Liquidity-driver tokens, as I call them, are an emergent and fascinating construction. Simply put, these tokens enable you to direct incentives (CRV, BAL, etc.) to the liquidity pool of your choice. To do so, you must usually own and lock the corresponding token (veCRV, veBAL, etc.
Liquity recently released the LUSD Chicken Bonds, a game-theory experiment merging DeFi and NFT elements to grow LUSD’s liquidity and reduce its price premium.
Although Chicken Bonds are building on top of existing protocols, such as Yearn, b.protocol, or Curve, it also instigates novel mechanisms, the two leading ones being:
A few weeks ago, the concept for the GHO stablecoin was introduced on the Aave Governance Forum and triggered a wave of excitement across DeFi. Indeed, the idea of a decentralized, collateral-backed stablecoin, pegged to USD and native to the Aave DAO makes a lot of sense as a next step for the protocol.
Decentralized finance has allowed the emergence of autonomous protocols whose functionalities are ensured by smart contracts that are sometimes immutable. It enables individuals from all over the world to use financial services that are at the same time sovereign, accessible, and more efficient and resilient than those available in traditional finance.
I’ve been a little less involved in the DeFi discussion lately and you might righfully wonder why. First, I needed to slow down and take some time for myself, and the timing could not be better. While I was off, I had the time to reflect on what drew me to DeFi in the first place and how the space has evolved since I started getting involved about four years ago.
The game and the fight around CRV and CVX tokens have changed in scope since my last article describing the original Curve Wars, now almost primitive. The infrastructure around Curve has become much denser with the arrival of Convex of course, but also Votium, Union Llama Airforce, Concentrator, CCRV, Lendflare, Warden, and many other protocols still in development.
Decentralized finance has opened up a world of possibilities: a myriad of previously necessary intermediaries are now supernumerary. Nevertheless, it is intimidating because of its potential complexity and interdisciplinary. In addition to the obvious technical dimension, DeFi also invokes concepts from various disciplines: economics, social sciences, “memetics”, etc.