# Builder’s Guide to LP Partnerships: Attracting Liquidity - Aleksandr Nechaev | Funders VC - Channel: [ETH Belgrade Community](https://streameth.org/eth-belgrade-community) - Date: 2025-10-07 - Duration: 22:54 - Watch: https://streameth.org/watch/yt-NW0NCpY_r2A - YouTube: https://www.youtube.com/watch?v=NW0NCpY_r2A ## Description Builder’s Guide to LP Partnerships: Attracting Liquidity - Aleksandr Nechaev | Funders VC ## Transcript Hi everyone and thanks for having me today. I'm Alex as a as as you've heard and I'm a partner at Founders VC. We've invest into DeFi RWA infrastructure and AI and we also provide liquidity. So the goal of this presentation is to tell you a bit more on how to attract the liquidity in the current market conditions because we've talked with the dozens of LPs, market makers, hedge funds and other uh kind of partners in the market who provide the liquidity and prepared all of this presentation just to show on how to have better protocols in the market with a good liquidity uh program. So it's a win-win situation for both. So I will tell you more about how to set the right API, how to structure uh the program, how how to attract liquidity and what are the most important mistakes you can avoid. So let's start from the reality on the ground and the TVLE protocol is decreasing. That's due to amount of factors. uh there are a lot of money inflows in the market but the number of D5 builders uh is more and the number of new protocols new good protocols is also increasing faster so the good news are that if you know how to structure the offer how to set the right API and manage risk you can still stand out so let's talk about the first difference it's the LPS versus VCs a lot of founders are trying to pitch to LP the same way they do it with the VC but there is a difference because LPS are deploying the capital today in the protocol you have right now so they're focusing more on the safety of the protocol and uh the question is if you be be able to generate the yield uh when the TGE and so the main reason and where should you focus on is to where to put the money today and how to answer this question to LPs. So, make sure your LP pitch is clear, grounded and focus on how you manage the money today and how you will show the returns they expect in the future. You also need to understand from the end and to plan from the end and to define the launch dates for private, public and TG because for sure you probably will raise one or two more VC rounds and you want to do it then your TVL is growing then you have new partnerships every week let's say and not then your liquidity program is ending and liquidity providers are uh turning back their liquidity. So when you understand your timeline, your TG, you can determine the required volume needed for getting visible. Usually it's around f 50 to 100 million in TVL uh to get noticeable for private round and for public it's at least as much as as as the same. Let's say if you want to raise 100 in private, you should target at least 100 150 in public. And after that you should define uh LP tiers and terms for different uh TVL. I would tell you a bit more about how to build the tiers. But let's talk about the benchmarks. For sure if you have the best protocol in the market with a great founding team but you can only give 5% API on stable coins they will not going to deploy the liquidity into your protocol. So the current benchmarks are around the 25 35% for stable coins, 50 to 20% for Ethereum and 10 to 15% in bitcoin. For sure the market is fluctuating. They can be different but you can always check uh the pendal let's say and multiply the average amount uh average API on pendal uh by three and it will be the target you want to reach. Um let's talk about the tiers as well. So the idea is you need to have different uh tiers, different tier levels for different LPS and it all depends on the current market stage because for sure if you are just starting raising the liquidity the risks are higher for the liquidity provider. Uh they're not sure if you will be able to get to TG. they're not uh sure about if you will be able to raise at least the public LP round. So you need to reward them for that. So the good uh point to start is to have 35% API for the first 5 million, 30% for the next five, then let's say 25% for the next 15 million, and so on and so forth. So practically that means that you need to to have every following dollar cheaper than the last one because that's how you make the your program sustainable in the long term. Uh now let's talk about how to build the API because your API is usually based on the fixed rate and the tokens and point system. So the the the good point to start is to have one/3 in a fixed rate and two3 in a tokens and points. So the higher for sure you can uh you can have fixed rate the better but it should be it should depends on your uh yield that your protocol is generating. So just just to let you know your fixed rate reurps they get paid even if your token underperforms and it's your marketing tool but it should depends on your tokconomics on your product on your yield revenue. Uh the next thing it's good to understand is that for LPS, LPS are not hedge funds. They are not market makers. They are not VCs. Even if they have some uh some arm that invests or let's say have a market makers, the risk reward in liquidity providing is different. So the focus is more on hedging the risks because the main risk is to lose all the money due to protocol vulnerabilities. And the second thing is to have a stable API at least better than the market conditions. Uh because the bad thing if they let's say will receive 10% API after lock in the liquidity for a long time then they can get and pendle let's say 15%. So you need to understand and provide the guarantee yield if you if you're able to because around 20% of the protocols on the market can provide guarantee yield. Um you can do it both ways. Let's say you are setting the API 25% and selling all the tokens on your side. Uh in this case you are able to manage the selling pressure because you're just returning the money to the investor returning the yield and uh using the upside for for for yourself. The second thing you can have a let's say fixed rate um 15% but to have guarantee rate at least at 20%. So for example if your token underperforms you will still need to sell more tokens to generate the yield for the LP until 20%. So if you can do guarantee if you can guarantee the API do it because this is this will help you to be ahead of the list on the on the investor on the LP's uh pipelines. Now let's talk about also points and tokens and it's also bread and butter of competitive API and here I would like to mention the vesting the structure and selling pressure. So in terms of vesting, you should target less than six months because the best terms is one to three months vesting and the three to six is still okay and it's due to the fact that LPS deposit large amounts of uh money early and they should be rewarded for this because the unlock should be better than VCs. And as for the structure, you for sure need to structure it correctly based on your tokconomics. So you need to decide uh what are the number of tokens you want to see as a rewards. Knowing the FDV, knowing the LP you want to attract, you can balance it correctly. And the next thing is uh selling pressure. you'll have it for sure because LP's goal is to have uh and fix their API they earned. So in most cases they will sell the tokens as they receive them. For sure they can sell it on some local picss but they will not hold the tokens for a long time. So just be prepared and to to to be to be able to manage the pressure in the first six months. Now let's mention at least uh at least for a few slides about the points because points is more like for a public program but you need to manage it correctly. So even in in in uh cases like eggen layer it can be hard to manage because for example the users were really happy with the with their points program. They were farming it bullish on these points but then the points were converted to tokens. The community was unhappy with that because whales claimed most of the rewards and tokens were non transferable initially. So Aen layer needs to rethink of the terms they provided to improve the bonus system to give some tokens additionally and they still managed to make a huge TVL and the program to be honest was good in terms of liquidity providing but it's good to know that even with a strong marketing you can uh some of the community members will be unhappy with that so you there is no perfect system for that and you need to balance in the incentives and uh balancing the expectations of the community. Now let's talk about the partnerships. It's another way to have a better API for liquidity providers or for the public and let's say you can partner in a two ways is it uh it can be foundations let's say so you can go to the foundation and talk that you will help to increase the TVL of the chain let's say and it's a good way because you have the same goals uh but just to let you know foundations can be slow and bureaucratic in this case and a few LPs and a few D5 founders said that they can postpone or let's say to cancel the agreement on the last minute. So you can spend a couple of months and uh have nothing at the end. Another way is to find a similar protocol or similar product um that can provide you their tokens. So their users will be happy to have the upside also probably this will attract you also the more people in your protocol and increase your incentives so you can provide better API as I said for the liquidity providers. So let's talk about the due diligence checklist. It's mostly the same uh as for VC but um usually yeah LP checking differently. So first of all it's security audit. Uh usually they are kind of expensive. So either LPs have some tech guys inside who can check the contracts who can ask question etc. or at least it's a person who understands how how to build the smart contracts and they can ask more questions etc. So it's not worth to spend like a lot of money on great security audits but LPS are still checking because the main risk is to lose all the money. Uh as for the other things uh usually LPS are checking it in in in a case of TG and will they be able to get the tokens they they are planning to receive. So if you can prove this points that your protocol is stable well managed so LP will much more likely to trust and deploy the liquidity. So let's talk let's talk also about the main risks. It's a custodial risk and OBSAC risk. And to be honest, OBSCAC risk is usually underestimated. So as the project grows, the main risks are the people themselves. Because for example, situation where a founder, let's say, can get kidnapped. To be honest, it's not so uh it's not is more common than you think. And a few LP sent me these things that operations is still important. For example, some processes can include like uh having everyday call with the founders to showing okay here's my key, here's my background. So yeah, it it probably it sounds funny but as it is when you have a 100 million in TL it can get really unexpectedly. Other common mistakes include different FDVS for VCs and LPS and it can be a red flag. Let's say uh you your last round was 30 million FDV for VCs but you are showing the rewards for LPS at 250 million. So make sure your VC's expectation LLPs are the same. Let's say if you are planning to do a TG at 100 mil show the same for LPS because for sure you can get upside but in reality 95% of protocols tokens are decreasing. So that's why LPS will do the math on their end. So you also need to have an option for LPS for sure to withdraw the liquidity. Uh and probably if you if your contract is upgradable to have time locks, the LPS will will ask for the roles to to block the upgrades. Uh because yeah, it's all about their money. And yep, as I said, the six plus months of vesting is not in the market right now. So yeah, just just to be sure if you can make it in one or two months is better, but around three to six is still okay. And get ready for the deal. Um it's more from operational side, but have your documents ready. It's a provision TVL provision agreement or token warrant because if you don't have it, you will still need to prepare it and to sign with LPS and you will spend much time late uh later. As for CRM, it's also important because you need to manage all the terms of the deals and if you have 100 million TL, it's it's kind of tough because some of the terms will be different for different LPS. So, just be prepared for this. Things can get messy really fast. And talking about increasing the liquidity, there are agents in the market as well. And there are two type of agents. It's buy side and sell side. So about 95% is a sell side. And their main job is just to connect you with the LPS. And they like take one 2% from your TVL provider. But there is a buy side agents and they work on the pro on the LP side and they receive the money only then they generate revenue for their LPS. So they can be pretty distinctive on the terms they will push you for the better tone for the LPS but it's not necessarily a bad thing because they can help you to improve the project in general. They can help you to improve the protocol idea tiers etc. So it means they yeah for sure you will be more competitive in the market. So yeah you you should work definitely with the sell side and the buy side. And talking about key takeaways, if I want you to remember only two things, uh it will be the next like LPs are usually asking themselves only two questions like is it safe to put the money into this protocol today and the second question is will we be TG successful in six months? So will I get SLP my API is expected. So if you can answer to this question yes uh then your protocol has a strong chance of success and that's the core of everything we've discussed today. uh for sure like we are pretty short on time so you can also check some tips for liquidity protocol protocols which we haven't included here and we there are also market insights from liquid cicada liquidity land ei capital and others who helped us to prepare this presentation and for sure if you want to ask some question about the liquidity providing or to connect with the ops or to discuss your program or just just to discuss DeFi just scan the code and write to me. Thanks for your attention. Thanks for having me. >> Okay, big applause. Thank you, Alexander. Uh, let's start the Q&A session. So, um, we have a hand there. Yeah. Thank you very much. What's your opinion on the projects which are starting without any investments like hyperlquid or even without tokens? Um okay yeah that's that's a good question. So usually let's say uh like from our LP side we are usually not providing the liquidity to these protocols. It's kind of um different LPS because there are a number of LPS who are looking for more yield. So you should balance it with a higher API on the start. That's still fine. uh but let's say VCs are also showing that they've done some due diligence on your team etc capabilities but that's okay yeah you still can generate but the problem is how you will uh generate the additional yield for them I mean if you are not planning to launch the tokens I think you will be able to generate the market yield let's say I don't know 10 15% so where will be upside that's the issue Thank you. Any Oh, sorry. Any other questions? Okay. Have a question here. Thank you for your presentation. Uh my question is uh regarding the slide about external help. Uh we have the sell side, we have the buy side. uh can your project like uh have help from both of these parties and uh fill the market with liquidity doing it? >> Yes. Yes. Sure. Sure. At first we can connect uh we can help you to improve the program in general and we can connect you also with the let's say liquidity land. They also help to to create the public program for you. So it's also important. So yeah, for sure we can help. So you can ask directly. >> Thank you. >> And any more questions? >> Okay, there's a Thank you. >> Um if Guini uh uh thank you for your presentation. I have uh question how you collect uh money for your liquidity pool. Uh do you have any special program for investors uh to to to get money which you planning to invest in the future project? >> Um are you asking from us as LPS >> done? Okay. Uh so yeah we have a let's say we've collected the money from let's say the partners the investors and we have a pool that we are distributing to in different liquidity providers there are also different kind of things in the market let's say we have partners who are creating an SPV for every liquidity program they're raising the liquidity from different investors and providers and that put money into the protocol but from our side we Yeah, we have raised uh the money from the investors and just allocating them to the different protocols. >> Thank you. >> Thank you. Any other questions? Maybe here is one. There you go. I don't know if you can share but like what is the average actual profit from a 30% you know theoretical deal? Um actual profit right now let's say in stable coins it's around 20 to 25%. >> But this is like like for theoretical 30%. >> No no no. >> Yeah. With the f theoretical 35 you will get around 20 25 let's say. We have also let's say uh kind of a familiar LP who is providing the liquidity in Ethereum. So they get between 50 to 20% in Ethereum in like for I guess around $20 million. So it's manageable but yeah it depends on the kind of risk you get. It depends on the like how hard are you understanding the market how many protocols you've checked but yeah the reality is around 20 to 25%. >> Thank you. >> Any other questions? Okay, then let's give a big applause to Alexander.