Yieldfunding
Yieldfunding is a mechanism where a user’s staked capital (e.g. tokens) generates yield or interest through DeFi protocols (such as Morpho vaults). Instead of the deposited assets themselves going to the project, only the generated yield is directed to the project. This reduces risk for contributors because their capital remains intact and can be withdrawn at any time.
Yieldfunding Benefits:
"No-Loss" Contribution: only yield is being used to help fund projects, which means that any deposited assets will always be available for withdraw when desired.
Alignment: it aligns the incentives of builders and supporters, committing their capital over a specified time-frame and building a loyal community.
Risk/Reward: with yieldfunding, the risk to reward ratio compared to traditional investing is magnitudes lower. Because there is no direct investment, those with a lower risk appetite have a greater opportunity to participate.
Community-first instead of VC-first: Builders can raise capital for their early needs without selling huge stakes early to VCs or launching a token prematurely.
Supplemental: yieldfunding is supplemental to any project. This means that, by utilizing Builda's yieldfunding, they still can explore other funding avenues such as through a VC if they so choose. They aren't obligated to only use Builda as their sole source of funding.
Note: participants can withdraw their staked tokens from active yieldfunding campaigns at any time.
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