How will the highly innovative liquidity 2.0 affect Market Cap of Xfi ?
Ⅰ. Increasing token issuance is the root of the bubble
First of all, the public chain bookkeeping mechanism produces mined coins by block, not every block produces a valid bookkeeping to create value. defi’s liquidity mining, the same way pledge mining basically shares the proceeds of mined coins according to time, the problem is that not every time period of pledge can create value.
For example, if $100 million is deposited in a bank and a daily interest rate of 1/10,000 is agreed, then while the $100 million is lying around without creating value, even if the central bank prints $10,000 to pay the interest for a day, then the $10,000 of additional money is actually diluting the value of the stock of money. The fact is that this idle does not create value but only increases the token situation, in the current coin circle accounted for a considerable proportion, so the token price decline has basically become inevitable. The digging and selling of mentions to smash the price of the coin increases the panic and creates a death spiral effect. This explains why more than 90% of tokens/public chain coins are reduced to air, rooted in the lack of application value support and short term hype not enough to support long term value.
Ⅱ. Depleted and Excess Liquidity
When the coin price falls, the liquidity involved in pledging panics to withdraw and the slippage instantly becomes larger, accelerating the decline; when the coin price rises, the increase in favourable conditions leads to a massive influx of funds into the liquidity pool, further strengthening positive market expectations. Investors are the slow hands in the roller coaster of a thought of hell and a thought of heaven being harvested out of existence. The two extreme scenarios repeatedly occur, the coders no longer have the heart to move bricks …… How quickly money is earned will be lost at an accelerated rate. The problem with the liquidity mechanism is that there is an urgent need to improve it from the root.
Ⅲ. Liquidity 2.0
xfi belongs to the Information High Speed Interaction segment and uses a scheme of application added liquidity, where every time an application is executed, a unilateral amount of cash is added to the exchange pool, while a small amount of tokens are generated. It shows the result of one liquidity increase per use and one coin price increase. The fact that advertising newsletters are high frequency just-in-time applications means that the liquidity pool is always increasing. So token trading slippage has been decreasing and the market cap is becoming more and more robust.
On the one hand, the direct abandonment of liquidity mining, there is no withdrawal of liquidity; on the other hand, liquidity increases in one direction with the application, giving investors the expectation of low slippage in the future price of the coin; another point, the application drives the price of the coin up, high-frequency applications that is, high-frequency price increases, not dependent on the market value formed by trading speculation.
Of course, in the initial stage without market liquidity injection, the pool shallow slippage large situation exists, through the specific liquidity injection helps to solve the problem. Objectively, the initial trading volume of any new project is small, and slippage must be reduced through the growth period. xfi Liquidity 2.0 is an effective and durable way for application-based token swap to learn from.
Ⅳ. Innovative ways to add liquidity
In terms of the initial lack of liquidity, the xfi token seed round is 100% funded to act as the original liquidity; furthermore, the token is preceded by a 100% two-way injection of liquidity from the NFT public offering, which is particularly interesting in that it automatically injects liquidity in batches at different prices. 1/6, 1/3 and 1/2 of the funds are injected when the token price rises to 10x, 20x and 30x respectively. The 30x rise on the data model alone is a visible expectation, with short term holders gradually switching to medium to long term.
Value investing often requires a long term sink, the world is not supposed to have fast money, there is indeed big money, and any smooth solution that turns short term users into long term users makes sense. It is worth waiting to see if Liquidity 2.0 can bring some changes to many application scenarios.
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