How Does Royco Protocol Work?
Royco Protocol is an incentive marketplace that helps DeFi applications attract liquidity by negotiating rates with providers. With ~$32M combined TVL (V1 + V2) across Berachain, Arbitrum, Ethereum, and other chains, it processes incentive campaigns through its IAM model. The B- risk grade reflects strong audits (Spearbit, Cantina, Nethermind) and no security incidents, but notes the novel IAM mechanism, Berachain concentration, and zero current fee revenue.
TVL
$20M
Sector
Yield
Risk Grade
B-
Value Grade
D+
Core Mechanisms
4.2.5
NovelIncentivized Action Markets (IAMs) for pricing on-chain incentives through negotiated marketplace
Novel marketplace where dApps and LPs negotiate incentive rates dynamically.
7.3.1
NovelPoints-to-token conversion via Boyco pre-deposit campaigns for Berachain launch liquidity
Boyco facilitated Berachain day-1 liquidity; over $3B TVL at peak.
2.1.2
Percentage-based protocol fees on incentive distributions
Protocol fee on incentive transactions.
8.1.3
Cross-chain incentive distribution via LayerZero and Stargate
Enables incentive markets across multiple chains.
5.4.1
Team-managed marketplace parameters
Team controls marketplace rules and campaign approval.
How the Pieces Interact
Pre-deposit campaigns attract capital with token promises; if actual value disappoints, LPs face losses and marketplace confidence collapses.
Cross-chain incentive delivery depends on bridge infrastructure; failures could strand LP capital.
Centralized control over marketplace rules could favor certain participants.
High fees reduce net incentive to LPs, potentially reducing participation.
What Could Go Wrong
- Incentivized Action Markets (IAMs) are a novel mechanism for pricing on-chain incentives with no direct precedent.
- Protocol acts as an incentive marketplace — if pricing is mispriced, one side bears disproportionate risk.
- Berachain concentration (58% of TVL) amplifies chain-specific risk; multi-chain fragmentation adds cross-chain operational complexity.
Incentive Mispricing Causing LP Losses
ModerateTrigger: IAM marketplace misprices incentives, causing LPs to commit capital for insufficient returns.
- 1.dApp offers uncertain-value incentives — LPs commit capital on optimistic pricing
- 2.Token value disappoints — LP returns are negative
- 3.LPs exit marketplace — Liquidity dries up
- 4.dApps can't attract liquidity — Protocol utility collapses
Risk Profile at a Glance
Overall: B- (34/100)
Lower score = safer