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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), 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.
- 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.