Liquidity for Adults: A Practical Taxonomy

Introduction

Liquidity in DeFi is a completely different beast than in CeFi. I would call the former an algorithmically-rebalanced hybrid asset, while the latter is essentially fiat cash that is earmarked for investment or another purpose.

Classes of Liquidity

1. Backbone

Uniswap v3 ETH-USDC Pool: https://info.uniswap.org/#/pools/0x8ad599c3a0ff1de082011efddc58f1908eb6e6d8
Uniswap USDC-USDT Pool: https://info.uniswap.org/#/pools/0x7858e59e0c01ea06df3af3d20ac7b0003275d4bf
SolFarm tokenomics chart: note almost half the tokens are reserved for LP incentives

Types of Liquidity

  1. LP Tokens
SolFarm Leveraged Liquidity position from initial deposit of 500 RAY.
Bancor single-token LP
Balancer Liquidity Providing interface

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A.N.Ranga

A.N.Ranga

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I write about crypto, climate, sports, music, and other stuff