"Revenue" is the word that separates protocols with speculative token value from those with fundamental, cash-flow-based value. Lorenzo Protocol isn't just building a product; it's building a fee-generating machine with multiple, synergistic income streams. Understanding this model is key to evaluating its long-term sustainability and the real value accrual to $BANK.
The fee structure is multi-layered:
Management Fees: A steady, predictable annual fee charged on assets under management (AUM) within each OTF. This is the bedrock revenue, providing stability.
Performance Fees: A variable fee taken on the profits generated by a vault (e.g., "2 and 20" – 2% management, 20% performance). This aligns the protocol's success with the success of its strategies.
Governance & Curation Fees: Potential fees for listing new vaults or strategies, paid by strategy managers seeking access to Lorenzo's liquidity and veBANK governor incentives.
This model is powerful because it scales directly with TVL and strategy performance. As more capital is deposited into high-performing OTFs, the protocol's revenue compounds. A significant portion of this revenue is then distributed back to veBANK lockers, creating the flywheel: more fees → better rewards for lockers → more $BANK locked → reduced sell pressure and stronger governance.
Let's project with some hypothetical data. If Lorenzo achieves $500M in TVL with an average blended fee rate of 1.5%, it generates $7.5M in annual protocol revenue. If 50% of that is distributed to veBANK holders, that's a meaningful yield on the locked token supply. This creates a tangible, analytics-driven valuation model beyond pure speculation.
The beauty is in the resilience. Even in bear markets or during periods of flat strategy performance, management fees provide a revenue floor. During bull markets or when strategies alpha, performance fees explode. This hybrid model is straight out of the most successful TradFi hedge fund playbooks.
From a user's perspective, you're not just paying fees; you're buying into a curated, professionally managed financial ecosystem. The fees are the cost of access, infrastructure, and aligned incentives. The question for you is: Which fee stream do you believe will become Lorenzo's largest revenue driver: steady management fees or high-variance performance fees?
