it, in order to retain some users by establishing a 2-week long withdrawal period that as each day passes the withdrawal fee decreases. So it would start at 15% and then drop down to 2%. then the 2% withdrawal fee goes back into the protocol treasury. so its like gamification meets defi then the next layer would focus on rewarding long term holders and users of the protocol/Dapp with a bonus/multiplier or can even be an NFT that is used to stake and generate bonus yield or rate of earning. NFT’s can be utilized with a variety of rarities to increase demand. → This idea came from creating a fomo for those short and medium term holders, making them want to keep their funds within the protocol to potentially get a bonus multiplier nft to increase their yield for a certain amount of time. ( This concept is taken from traditional multiplayer video games where you can use points earned to gain extra health, earning coins x2.. things like that) Then the disincentive for this acts as a countermeasure against dumping it, if the market turns the next week, Users who unstake their bonus/multiplier NFT before the NFT’s expiration, the user forfeits their potential rewards back to the protocol to be dispersed to other users. Next the opportunity cost of unstaking the NFT bonus multiplier is that your forfeit the rewards you would have gained back to the community.

Then the next layer of incentives focus on medium term holders, with poaps, swag, and vip to real life events. Something simple not too costly, but just enough make the user want to earn those objects, that they are willing to sacrifice short term gains for poaps, swag and IRL vip and early access to new features. Then the disincentive comes with missing out on earning these objects just for keeping you liquidity within the protocol

The last incentive focuses on swing traders and short term holders to incentivize them with a random bonus apr for a specific amount of time, which will lock their assets. Once the time period ends, the withdrawal fees reset, incentivizing users to stay in the ecosystem. To avoid gaming the system you can create a monthly max/min allotment of these bonuses allowed to each wallet. Additionally, if you find users attempting to game the system there could be a time lock requirement based on wallet. Meaning users withdrawal would either go up or extend. Meaning you could either raise their withdrawal fee for a two week period or extend it by 30 days.

The overall goal and design of a decentralized financial platform should be to retain and increase the value of the underlining asset; while retaining and incentivizing users at the same time. By creating an inclusive financial platform to allow users to increase their initial investment in a sustainable, non-volitile ecosystem should be the goal of every Dapp that comes to market.

Therefore, I see leveraging NFT Communities as a source of future DeFi platform designs that incentivize BLue-chip holders, Notable NFT Communities, and NFT partnerships exclusive bonuses for utilizing their platform for medium and long term multipliers for loyalty. Similar to how medium and large businesses give loyalty rewards, DeFi platforms will reward these holders with a variety of rewards from bonus APY, Poap’s, Whitelists, IRL events, and launchpad opportunities. The NFT community has been slowly onboarding users into DeFi, by including tokens, staking NFTs, Claiming, and swaping. These are similar actions that are included in a lot of DeFi Dapps, with the exclusion of adding to an LP, which has been improved upon in design with a new feature referred to as Zapping. Zapping is the you only add one token and the platform automatically creates the pair with the initial token of deposit. So, as more users are onboarding into the Web3 ecosystem through NFTs either creating or buying, they will be more prepared and have less friction when it comes to to entering into the realm of DeFi.