600 million dollars of BTC, with a 5% annual return, amounts to 30 million dollars in real cash.
Where this money flows is the most realistic and also the most dangerous question in DeFi—
Giving it to the team can easily turn into a 'dumping ATM'; sending it directly to the token holders may risk stepping into the 'investment contract' pit in the eyes of the SEC.

The Lorenzo Protocol has chosen a more difficult path: to give the distribution rights of 600M BTC's returns to veBANK governance, rather than hardcoding it into an 'automatic dividend logic.'
Now veBANK holders can vote to decide whether to award 30% of the protocol's revenue to the best performing Staking Agent—
It seems that profits are being distributed, but in essence, it is an experiment in compliance design:

How to package 'profit rights' as 'governance rights' without losing the value capture of BANK / veBANK?

veBANK: from 'passively receiving money' to 'actively governing' compliance shift

Many governance tokens face the issue:

  • Even if you do not participate in governance, you can still passively receive 'dividends / repurchase profits';

  • This can easily be locked in by a key point in the Howe test—'expecting others to work hard for profits.'

Lorenzo has made two layers of rewrites with veBANK:

  1. Time locking + weight amplification

    • Locking BANK for a maximum of 60 months is required to obtain the highest veBANK weight;

    • This is not 'buying stocks for dividends,' but 'sacrificing liquidity first for governance voice.'

  2. The flow of profits is entirely determined by veBANK voting

    • The protocol will not write dead '30% income permanently allocated to certain addresses';

    • Instead, it is veBANK that sets weights for Staking Agents, vaults, and ecological incentives.

    • Today you vote 30% for a Staking Agent, tomorrow you can also retract that weight.

Key difference:
Lorenzo can tell regulators:

'BANK / veBANK does not promise any fixed returns; all distributions depend on how the community votes.'

Profits are not 'passively received dividends,' but 'incentives gained as a result of your participation in governance.'
This is the first layer of firewall for veBANK in compliance.

Lorenzo's governance flywheel: veBANK turns 'distribution rights' into 'judicial rights'

Simply 'locking + voting' is not enough to give veBANK value.
What is truly impactful is Lorenzo tying the livelihoods of Staking Agents to veBANK.

In Lorenzo's design, the profits from 600M BTC are not distributed evenly by address, but first enter a 'distribution pool,' and then decided by veBANK:

  • Which Staking Agents perform well and have low risk are worth more of that 30% share;

  • Which Agents perform poorly should be downgraded or even removed from the pool.

Looking at it through a flowchart, you can see what power veBANK truly holds here:

Code segment

Here, veBANK has accomplished two things:

  1. Turning Staking Agents into 'workers'

    • Want to take that 30% share of the 600M BTC?

    • Please first present your performance report and accept the judgment of the veBANK governance layer.

    • The more you vote, the more the community recognizes your risk control and revenue capabilities.

  2. Turning BANK into 'a pledge certificate for judicial rights'

    • The more BANK you lock, and the longer the time, the greater your voice in 'who gets that 30%';

    • This is no longer 'the qualification to receive money', but rather **'the power to decide who is qualified to receive money'**.

Once this design is on-chain, veBANK upgrades from a 'governance ticket' to a 'compliance-friendly distribution gate.'

Mechanism details: how veBANK walks the tightrope between SEC and Real Yield

From a compliance perspective, Lorenzo is walking a very narrow tightrope with veBANK:

  • Not fixed dividends:

    • The agreement does not promise 'holding veBANK will yield you X% profit each year';

    • The flow of profits must be approved through proposals and voting to take effect, and can be overturned at any time by new governance proposals.

  • Not purely passive income:

    • Only veBANK holders who participate in governance and vote for high-performance Agents,
      can receive more incentives through Boost / Gauge.

    • If you do not participate in governance, you will only receive the most basic part, and the profits will be significantly discounted.

  • Behavior is strongly linked to profits:

    • veBANK holders must continuously assess the risks, returns, and audit status of Staking Agents;

    • Otherwise, if you choose the wrong Agent, the overall profits of the protocol will decline, and the BANK in your hands will also be affected by the market.

In the context of the Howe test, Lorenzo can be described as:

'BANK / veBANK is a governance tool for the DAO,
profits are a byproduct of governance choices, not a promise of returns made by the protocol to holders.'

This is fundamentally different from the typical securities-style narrative of 'I issue tokens, you lay back, and I promise to give you 30% of the income every week.'

Data feedback: veBANK filters out speculators and locks in the 'real governance layer'

The economics and governance logic of veBANK, when combined, show some interesting data from Lorenzo:

  • Governance participation rate > 70%

    • A 5% participation rate in the industry Snapshot is already considered good;

    • veBANK's design of 'if you don't vote, you lose money' filters out those who truly care about the protocol.

  • Staking Agents form 'governance involution'

    • To obtain that 30% of protocol income, Agents must not only generate stable BTC profits,
      but also maintain their reputation, transparency, and safety records within the community.

    • Safety / audit / risk control reports have shifted from cost centers to 'marketing budgets'.

  • Noise speculators are gently cleared by the mechanism

    • Those unwilling to lock or vote cannot receive governance Boost and can only get basic profits;

    • For them, BANK is not very attractive, and they will naturally leave—
      What remains increasingly resembles a 'professional financial advisory committee meeting.'

Once this mechanism is in operation, veBANK becomes Lorenzo's 'governance firewall':
It helps keep speculative funds out while locking in those who are genuinely willing to make long-term decisions.

DAO is not a dividend machine: veBANK makes Lorenzo more like a 'cooperative' rather than a 'public company'

Many projects fail because they have turned the DAO into a 'shadow public company':

  • Token = stock

  • Repurchase = profit distribution

  • Voting = annual meeting applause

Lorenzo's path with veBANK is closer to a 'cooperative (Co-op)':

  • DAO does not promise a return rate, only promises **'you can decide the direction of profits'**;

  • Staking Agents function like contractors entering the community; if they perform poorly, they are voted out;

  • veBANK acts like member rights, the longer you lock, the more qualified you are to decide who gets a share.

This is crucial for the SEC narrative:

This is not a company issuing securities,
but a group of participants holding BANK / veBANK,
operating a BTCFi profit machine together.

How profits are distributed depends on the participants' own Collective Choice, not on the unilateral promises of a 'project board.'

Summary: veBANK is Lorenzo's true 'compliance shield + value black hole'

The conclusion of F022 is very simple:

  • The profits from 600M BTC are hard value;

  • veBANK deciding where this hard value flows is even harder power;

  • Packaging this power as 'long-term locking + active governance' is the survival space Lorenzo has fought for BANK / veBANK within the SEC's gaps.

In the next cycle of tightening regulation, the DeFi 'securities-like' purge,
those tokens that have 'dividend' written into their white papers will be put on the table one by one;
While Lorenzo's model, which turns profit paths into 'requiring governance triggers, time commitments, and shared responsibilities',
has a better chance of surviving as the true 'legal cash flow machine' of the BTCFi world.

I am like a person trying to find a sword in a boat,
On the voting page of veBANK, what you see is not just numbers jumping,
but rather the next generation of DeFi protocols learning to use governance instead of written promises of dividends,
to buy a ticket that can traverse regulatory cycles for their own value.@Lorenzo Protocol #LorenzoProtocol $BANK