Liquidity unification refers to the process of aggregating and consolidating fragmented pools of capital across multiple decentralized finance protocols and blockchain networks. It aims to create deeper, more efficient markets by making dormant or siloed assets accessible for trading and yield generation. This concept is central to improving capital efficiency in DeFi.
Context
The drive towards liquidity unification is a recurring theme in DeFi development, with ongoing discussions about new protocols and cross-chain solutions designed to achieve this goal. News frequently reports on initiatives that aggregate liquidity from various sources, the challenges of maintaining security and decentralization during this process, and the potential economic benefits for users and protocols alike.
PayPal's PYUSD stablecoin leverages LayerZero's OFT standard, deploying a unified, permissionless asset across nine new chains, enhancing cross-chain liquidity.
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