ICO was once all the rage, but now it has almost disappeared.
IEO was once very hot, but now it is getting colder.
The difference is that the ICO is almost gone, while the IEO is still there. This year, the exchange also launched an IEO. Binance once launched sand in the form of IEO.
After the liquidity mining exploded, the heat gradually faded. ICO or IEO may be the end of liquid mining.
So, will liquidity mining disappear like ICO? Still keep a low profile like IEO?
❖Exchange and market making❖
Open various repository-style Dex, we will see two interfaces: exchange and market making. These are two ways to participate in a repository-style Dex.
So, what is the relationship between exchange and market making?
We know that the changer uses one currency to exchange for another currency, injects one currency into the transaction fund pool, and then exchanges another currency from the fund pool.
In other words, when the exchanger is trading, his opponent is the fund pool. Where did the fund pool come from? Yes, the market maker injected the capital pool.
Therefore, in essence, the exchanger and the market maker are rivals.
This is different from the order book-style Dex or Cex. In the order book-style Dex and Cex, the trader’s opponents are other traders. Logically, what the exchange provides is only a trading platform. It does not participate in trading, but just reaps the benefits of fishermen.
However, in the repository-style Dex, exchangers and market makers are actually playing games.
The risk of the exchanger is relatively small. Because the changer is active. Exchangers actively initiate transactions and can even move bricks based on the price difference between Dex and other exchanges.
The market maker is more passive. With the exchange of convertors, the ratio of the two currencies in the transaction fund pool will change, and the ratio of the two currencies used by the market maker will actually change.
Therefore, although the other relationship between the exchanger and the market maker is that the exchanger is the user and the market maker is the shareholder. The user pays a handling fee to the market maker. In fact, this is a kind of risk compensation. Exchangers have low risk, so they have to pay commissions, while market makers face greater risks, so they receive commission fees.
❖Mining Coins❖
Despite the handling fee compensation, market makers still face the risk of impermanence. Therefore, some repository-style Dex issued mining coins, and market makers received both commission income and mining coin rewards, thus encouraging people to participate in market making.
Some people think that the increasing number of mined coins will lead to long-term inflation, so the price of coins will get lower and lower. It is meaningless to think that mining coins.
The little bee has a different point of view.
We know that in the repository-style Dex, there are two types of users, exchangers and market makers. They are actually rivals. There are two currencies, two currencies for exchange, these two currencies are actually counterparties.
When mining coins intervened, market making became three coins and three things.
We know that the triangle is the most stable shape in the world. Therefore, when mining currency intervenes, the two types of mining currency and exchange become a triangular relationship; exchange, market making, and mining also form a triangular relationship.
Exchangers can also exchange for market making, because market making can also be used for mining.
Market makers can also retrieve the market-making assets at an appropriate time and exchange them, because they want to avoid and reduce the risk of impermanence.
Therefore, although the mining currency has an obvious downward trend, it still seems to have a certain significance.
❖Write at the end❖
In the repository-style Dex, the exchanger and the market maker are actually rivals. The market maker is the taker of the exchange.
There are two kinds of coins, A and B. Some convertors exchange A for B, and some exchange B for A, but there is always a trend, or more A flows into the fund pool and B flows from it; or Conversely, more B flows into the capital pool and B flows out of it.
The market maker is the receiver. In addition, market makers are different from order-thin exchanges in that they can place orders. Market makers are the unconditional takers of exchangers.
Therefore, as a kind of risk compensation and incentive, liquidity mining is actually to encourage more market making, to make the capital pool larger, and to allow exchangers to enjoy lower slippage during transactions. Therefore, mining, exchange and market making form a triangular relationship. Mining is not only good for market makers, but also good for exchangers.
Of course, this triangle relationship is unbalanced when mining coins are speculated crazy. Because there is too much bubble in mining coins. At that time, when the liquidity mining bubble faded and prices became more rational, this balance would gradually be established.
Of course, mining coins are not suitable for long-term holding. As far as the current liquidity mining design is concerned, mining coins are inflationary for a long time, and there are not many application scenarios, except for doll mining. However, even things that fall for a long time are subject to short-term fluctuations. In short-term fluctuations, mining coins are not without opportunities, but are very difficult to grasp. However, we cannot deny the significance of liquidity mining for market making and exchange.
