Exit Friction Models

Exit Friction Models

Ownership • Legacy • Access Control • Sovereignty

mechanisms that slow, penalize, or disincentivize early withdrawal

Exit Friction Models are protocol-layer mechanisms designed to slow down or penalize capital withdrawal in order to reduce volatility, preserve liquidity, and promote long-term participation. These models create “soft locks” through timing constraints, fee structures, or progressive reward systems that make it economically irrational to exit early. Exit friction isn’t about restriction — it’s about realigning user behavior through well-placed disincentives and pacing.

Use Case: A staking platform includes a Cooldown Period of 7 days before assets can be withdrawn and applies a Protocol Withdrawal Fee if users exit before 30 days. Together, these exit friction models deter yield-hopping and preserve protocol stability.

Key Concepts:

• Cooldown Periods — Time delays that slow down unstaking or access to liquidity
• Protocol Withdrawal Fees — Penalty fees applied to early exits or fast capital movement
• Reset Penalty Systems — Users who leave lose all accrued loyalty or reward progress
• Retention Pressure — Incentive pacing that encourages users to remain staked longer
• Exit Discipline Toolkit — Modules that enforce behavioral alignment during withdrawals
• Penalty for Unstaking — Early exit consequence mechanisms
• Cooldown Penalties — Forfeiture or reductions during waiting periods
• Reward Forfeiture Models — Systems that revoke unearned rewards on exit
• Staking Disincentives — Mechanisms that discourage early withdrawal
• Behavioral Deterrent — Mechanisms that discourage short-term behavior
• Behavioral Lock-In — Users maintain benefits only through uninterrupted participation
• Protocol Stickiness — Ability to retain users through incentive design
• Token Velocity Control — Strategies to slow token turnover
• Unstaking Timers — Time-based delay between exit request and withdrawal
• Staking Withdrawal Mechanics — Framework governing how exits are paced and penalized
• Liquidity Defense Bundle — Combined mechanisms for TVL protection

Summary: Exit Friction Models introduce calculated resistance to withdrawal. By making exit behavior less attractive, they stabilize token ecosystems, reduce mercenary cycling, and increase the quality and consistency of protocol participants.