How Does Competition Impact a Protocol’s Projected Fee Capture Rate?

Competition directly impacts a protocol's fee capture rate by driving down the fees it can charge. In a highly competitive market, protocols must offer lower transaction fees or higher user incentives to attract and retain users, which reduces the total revenue available to the token holders.

The projected fee capture rate must be conservatively adjusted downward over time to reflect the inevitable commoditization and competition in the decentralized application space.