RE: LeoThread 2025-08-07 11:05
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The tools being developed for Thorchain currently aim to aid arbitrage users, who act as the genuine liquidity providers since streams emerged.
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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…