Wouldn't most of the liquidity come from Hive that is currently powered up?
I mean, if the AMM offers 200% initially (since funds allocated are low to start with) then people will power down (they probably would have done this is advance) since the yield exceeds the powered-up curation yield of 10-12%.
People will power down and the funds in the AMM will increase and the AMM yield will drop until equilibrium is restored. Probably the AMM yield would be slightly higher than the curation yield because people like Hive voting. So like 15% vs 10%.
But mainly the process would move Hive from powered-up status to the AMM fund.
Hive pulled off the exchanges for the initial yield of 200% (attractive) would quickly return to exchanges once the yield falls to 15% (better options out there). So potentially a brief pump and then a dump on the markets.
I mean, I'm not against the idea of an AMM. I think it would be cool.
I'm just not convinced it would lock up additional liquidity or increase the Hive price.