The first time I heard about BANK as Lorenzo's governance token, images of those 'governance junk' tokens I had forgotten in various wallets immediately came to mind — tokens that would only occasionally cast an inconsequential vote and would just keep depreciating through inflation. I almost categorized BANK into this category until I did something foolish: I locked it.
From 'voter' to 'energy converter'
The story begins on that boring Tuesday afternoon. I was staring blankly at Lorenzo's dashboard, watching the APY numbers fluctuate. At that time, I had just put some assets into a volatility strategy OTF, but I never felt at ease — the strategy looked good, but I had no say in its future direction.
At this point, I saw the button 'Lock BANK to obtain veBANK'. Based on past experience, this was nothing more than another 'locking mining' trap. But by a twist of fate, I locked a portion of BANK for three months.
The subsequent changes shocked me.
In the first week, I found that my veBANK weight could influence the incentive distribution of a newly launched trend-tracking vault. I voted and watched the incentive weight of this vault increase from 5% to 12%. This is not the key point — the key point is that due to this adjustment, more funds flowed into this vault, and after the vault's scale expanded, the trading slippage decreased, resulting in an actual profit increase of 1.2%. My vote directly changed the real yield.
In the first month, I participated in the vote on whether to launch the 'BTC ecological yield enhancement strategy'. After the proposal passed, the development team deployed the strategy within two weeks. Now, this strategy contributes 15% of the entire protocol's fee income, which is distributed proportionally to veBANK holders.
I suddenly understand: BANK here is not a tool for me to 'govern the protocol' — it is a tool for me to participate in value creation of the protocol. Just like you are not 'managing' a power station, but deciding which generators should be prioritized to connect to the grid, and then sharing the power generation profits of the entire grid.
Triple Role Anatomy: Three Faces of BANK
Face One: Economic Adjustment Hormone
In traditional DeFi, incentives are usually simple and crude: set a fixed APY, issue tokens, and wait for token inflation to make them unwanted. But BANK, through the veBANK model, has turned into a continuously adjusting hormone system.
For example: Last month, market volatility sharply decreased, and the yields of several volatility strategy OTFs significantly shrank. In other protocols, these strategies would gradually bleed to death — funds would flee, APY would drop, and less capital would enter, creating a vicious cycle.
But in Lorenzo, veBANK holders did something clever: we voted to temporarily shift incentives from these OTFs to trend strategies and arbitrage strategies. What was the result?
1. No large-scale withdrawal of funds from the protocol, just internal circulation.
2. Transferred funds achieve better returns in new strategies.
3. Volatility strategies shrink moderately due to reduced incentives, and instead survive in a low-volatility environment.
4. When volatility returns, we can quickly adjust the incentives back.
BANK acts as an adaptive regulator of the market environment here. It is not a static reward token but an intelligent pipeline that dynamically allocates value based on market changes.
Face Two: Risk Pricing Signal
This is the most fascinating role of BANK for me. In traditional finance, risk pricing is a black box operation of investment banks; in most DeFi, risks are either ignored or subjectively decided by centralized teams.
And in Lorenzo, the flow and lock-up situation of BANK became real-time risk pricing signals.
I recently observed an interesting phenomenon: when market uncertainty increases, the lock-up rate of BANK (locked amount/circulating amount) rises. This is easy to understand — more people choose long-term locking, seeking stable returns rather than short-term speculation.
But the deeper logic is: a higher lock-up rate means that veBANK holders have a longer average time preference, and they are more inclined to vote in support of robust, sustainable strategies rather than high-risk speculative strategies. This preference is transformed into actual incentive distribution through voting, guiding the entire protocol's risk preference to match the market environment.
Simply put: BANK holders vote with their feet, telling the system 'should it be conservative or aggressive now', and the system executes automatically. This is more real-time and genuine than any risk committee.
Face Three: The Value Cycle Engine
I drew a cyclical diagram of BANK in the Lorenzo economic ecosystem, which is as beautiful as a perpetual motion machine (of course, it's not really perpetual motion, but close to self-sustaining):
```
User deposits assets → OTF generates profits → Protocol collects fees →
Fees used for:
1. Buy back and burn BANK (deflationary pressure)
2. Distribution to veBANK holders (holding incentives)
3. Protocol development vault (ecological construction)
veBANK holders obtain profits after:
1. Partial reinvestment lock-up (increase weight)
2. Partial provision of liquidity (enhancing BANK depth)
3. Partial consumption/cash withdrawal
More BANK locked → veBANK voting weight changes → Incentive distribution optimization →
OTF profit increase → Protocol fees increase → The cycle continues
```
The key to this cycle is: each link strengthens the next link.
My own experience is as follows: of the profit distribution I received from veBANK, I chose to re-lock 30% (to increase future voting power), provide 40% to the liquidity pool (due to good depth, low slippage for BANK trades, which is beneficial for attracting new users), and cash out 30% for living expenses. This choice is not only advantageous for me but also for the ecosystem — I have become part of the value cycle, not just an extractor.
Experiencing the crisis: BANK's resilience test.
The real test occurred three months ago. At that time, the market suddenly plummeted, and a series of cascading liquidations happened. Several DeFi protocols I invested in faced serious problems: one governance token dropped 60% in a single day, and another's incentive system completely collapsed.
And the BANK in the Lorenzo ecosystem has undergone a completely different story:
On the first day: BANK's price fell with the market, but the decline was smaller than that of similar governance tokens. The key point is: the number of locked addresses did not decrease but increased by 3%. This means holders did not panic unlock but chose to 'tough it out'.
In the first week: veBANK holders urgently voted to temporarily increase the incentive weight of stablecoin-related strategies and decrease the incentives for high-leverage strategies. This adjustment was completed within 24 hours — in traditional funds, such strategy adjustments would require a three-day meeting of the investment committee.
In the first month: due to rapid adjustments, the overall drawdown of the protocol was kept to half of the industry average. When the market rebounded, the previously increased stablecoin strategies provided stable cash flow, while other strategies that restored incentives quickly caught up.
What I see is: BANK is not just a simple price symbol; it is the immune system of the ecosystem. When external shocks occur, it quickly activates defense and repair mechanisms through the behavior of holders and the voting mechanism.
BANK and veBANK: not parent and child, but symbiotic.
Many people mistakenly think that veBANK is just an 'upgraded version' of BANK, like a VIP card. My understanding is completely different.
In my notebook, I wrote:
· BANK is the flowing blood — it circulates between exchanges, wallets, and users, carrying price discovery and entry functions.
· veBANK is organs and organizations — it becomes fixed, forming structures and executing specific functions.
Without blood, organs will die; without organs, blood is just liquid. They must coexist.
I know an interesting participant 'Old Chen'. He holds a lot of BANK but never locks it, specializing in market arbitrage and liquidity provision. He earns money from BANK liquidity. I locked most of my BANK, earning from the growth of the protocol. We are both in the same ecosystem, earning completely different money, but we need each other: I need him to provide liquidity, making my locked BANK have a value basis; he needs my vote to ensure the healthy development of the ecosystem, making his liquidity business sustainable.
Speculation on future roles: What else can BANK be?
Based on current developments, I boldly predict three new roles that BANK may evolve into:
1. Cross-protocol credit vouchers
Imagine this: because you locked a large amount of BANK in Lorenzo (showing your long-term commitment to the ecosystem), other protocols automatically give you a higher borrowing limit or lower collateral rate. BANK becomes your 'credit score' in the DeFi world.
2. Strategy development license proof
In the future, if you want to deploy a new OTF strategy on Lorenzo, you may need to stake a certain amount of BANK as 'quality collateral'. If the strategy performs well, the collateral is returned along with rewards; if it fails or misbehaves, the collateral is used to compensate users.
3. Ecological Yield Bonds
Long-term locked veBANK can be packaged into interest-bearing bonds and traded in the secondary market. Institutional investors can directly purchase 'Lorenzo ecological yield rights' without having to manage it personally.
My BANK Philosophy
After holding and observing BANK for a year, I formed my own 'BANK philosophy':
In the short term, look at the price; in the long term, look at the lock-up rate. The price reflects market sentiment, while the lock-up rate reflects actual confidence.
Not seeking to maximize holdings, but to optimize veBANK weight. 1 long-term locked BANK is more valuable to the ecosystem (and to myself) than 10 short-term held BANKs.
Every vote is an investment decision. Every vote I cast affects my future profits, which is more direct than picking stocks.
Finally, let me share a metaphor I often use: If the Lorenzo Protocol is a country, then OTF is its industry, users are its citizens, and BANK is not its currency — the currency is stablecoins. BANK is a fusion of its constitution, central bank, and stock exchange. It defines the rules, regulates the economy, and provides a venue for value exchange.
This is why I no longer refer to BANK as a 'governance token'. This label is too small, too small to accommodate everything it is becoming. It is more like the central nervous system of an ecosystem — silent but coordinating the operation of all important functions.
And I, as a lock-up participant, am not just holding tokens. I am participating in the neural signal transmission of a digital organism. It sounds mysterious, but when you see how your vote causes the entire ecosystem to shift, adapt, and grow, you'll understand what I mean.
BANK will not succeed because it is hyped to astronomical prices; it will succeed because it enables enough people to choose long-term locking, serious voting, and co-building the ecosystem. I locked my share; what about you?@Lorenzo Protocol #LorenzoProtocol $BANK
