💸 [Analysis] DeFi Liquidity Models - Alex Evans

Decentralized finance liquidity protocols vary widely, each nudging competitors in the adoption race. Three models are found: truly peer-to-peer sites like Augur ($REP), ecosystems like Uniswap or Compound, and highly parametered systems like Maker ($MKR). Time will determine who wins the competition race, but for now how each system controls and dispenses liquidity gives clues to future dominance. One trend in DeFi protocols is smaller, more concentrated pools of capital to ease adoption. Maker leds this game, as its system only allows for trades in one asset, DAI. P2P and ecosystem models require high amounts of infrastructure, a liability simpler systems like Maker do not have. As these costly systems grow they offer potential upside in the amount of products and services they offer. Today, liquidity is the key indicator of adoption.