Liquidity for Adults: A Practical Taxonomy


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:
Uniswap USDC-USDT Pool:
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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