Introducing Royco: The Incentivized Action Market Protocol

TLDR: Royco establishes the Incentivized Action Market (IAM) Protocol. IAMs enable anyone to create a market to incentivize any onchain transaction (or series of transactions). IAMs can be used to find efficient pricing for any onchain action, including depositing, staking, lending, voting, minting an NFT, etc. 

Markets for onchain actions are huge, they account for billions of dollars of annual spending and many multiples more in economic activity. Some examples include Ethereum distributing ~$4B+ in assets (ETH) to incentivize a single action: staking. $100B+ of ETH has now been staked. Or EigenLayer’s intent to distribute 15% of the network’s token assets to incentivize deposits. As a result, $20B of ETH has been deposited. Or Compound distributing $COMP token assets to incentivize lending and borrowing, resulting in 11,000% growth and $11B TVL within a year.

But these markets are wildly inefficient. 

• No price discovery. In current mechanisms like liquidity mining or airdrops, Incentive Providers don’t know how much to spend on incentives and cannot measure or capture latent demand. Users have no tools to negotiate for more incentives.

• Fragmented markets. Every new protocol must bootstrap an isolated network of market participants, which is a lot of work. Users must stay on top of various channels to benefit from new incentives and markets.

• Inefficiencies benefit a select few. With constrained price discovery and participation, incentives have shifted to offchain agreements controlled by a handful of whales and institutions. This diminishes the potential of permissionless crypto markets. 

Royco was built to solve this.

Royco Protocol allows anyone to create a market around any onchain transaction (or series of transactions). Using Royco:

• Incentive Providers (IP) may create intents to offer users incentives to perform the transaction(s).

• Users may then create intents to complete the transaction(s) and/or negotiate for more incentives.

When these intents satisfy each other, the user’s transaction is atomically executed, and the IP distributes the negotiated incentives. Royco Protocol is entirely non-custodial, permissionless, and immutable. It is also capital-efficient, allowing participants to create many intents with the same assets. IAMs can be used to find efficient pricing for any onchain action.

The E2E flow of an IAM:

1. Create Market

First, the Market Creator specifies the onchain action the IAM will incentivize. There are two types of actions in Royco: a (1) 4626 Vault Action or a (2) Recipe Action. The 4626 Vault Action is designed to incentivize 4626 pools. The Recipe Action is much more versatile and allows for incentivizing any smart contract transaction(s) through the Royco Recipe Builder. 

IAMs are completely immutable once deployed.

2. Offer Incentives

Once a market is created, Incentive Providers may create intents to offer incentives to users to perform the transaction(s). Incentive Provider intents can specify how much of the Action will be incentivized (i.e., “reward 200 $ABC for 5 ETH of deposits”). Incentive Providers can be anyone and offer tokens or points in lump-sum form or pro-rated among all participants.

3. Negotiate Incentives

Users may then create intents to complete the transaction(s) and/or negotiate for more incentives for performing different amounts of the Action(s) (e.g., “deposit 10 ETH for 500 $ABC rewards"). Users may create many of these intents utilizing the same capital base. Incentive Providers may choose to provide the incentives requested by users or counter with another Intent. 

4. Complete Actions

When an Incentive Provider's intent satisfies a user's intent, then the transaction is atomically executed, and the Incentive Provider trustlessly distributes the negotiated incentives. 

• Efficient Incentive Spending: As an Incentive Provider, you may use Royco to price incentives, capture latent demand, and benefit from the Protocol’s composability and network.

• Negotiate for More Incentives: As a user, you may use Royco to negotiate for more incentives in a capital-efficient way and reallocate to earn incentives.

• Incentives for all: Royco intends to bring transparency and broader participation to Action Markets, which were previously accessible only to whales and institutions.

The Protocol is also a platform for creating novel products (here’s a sneak peek of one, Dahlia) that natively use an IAM to power their liquidity and infrastructure. Additionally, we invite wallets and interfaces to surface IAMs to their users.

It's time to build.

The Royco Community is already building and ideating the uses of IAMs. Some that are particularly exciting:

• An entirely novel chain launch using IAMs to pre-deposit assets for its ecosystem.

• A notable stablecoin using IAMs to propagate itself across all of DeFi.

• A new DeFi protocol using IAMs to discover their users' hurdle rate to lock up tokens.

Over 100+ Incentive Providers plan to run IAMs on Royco in the next 100 days. If you're interested in providing incentives, DM us on Twitter for more information.

Royco.org has over $500M+ on its waitlist and is expected to go live this month. Stay tuned.

Follow us on Twitter: @RoycoProtocol
Read it first on Paragraph.
Participate in the discussion on Telegram.
Learn more at Royco Documentation.