# Protocol Owned Liquidity

On decentralized exchanges, protocol-owned liquidity is a novel method for providing tokens with liquidity.  Rather than depending on market incentives to provide liquidity to liquidity pools, the protocol-owned liquidity model employs a "bonding" mechanism.

Nemesis PRO has always held a substantial amount/supply of the NMSP liquidity through the bonding mechanism. This ensures that users and protocols are always able to exchange NMSP regardless of market and/or external conditions.

The Treasury of Nemesis PRO maintains NMSP liquidity on decentralized exchanges. With [RBS (Range-Bound Stability)](/whitepaper/features/range-bound-stability-rbs.md), the equilibrium between reserves and liquidity is determined by an algorithm with the purpose of optimizing liquidity and resources for resilience and long-term market stability.<br>

#### The Traditional Form of LP vs. POL

<table><thead><tr><th width="143">Actions</th><th>Traditional form of LP</th><th>POL</th></tr></thead><tbody><tr><td>How</td><td>A. High emission of tokens to incentivize liquidity providers<br>B. Gets liquidity from outside providers and pays continuous bribes. </td><td>Acquire LP tokens via <a href="/pages/RNr87BcQ0qDq8xWbgFGd">bonding</a></td></tr><tr><td>Impact &#x26; Effect</td><td>A. Stagnant or downward pressure on token price due to inflationary pressure<br>B. Continuous time and resources required to secure liquidity</td><td>Emission from <a href="/pages/RNr87BcQ0qDq8xWbgFGd">bonding</a> can be modeled and numerous variables within one's disposal, giving a significant degree of control</td></tr><tr><td>Advantages</td><td>None</td><td>A. Relatively maintenance-free once the bond market has been created.<br>B. Ability to let the bond market run until the desired level of <a href="/pages/xijiFz4MdGwvHjuiqeot">POL</a> is achieved.<br>C. Ability to create upward price pressure via boosting the <a href="/pages/c7Q3cTwwyneABei6AgtE">buyback mechanism</a>.<br>D. Provide an alternative source of token rewards for ongoing and upcoming pools and features.</td></tr></tbody></table>

### Why

* Renting liquidity is costly, while POL provides an extra revenue stream in the form of swap fees issued by AMMs.
* In times of market distress, liquidity providers have a significant likelihood of withdrawing funds from the pool (which is when liquidity is most needed). Protocol-owned liquidity stops this from happening because the protocol won't reduce its own liquidity and avoid a downward spiral of the price of the token.


---

# Agent Instructions: Querying This Documentation

If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question.

Perform an HTTP GET request on the current page URL with the `ask` query parameter:

```
GET https://nemesisdao.gitbook.io/whitepaper/features/protocol-owned-liquidity.md?ask=<question>
```

The question should be specific, self-contained, and written in natural language.
The response will contain a direct answer to the question and relevant excerpts and sources from the documentation.

Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.