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Where is the future of liquidity mining?

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Liquidity mining was once the fastest growing dark horse in DeFi, but with a wave of new projects, is there a way out?

Liquidity Mining Is Dead. What Comes Next?

Original author: Andrew& NBSP; Thurman

James, chain Catcher

For now, liquidity mining seems to have run out of gas, with various sub-sectors of the cryptocurrency space keen to find alternatives.

2020 年「DeFi Summer」热潮背后的主要驱动力其实就是因为流动性挖矿，这个概念是指用户为平台提供流动性，比如质押 Stablecoin 或是有价值 Token，然后通过在平台交易、放款、借款，就能获得该平台发送的 Token 作为奖励。

可是，近几个月来，流动性挖矿反而变成了一种「不精确」的激励工具，甚至招来了一批以太坊矿工的猛烈抨击。于是，一大批新项目开始涌现出来作为流动性挖矿的替代品，例如债券、时间加权投票系统、以及专注于「DAO-DAO」的 Stablecoin 发行方等——这些更新换代的项目很有可能将永久性地改变 DeFi 协议吸引质押的方式。

Depending on the project, what really works might be something called "liquidity as a service", or "protocol-controlled value" or even "DeFi 2.0", but whatever the name, the basic principle is the same: managing large amounts of money through incentives.

These efforts seem to be an attempt to answer a deceptively simple question: until now, "free" money has been behind the adoption of DeFi. So what's a more precise way to do this?

As we enter the New Year, projects that address these conundrums are the most popular among traders and investors. Deals focused on attracting liquidity are welcome, despite the market slump. Some believe this trend is in line with the trend. The development of Web 3 is that value can be exploited and commoditized just like information on the Internet.

Fei Protocol co-founder Joey Santoro has this to say: "Liquidity is king. The way I frame it is: The Internet is controlled by services and information stores [cloud computing and data storage] and when you turn it into DeFi, you need value services -- lending platforms and automated market makers [AMM] and then you need stores of value, which is liquidity management."

Whoever controls liquidity controls it. DeFi

Others, such as VENTURE Capital eGirl Capital, see liquidity trading as obsolete. Whether liquidity as a service became a kind of fashion, in brief capricious encryption monetary economic stimulus, and become the new foundation, the market structure of chain from so far at least, to control this DeFi pledged liquidity in the field of arms race, is essentially a race to the $230 billion industry in the war.

Joe Santoro continued: "Liquidity is one of the two most important resources in this new world, and whoever controls liquidity controls it."

However, liquid mining seems to have gone out of fashion

From a usage agreement perspective, liquidity mining initially seemed to represent the future of project mining products with market fit.

在 2020 年夏天的「DeFi 热潮」期间，DeFi 协议 Compound 通过使用 COMP Token 奖励来提高其借贷平台的质押回报率，从而掀起了这股热潮。在类似激励计划的支持下，Sushi 等协议成功地暂时性超越了其竞争对手 Uniswap。

然而，批评者最近指出，虽然向用户发放大量奖励肯定会在短期内刺激质押，但流动性挖矿并是一个不完美的工具，它同时也吸引了多产的 DeFi 开发者 Andre Cronje 口中的「流动性蝗虫」——也就是所谓的「临时矿工」，一旦 Token 被榨干后，他们就会拿走自己的奖励并前往下一个 Token 池。

Deribit "I think liquidity mining is one of the dumbest things that's happened in crypto to date," Insights researcher Hasu said in a recent podcast.

Why do you say that? Because I don't think there is a strategic consideration behind it at all. You should think carefully about "what do we want out of this? What is the target liquidity that we want in the agreement? Once the target is met, there should be no further rewards."

The core audience is the key?

相比之下，利用流动性的新一批项目使回报变得更加透明化。他们试图统计在协议中支付了多少美元的 Token 奖励，吸引了多少美元的质押。在某些情况下，他们实际上是将协议的流动性置于 DAO 的直接控制之下。

The first of these alternatives to mobile mining came about by accident.

自动做市商 Curve 在 2020 年 8 月推出了「投票锁定」功能，该功能允许 CRV Token 持有者锁定其 Token 最多可达四年的时间，以换取 veCRV（投票托管 CRV）。反之，VeCRV 又能为哪些流动性池能获得 CRV 奖励来进行投票，而投票权则会偏向那些锁定自己 Token 时间更长的人。

在那段时间内，它似乎是个体矿工最大化回报率的工具：通过锁定他们的部分 CRV 奖励，他们可以将更多的奖励引导到他们最喜欢的矿池中，从长远来看矿工可以获得更大的盈利。然而，恰恰相反的是，其他协议已被证明是该系统的主要受益者，而不是个体矿工。人们正在这场被称之为「Curve Wars」的竞争中竞相比赛积攒 CRV Token 。

据一位不愿透露姓名的分析师称，这种投票锁定系统——也称为「Ve 经济模式」——「假装选择时间偏好，但实际上将治理集中在谁能积累最多 Token 的人身上。」

In short, who accumulated the most. VeCRV, who controls the amount of CRV reward released.

目前，控制 Curve 奖励的「造王者」协议是 Convex Finance。根据 Dune Analytics 的数据显示，Convex 占据了 CRV Token 总流通量的 43%，这一比例非常惊人，而投票权中，1 枚 Convex 的治理 Token CVX 相当于 5.1 枚 CRV Token 。

In fact, Curve and Convex are also the two largest protocols in DeFi. According to DefiLlama, the total number of lock-ups between the two protocols has reached 40 billion dollars.

As a result, a "new industry" soon appeared in the market, using products such as Platforms such as Votium, where agreements can be used to "bribe" vote-managed CVX holders to channel liquidity into pools of capital that are important to them.

In fact, "bribery" with deposits has clear benefits to the DeFi agreement.

举个例子，比如像 Terra 的 UST 这样的 Stablecoin ，Curve 池中的存款其实有助于 UST 确保拥有健康、流动的市场，帮助 UST 保持与美元挂钩并为 Stablecoin 创造效用——实现流动性挖矿计划可能实现的所有目标，同时成本、回报和目标也会变得更加透明。

事实上，在最近的治理论坛帖子中，UST Stablecoin 团队成员得出结论，该协议正在进行的通过 CVX「贿赂」激励存款，而且积累 CVX Token 的计划也「进展得非常顺利」。

According to some, these benefits mean that "DeFi Ve economics" is likely to survive.

Redacted 创始人 0xSami 表示：「假设你是一个 Stablecoin ， Stablecoin 的首要任务是建立流动性，所以你去购买 Convex Token 是有道理的。此外，如果你想要衍生品流动性，那么你应该去购买 Ribbon 的投票托管 Token 并用于 DEX 流动性的 Sushi 或 Aave，这样你就可以成为贷款的抵押品，这将是今年的一个大趋势。」

Does "bribing" the DeFi ecosystem make sense?

In the wake of the emerging "Bribe" economy, many new products are coming to market that act as governance or voting intermediaries in an evolving technology stack and are dedicated to protocol routing and liquidity control: Warden, Llama Airforce, Votium and Votemak.

Votemak was recently acquired by Redacted, the governance marketplace platform. The company also recently announced that it completed a $4 million seed round of financing to help establish the VEV agreement, led by Spartan Group and joined by Dragonfly and Rarestone Capital.

Frankly, part of the reason for the rise of these programs may be that other DeFi programs implement "variants" of the Ve economic model, thus creating more market demand so that DeFi protocols can buy tickets to obtain liquidity --

Tokemak 就是这样一个项目，该协议旨在成为一个去中心化的做市商：用户存入资金并获得 TOKE Token 作为奖励， Token 可用于投票以决定在哪个 DeFi 协议部署流动性。因此，对于那些希望通过「贿赂」引导流动性的 DeFI 协议来说，Tokemak 现在成为了他们「盯上」的另一个目标。与此同时，其他项目（例如 Frax 和 Yearn）也开始尝试引入 Ve 式经济模型。

"Retail investors can understand what we are doing and why it is important," said Condorcet, the anonymous founder of the Bribe Agreement. "They want the same Bribe as the people behind them, so we do it." Tokemak will be one of the results of the first integration.

不出所料，新兴行业也引起了风险资本投资者的注意。Bribe 最近一轮融资的参投者之一，来自 Dragonfly Capital 的 Ashwin Ramachandran 表示：「我们认为这是一个很有趣的趋势，就流动性挖矿计划而言，在资本效率和定价方面绝对能得到一个数量级的提升，而这可能会给原生治理 Token 造成过度的抛售压力。」

Token control

While some DeFi protocols are playing the "bribe" game, trying to channel liquidity to their advantage, others have opted for direct control of liquidity -- another emerging trend known as "protocol-owned liquidity".

算法 Stablecoin 项目 Fei Protocol 正在与 Ondo Finance（一种专注于减轻无常损失风险转移的 DeFi 协议）合作，旨在构建一种产品，允许协议将国库中的本地治理 Token 与 Fei 的 Stablecoin 配对，以直接创建流动性资金池。

This means that the DeFi protocol can create a pool of liquidity directly, rather than having the protocol generate user deposits in the pool -- and crucially, it also allows the protocol to retain a portion of transaction fees from the pool, thereby creating a new revenue stream.

这一逻辑已经应用在了 Olympus 的债券计划 Olympus Pro，在该债券计划中，Olympus 协议用流动性池头寸交换债券，然后允许协议控制其 Token 的流动性，并赚取交易费用。

Fei Protocol 协议创始人乔伊·桑托罗解释说，这是新兴「direct-to-DAO」服务的一部分，也就是让第三方来帮助 DAO，以更有效地引导其 Token 的流动性以及其他需求。

协议拥有的流动性本身也正在成为一种垂直领域，Olympus 及其各种分叉协议，包括 Wonderland 和 Redacted 等协议，已经积累了大量的 CVX Token 和其他具有「贿赂」收入潜力的 Token ，以寄希未来可以使用 Token 储备来产生回报。

In a recent tweet, Daniele Sestagalli, a protocol developer at Wonderland, admitted that they were moving away from Olympus's much-maligned "annualized revenue plan."

与此同时，Redacted 的 0xSami 则表示，他希望协议成为一种「元治理 Token 」meta governance token），使项目能够成为单一资产。实际上，Redacted 已经开始这么做了，比如他们的「元治理 Token 」 BTRFLY 就在多个治理过程中发挥了主导作用，协议金库通过此服务赚取费用，这些费用又可以通过债券或类似的金融工具进行再分配。0xSami 进一步说道：

「显然，我们现在需要高年化回报来获得市场竞争优势，不过，一旦建立了金库， Token 甚至不需要采用 rebase 分配机制——因为我们完全可以引入一个具有可持续回报的项目。」

One example of this concern is Avalanche protocol ecosystem project Wonderland, which has made a seed investment in Polygon-based decentralized betting app BetSwap, according to avalanche-based algorithmic money market Wonderland, Jan. 7. The move marks one of the first instances of community-governance cryptography projects investing in DeFi protocols. On Jan. 11, Wonderland crossed the $1 billion mark, and was quick to use its own money for a big buyback on Jan. 18, which may have been the same. The first example of DeFi project "quantitative easing".

Layer 2 extension

Oddly enough, until recently, most of the liquidity as a Service experiment focused on Ethereum. You know, many alternatives to Layer 1 is still running incentive programs, and they are still using traditional liquid mining tools, so it is extremely inefficient -- arguably the best time to disrupt the traditional DeFi model, and the time is ripe.

在谈到以太坊替代链时，乔伊·桑托罗说道：「我认为你会看到完全相同的说法——通过释放治理 Token 进行收益耕作，将会变成 DeFi 协议拥有的一种流动性形式。」

将您的 Token 分配给平台，然后助推平台的未来发展——这无疑一个非常强大的概念。

In fact, DeFi protocols that deploy the Ve economic model are already beginning to appear in other ecosystems. Andre Cronje and Sestagalli, for example, are working together on an unreleased fantom-based project currently called ve(3,3) -- essentially a mashup of ve economics and Olympus pledge.

The unreleased project has already shown huge popularity, but on Tuesday, a new project named &NBSP; VeDAO's new project, which aims to acquire majority control of the ve(3,3) agreements, has locked in more than the total value of the agreements in just a few hours. 785 million dollars.

Meanwhile, Joe Santoro says, Planning to choose one. Layer 2 to migrate its ecosystem, which he thinks is a protocol. Very beneficial and will continue to push them to be a leader in the field of fluid mining alternatives. From Joey Santoro:

"Fei Protocol will migrate to Layer 2 as we see fit, we will also build L2, who can have a $1 billion unincentivated lockup volume blockchain competition?"

What is the way forward?

While "liquidity as a service" is currently one of the fastest growing areas in cryptocurrencies, the problem is that even those working in the space don't know if "liquidity as a service" is the future that will drive crypto projects.

Founder of Redacted & NBSP; 0xSami believes that projects such as Curve and Tokemak, which have become liquidity hub through incentive schemes, will either win a large share of the market or disappear altogether:

"For Curve and Tokemak such DeFi projects, either one of them becoming the ultimate liquidity center, or narrative run out, and then the death of one by one."

最近几周，一些分析师也指出，虽然许多 DeFi 协议锁仓量比以往任何时候都高，但随着低费用 Uniswap v3 池不断侵占 Curve 的「领地」，Curve 的 Stablecoin Swap 交易量（也是其市场份额的基石）的市场份额其实一直在下滑。

一位不愿透露姓名的分析师也对 Ve 式经济模式获胜表示怀疑，称 ve-token 并没有「针对正确的事情进行优化」，但「流动性治理和 Token 释放控制令人难以置信」，这位分析师说道：

「这是 Curve 给 DeFi 生态系统的最大礼物——能够以流动性释放的形式将你的 Token 分配给平台，这有利于推动平台未来增长，无疑是一个非常强大的概念，」

At the same time, Joy Santoro believes that the eventual outcome of the DeFi market may not be a single winner, but a world with multiple competing joint projects, all of which have a lot of liquidity.

"I don't think it's a monopoly, it's a bunch of competing ecosystems. It's part of the DeFi market integration narrative. You'll see Tokemaks, Olympuses, Tribe DAOs, Curves absorb liquidity and control, and DAOs that are aligned with them will benefit as well."

Even if the outcome is uncertain, projects that emerged during the liquidity mining boom have shown us how to attract and motivate users, and while the VE-style economic model is somewhat misleading, who wouldn't want to retain liquidity?

Joey Santoro finally said significantly --

"I thought there was nothing wrong with trying."