1/ Capital efficiency = sexy? Is value locked in protocols really put to work? Recently, Ironbank w/ $CREAM $ALPHA is innovating on this problem. But often overlooked is capital efficiency of governance tokens. Some thoughts on building

2/ Because governance tokens are liquid with a market value, protocols can use that liquidity - by incentivising participants to put their gov tokens to work and building mechanics that leverage the liquidity

3/ Low efficiency protocols rewards those who hodl (or even stake) their governance token, but they don't do anything with the value that users put at stake. The only "work" that is being performed by the participant is to not sell

4/ Higher efficiency protocols lock tokens and use its value to power protocol functions. Prime examples would be $SNX and $NXM or even ETH2. The value of SNX collateralises synthetic assets, NXM secures insurance and $ETH secures consensus

5/ n.b. token utility and capital efficiency are not the same. e.g. $CRV has great utility and drives engagement, but the value of CRV while locked as veCRV is not leveraged by the protocol. What if locked veCRV also acted as an insurance backstop?

6/ Governance token capital efficiency generally also drives stronger protocol participation since stakers have more at stake - upside and downside. $SNX as a prime example of both cap efficiency and weekly engagement hooks to fuel community