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15) And how about the locked volume? Again, it's all stablecoins. Compound, the largets, is mostly people borrowing DAI from themselves; Curve is basically all stablecoins. Most of DeFi right now is people locking, trading, and lending stablecoins against each other.

16) Why? Well, because at this point any project with their salt has liquidity incentives. The total notional per day is around $1m (!!!). So people are buying, and selling, and borrowing, and lending, and locking their stablecoins for pay.

17) And where is that pay coming from? It's coming from the governance tokens, really. They're being airdropped on platform users. And all of a sudden they have huge valuations.

18) But you can't spend valuation. So really, the money that liquidity farmers make is coming from the people buying the governance tokens. And why are they buying those governance tokens at so much higher a valuation? Because their projects TLV is up.

19) So that's the whole cycle. Liquidity incentives --> TLV up --> valuation up --> larger incentives --> TLV up more --> ... It's a positive feedback cycle, starting out of nothing, creating billions of volume, locked assets, and valuation.

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20) But it's not creating revenue, or value for users (outside of the price paid by governance token buyers, of course). It's the entire sub-industry. Out of nothing, it made something. Transmining. But, you know, decentralized.

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21) All the metrics are popping, but it's also basically a circle-jerk. So where does that leave us? Is it all a brilliant growth strategy and marketing plan, or just smoke and mirrors? I'd like to tell the story of two exchanges here: FCoin and BitMax.

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22) For a while, they were very similar. Both were printing billions of dollars of "volume" per day. All the volume was transmining--content-free wash trades incentivized by exchange token airdrops. Both tokens pumped exponentially, and then crashed all the way back down.

Kmpec

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So, what if the governance token is used to cut a slice of the fees of the governed protocol? Lets say, COMP, BAL or CRV and they vote to redirect 0.1% of the 0.3% trading fees towards the holders of the governance tokens. That should generate value and revenue, wouldnt it?