The key to the future of definiteness

Currently, the protocols are stuck: cycling between the inflows of encouraging and inevitable liquidity outflows as a provider is chasing and higher yield. Even with existing bridge and wrapping solutions, due to concerns about complexity and security, most retail investors are not able to want distribute Their assets effectively in protocols.

This leaves this $ 400 billion The value in empty assets locked over the chains until the protocols across Defi compete for limited liquidity, their demand greatly fires the available offer. Without global liquidity to unlock these empty assets and allow a common liquidity source, deficient to fight traditional finances and reach global adoption.

Liquidity problem

Traditional finances succeed in deep capital markets. The centralized structure of global banks means that liquidity thresholds can be proactive regulated To maintain solvency, and the clear number of participants in bandwidth global markets means that there is capital in any system that is in any system there is capital.

Defi, in contrast, remains fragmented. Lack of compatibility between competing chains fractures Liquidity but a small user base, while non-technical participants can struggle To move your property with interoperability solutions currently existed. This limits the possibilities defined as a financial system; Simply put, people are able to do less with their capital. This problem is trapped in one-two strikes of stagnation and insufficiency.

Without access sufficient liquidity, emerging products are fighting to maintain the scope of trading, capacity for credentials and user activities. To attract Liquidity, new projects issuing gender tokens and offer high apparel or management awards. However, while these strategies succeed in the short term, this capital remains trapped in some ecosystems.

These ecosystems suffer From sharp outflows when rewards cones or is better better, slowing down the growth of new and potentially innovative projects. We even see this manifest in the previous dominant protocol, with Etherem (El) struggling In the past year. This has come from cultural move In definitely from the promise of a long-term utility and instead of returning to Memecoins on Solana-based (Salt), the capital from one silo to another in the process.

Both symptoms and causes of some of these liquidity issues are a huge amount of insufficiently used capital through definition. Unlocking this capital also provides a key solution. When you talk about $ 400 billion billions of billions in definite, we are talking about ‘Prime Minister’ tokens like XRP (XRP), Bitcoin (Btc), Dogecoin (Exaggerate); tokens with High market cover, but relatively low TVL.

These tokens or lacking opportunity to be effectively used in jam and trade or many their owners deficiency Technical ability or interest in investing and restart optimized yield. This represents a significant imbalance in the overall assessment of property and the associated active activity of the Protocol. If we could correct this imbalance, there would be flooding liquidity on the market. This would jump into the investment process and innovation to definitely need.

According to a global layer of liquidity

If it is definitely interrupted without cycling of fragmented liquidity and short-term incentives, must be followed by Tradfi’s lead. Most importantly, it is necessary to develop a common liquidity infrastructure to allow for the flow of funds without friction that potential users expected.

The industry is not blind for these problems, and early steps towards global liquidity are already in progress. Protocols like wormhole and Layerzero allow smart contracts to complete orders by chains. Elsewhere, protocols and advancement of intentions based on evidence of zero knowledge are start To push the boundaries of the Defective UKS, making capital movements as simple as in the traditional offer.

The unique layer of liquidity could create, for example, the KSRP market on Solana, the Doga market on the avalanche (Avaq) and Cardano (Ada) A market-based market. This would enable DEFs projects for functioning such as large long-distance institutions, benefit from deep and stable capital pools, reducing the need for constant incentives programs.

In time, it would eliminate short-termism of the Wars, encouraging lenders to set property with greater confidence, with a unique liquidity framework by mitigating the risks of exposure without compromising yield. The capital would be fully utilized, liquidity would be free to flow where necessary, and define would have speeded up.

For retail users, it would be a breakthrough. With accessible markets of crossed chains, retail investors could easily diversify their property without moving to move complex bridges or do not take unnecessary risks. In addition, simplified UKS reduce technical barriers, making, lending and trading available to users from the day. Given the reduced exposure, retail users could be confident to interconnect each other in defi, adopting billions of dollars in new markets and enabling that it is definitely achieved its lucrative potential.

However, if it is redundant in global liquidity, the main ecosystems must exceed isolated solutions and establish common standards through interoperable liquidity or decentralized coordination mechanisms. Founders and developers must cooperate for a healthy and prosperous ecosystem, and do not compete for limited resources.

Movements to unlock the free flow market of the future requires more than one market suffocation. It will come from efforts to all industry: a cultural shift towards ambitious and customers adapted to production products that take into account needs and markets and customers of the future.

Conclusion

The liquidity problem of defia is more than a matter of inefficiency; This indicates structural, cultural and systemic issues in the industry. The coordinated response only will allow it to definitely achieve its potential. The industry is locked in the cycle of short-term incentives, with key resources as part of the interpreted and protocols competing for fragmented capital; Without a structural transition to the global layer of liquidity, it will definitely fight for scaling, innovation or offer real alternative to Tradefi.

The foundations for this direction exist; Maybe even in progress, but a coordinated answer remains missing. For those who believe in the DEFF mission, however, the future in which liquidity is free to move in the chains do not negotiate; It’s the only way forward.

Altan Tutar

Altan Tutar is a co-founder and executive director of the Seamarket, a global liquidity market. He has previously worked near the Foundation as it is as a basic associate and a member of higher technical development teams for business development.