Chain owned liquidity refers to digital assets held within a decentralized protocol’s smart contracts, managed and controlled by the protocol itself. These assets are not provided by external users but are native to the protocol’s treasury or operational reserves. This liquidity serves various functions, including supporting stablecoin pegs, facilitating swaps, or providing collateral for lending. It grants the protocol greater autonomy and stability in its financial operations.
Context
The concept of chain owned liquidity is a significant development in decentralized finance, moving away from reliance on temporary user-supplied liquidity. Discussions often focus on its role in protocol sustainability and its ability to reduce mercenary capital issues. Projects implementing this model aim for long-term operational independence and increased resistance to market volatility, which is a key trend in current digital asset strategy.
The RPCfi primitive converts off-chain Remote Procedure Call costs into on-chain liquidity, forging a usage-based flywheel for capital efficiency and market stability.
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