The Network Effect
Each new liquidity provider benefits existing users through the increased fee capture opportunities created from the addition of their supply.
Minterest operates on the principle of a positive sum game and the network effect to deliver increased value to its users. By providing liquidity to the protocol, each new liquidity provider benefits existing users by increasing the fee-capture opportunities created from the addition of their supply. This creates a win-win situation, where the new provider benefits from the yield generated by the protocol, and existing users benefit from increased fee value, which allows for higher value buybacks.
These buybacks positively support the value of MNT, the governance token of the Minterest protocol. As the value of MNT increases, emission rewards become more valuable, positively influencing user APY. This creates a virtuous cycle where the increased value of MNT attracts more liquidity providers, which in turn creates more fee-capture opportunities and higher-value buybacks. This further supports the value of MNT, attracting more users, and so on.