New DeFi protocol Nudge aims to unlock hidden value in users’ wallets

Nudge seeks to unleash a new DeFi primitive called Re: allocation Value.

Nudge is launching a new decentralized finance (DeFi) protocol on Ethereum designed to unlock the economic value hidden in users’ wallets, it told Cointelegraph on Aug. 15. 

It aims to create a two-sided marketplace where Web3 protocols pay users incentives — or “Nudges” — to redirect onchain assets, liquidity and engagement.

Nudge will unleash a new DeFi primitive called “Re: allocation Value” that represents the economic value of users’ onchain activities, according to the company.

“Users can extract a substantial amount of this value by getting paid or ‘Nudged’ by protocols to re: allocate those scarce goods onchain,” Nudge said in a statement shared with Cointelegraph.

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Nudge’s programmable smart contracts allow participating protocols to craft “sophisticated eligibility and payout criteria” for incentive programs, it stated.

“One significant use case is asset nudging, where users can earn rewards by reallocating their holdings— stablecoins, memecoins, or governance tokens — between competing ecosystems,” according to the statement.

Other uses include “liquidity nudging,” where users enhance returns by reallocating staked Ether (stETH) or liquidity to the highest bidder, and “activity nudging,” where protocols pay users to redirect engagement.

Nudge could emerge as an alternative to existing onchain incentive mechanisms, such as airdrops, which have been plagued by underperformance and contention over arbitrary payout criteria.

“I absolutely think we have reached peak airdrop,” Jonathan Joseph, co-founder of SmartFunds, a real-world asset platform, told Cointelegraph.

“We need constructive models that get liquidity into new protocols in a way that adds value to all stakeholders involved.”

Nudge is launching first on Ethereum and will eventually “extend across various ecosystems, including Solana, Bitcoin L2s and more,” Nudge stated.

The protocol was created by German developer DeFi Labs, which previously launched Mauve, a compliant decentralized exchange, and Violet, an onchain identity protocol.