Sponsored Content
Disclaimer. This content is part of a paid partnership. The text below is a sponsored article that is not part of Cointelegraph.com editorial content. The material is written by our advertorial team and has undergone editorial review to ensure clarity and relevance, it may not reflect the views and opinions of Cointelegraph.com. Readers are encouraged to conduct their own research before taking any actions related to the company. Disclosure.
Decentralized finance (DeFi) originally emerged from the idea of reducing reliance on centralized intermediaries and lowering structural barriers in financial markets. Cryptocurrencies were conceived in the aftermath of systemic financial crises, with the stated aim of enabling peer-to-peer transactions, greater transparency and user control over assets.
Over time, however, DeFi and broader crypto markets have developed fee structures that diverge from early expectations. While many traditional equity brokerages have moved toward zero-commission trading models, a number of crypto trading platforms apply transaction fees that can approach or exceed 1%, depending on the venue, product type and market conditions. Some users attempt to offset these costs through airdrops, rebates or limited cashback mechanisms, which are typically subject to eligibility criteria and variability.
In response to rising onchain transaction costs, DeFi platforms have experimented with several approaches to fee compression. These include dynamic fee schedules, volume-based rebates, protocol-level incentives and token-aligned participation models. Each approach carries different trade-offs related to sustainability, transparency and long-term incentive alignment, and no single model has yet emerged as a standard across the sector.
Within this broader context, Velvet Capital has introduced a cashback-based fee mechanism as part of its DeFi-focused ecosystem.
DeFi usage and cost considerations
DeFi is often positioned as an alternative to traditional financial infrastructure, with transactions settled by distributed networks rather than centralized custodians. In such systems, users generally retain control over their assets, and protocol rules determine settlement processes.
Despite this structure, many decentralized exchanges (DEXs) apply trading fees for spot and derivatives activity. Depending on the protocol and network conditions, these fees can exceed 1%, increasing cumulative costs for users who trade frequently or deploy automated strategies. Even where swap rates are fixed, repeated execution can result in substantial aggregate fees over time.
Against this backdrop, Velvet Capital has positioned its approach as one example of a volume-based rebate model designed to return a portion of fees to eligible users under predefined conditions.
A cashback-based approach
Velvet Capital’s initiative, referred to as Velvet Cashback, is structured around a rolling 30-day trading volume calculation that updates continuously rather than resetting on a fixed calendar date. Under the program’s design, higher volume tiers correspond to higher cashback rates, according to parameters defined by the platform.
The program also incorporates a staking component tied to veVELVET, a staked representation associated with the platform’s native token. Participation in staking may influence eligibility for certain cashback tiers, subject to the platform’s rules and ongoing adjustments.
The cashback mechanism is capped at 100%, meaning that, under specific conditions, eligible users may offset a portion or all of the fees they incur through trading activity. Cashback balances are intended for use within the ecosystem across supported networks, which include Solana, Base, BNB Chain, Ethereum, Monad and Sonic. Availability, eligibility and functionality may vary by network, jurisdiction and user profile.
Artificial intelligence within the ecosystem
Velvet Capital also integrates artificial intelligence-based tools into its platform. According to the company, these tools are designed to support data aggregation, workflow automation and interaction with DeFi protocols through natural-language inputs.
The platform’s interface allows users to view token data, market activity indicators and selected DeFi pools without leaving their wallet environment. AI-assisted features are positioned as operational and analytical aids intended to streamline navigation and execution processes, rather than as systems that predict market movements or guarantee outcomes.
In addition, the platform offers portfolio management functionality that supports collaborative trading structures. Users can create shared vaults that other participants may join under predefined access conditions. Transactions within these vaults are executed under the same parameters for participating wallets, based on the platform’s execution model.
Long-term perspective on DeFi fee models
Velvet Capital frames its cashback initiative within a broader discussion about how fee structures in DeFi may evolve as the sector matures. In traditional finance, commission rates declined over time following regulatory and competitive shifts, eventually leading to widespread zero-commission equity trading. Whether DeFi follows a similar trajectory remains uncertain and will depend on factors such as protocol economics, liquidity dynamics and regulatory developments.
At present, trading fees around 1% remain common across many DeFi venues, while rebate and cashback programs vary significantly in scope and structure. Velvet Capital’s approach represents one attempt to explore alternative fee models within this landscape.
As with other DeFi mechanisms, actual costs and benefits depend on protocol rules, market conditions and individual usage patterns. Participation in decentralized finance involves technical, market and regulatory risks, and platform features and programs remain subject to change over time.
Any references to artificial intelligence tools are limited to analytical or operational support functions and do not guarantee profits, returns or trading outcomes. Cashback, rebate or fee-offset mechanisms are subject to platform rules, eligibility criteria, applicable terms and conditions, and may change over time. Participation in decentralized finance and digital asset markets involves risk, and users should assess the suitability of any product or service based on their own circumstances and jurisdiction.
Disclaimer.This content is part of a paid partnership. The text below is a sponsored article that is not part of Cointelegraph.com editorial content. The material is written by our advertorial team and has undergone editorial review to ensure clarity and relevance, it may not reflect the views and opinions of Cointelegraph.com. Readers are encouraged to conduct their own research before taking any actions related to the company. Disclosure.
