The tools being developed for Thorchain currently aim to aid arbitrage users, who act as the genuine liquidity providers since streams emerged.
The tools being developed for Thorchain currently aim to aid arbitrage users, who act as the genuine liquidity providers since streams emerged.
This significantly questions the necessity of traditional LPs, suggesting that only a 'minimum liquidity' for arbitrageurs to rent is required to maintain market prices.
For BTC, it’s estimated that rental fees should range from 27-58%, yet pool fees are far from this. At just 27%, existing volumes could back around $5-$10M in liquidity.
Additional liquidity relies on the expectation that Rune's value will align with BTC.
To sustain the present system, pools must become significantly more capital-efficient, possibly by 5-10 times (volume/liquidity ratio).
Anticipating virtual order books will prevail…