Liquidity is often said as the lifeline of the Defi industry, because it determines the convenience with which digital assets can be purchased and sold at stable prices.
Digital assets require sufficient liquidity to create efficient markets, because this facilitates fast, seamless transactions. If a digital active liquidity has a high liquidity, this means that it can be traded in large volumes with little impact on its price, which contributes to a stable market and a greater confidence among investors. On the other hand, low liquidity causes enormous problems, with irregular price movements that cause significant risks for market participants, lower investor confidence.
It is for these reasons that the availability or lack of liquidity has such a major influence on investment strategies and market perception.
In order to become Defi Mainstream, it is necessary to attract sufficient liquidity to support massive capital inflow of institutional investors, investment banks, hedge funds and risk capital companies, and therefore buzzed this important market with innovation.
Without sufficient liquidity, the idea of investing in digital assets is a non-starter for many of these institutional investors. A famous example of how the lack of liquidity can keep the industry back, took place at the end of 2021, when it was reported that a large family agency wanted to invest in the Tokenized Carbon Credits Marktplaats Klimadao. It was about Klimadao on Twitter (now X) and wanted to invest millions of dollars in the carbon credit economy, only to discover that the protocol could not possibly support an investment of that size without crashing the value of its NFT assets.
That example shows how the lack of liquidity Defi protocols can paralyze that are simply not ready to scale for mass acceptance.
The evolution of capital efficiency in Defi
Fortunately, the Defi sector has taken a long way in terms of making a greater capital efficiency possible to support the influx of more liquidity. One of the earliest game schangers was Uniswap V3, which was established to place concentrated liquidity to support existing market prices. It managed to improve the capital efficiency in important digital asset markets by 4000 times, so that liquidity providers can benefit from a higher return on their capital.
It was seen as transforming for the Defi industry, but later many liquidity providers discovered that they were priced from their predetermined series. The problem stems from unbalanced transaction costs that can flash on Ethereum between 0.3% and 1%, which can make it inefficient for investors to implement their capital on the UNISWAP V3 -Prize curve, given the expensive transaction costs of that network.
The solution to this problem came from a number of protocols that introduced automated active liquidity provision. The will of Visor Finance, Unipilot and Lixir pioneered the idea of smart safes with which investors can use assets in the liquidity pools of Uniswap V3S, with possibilities for optimization of reimbursements, options to re -invest the reimbursements and optimize the liquidity meeting.
Another important development in liquidity supply came with the arrival of chain-specific Dex-Aaggregators, which facilitates the price discovery on multiple decentralized exchange platforms before they carry out transactions via the most optimal route to guarantee the best possible price. They were followed by the rise of cross-chain liquidity aggregators, which further reduced friction, making cross-chain arbitration and flash loans possible.
In the meantime, other projects have emerged that focus on analyzing the concentration of trade volumes on DEX platforms, so that investors can use automation to take advantage of the most profitable strategies for making market. An example of this is the RFQ algorithm of OX (request for quotation), which facilitates the influx of liquidity of centralized exchange platforms to Dexs.
Liquidity stimuli of the next generation
Such innovations have taken a long way to support and support institutional investments and to support the next level, but protocols continue to look for superior solutions that support more flexible operational and capital efficiency.
That is why there is a lot of hope in the next generation of liquidity management models such as the V3.3 model of THENA, which was inspired by an earlier project called Solidly and was designed to support the dynamic allocation of capital in liquidity pools based on Vethe Token Holder-voices .
Thena positions itself as the liquidity layer of BNB chain and the “protocol of protocols”. With VE (3,3), the most important stakeholders of his ecosystem, Vethe token holders, users, LPS and protocols are aligned by dynamics that determine the emission percentage of his native $ the token, along with the “bribes” by protocols Poured by protocols and the reimbursements generated by every liquidity pool. It is designed to stimulate the maximum liquidity for each project.
The most important element introduced by thena V3.3 is “decentralized emissions”, where emission distribution is based on a free market model that offers third -party protocols with the possibility of stimulating liquidity through two different methods.
The main method is “bribery”, where protocols can deposit extra rewards based on their meter within the bribing interface of thena, so that the holders of Vethe offer stronger incentives to vote for their LP. Moreover, they can also acquire Vethe -Tokens themselves and use them to vote to assign more $ the emissions within their own pole.
In both cases, these mechanisms are fully permissionless and decentralized, with the market price of bribes determined by free market forces.
In addition, thena V3.3 supports a number of “valuing strategies” for protocols, including liquidity deposits or Pol’s in the hands of protocol that enable Vethe projects to use their own liquidity on Thena. As a result, they can then edit $ the tokens and lock the proceeds as Vethe to increase their share in the total offer.
A second strategy called Market Buy and Lock offers protocols the opportunity to buy and lock $ to increase their part of the emissions. In the meantime, reversal deposits can enable protocols to deposit adjusted remuneration amounts for each pool, so that they can be claimed by Vethe token -holders who vote and allocate how many $ the emissions go to each pool. This offers a way for protocols to influence the amount of emissions for their indigenous tokens, and is one of the most affordable ways to stimulate liquidity.
Other methods for protocols to stimulate liquidity include depositors generated from the Polish of Thena as bribes, or selling their voting ability to generate more income, which can then be used if they consider it necessary. Protocols can even use a combination of strategies, such as Pol and bribery deposits.
Powerful tools for liquidity management
Innovations such as decentralized emissions, Protocol property liquidity deposits and bribes can be powerful tools, allowing protocols to increase their influence on the emissions of thena and at the same time support virtuous value creation for each stakeholder.
By giving protocols more control and flexibility on liquidity management, they can come up with tailor -made strategies and scale them in a more sustainable way. Thena V3.3 offers several options for protocols to adjust their growth strategies, while the value of their tokens is maximized and offers strong incentives for long -term liquidity.
