This is what we think we are doing:
This is what we are actually doing:
This is what we could be doing:
Liquidity incentives are broken.
We (the SP and STEEM shareholders) are collectively paying $29,979,720 USD per year for these incentives via debasement (or in other words dilution.) The spreads are high, and actual "useful liquidity" (liquidity that is close to the price feed) is low. In the real world, if someone isn't doing their job they are fired. I suggest we do the same with "liquidity providers" (I use that term jokingly) and get rid of the liquidity incentives all together. I have come up with an autonomous liquidity solution that:
- Over time, as the 1200 STEEM (or 1200 STEEM worth of SD) a hour adds up, the spread in the STEEM/SD market will eventually become tighter and tighter. This results in users paying less of a premium every time they trade SD for STEEM (or visa versa.)
- SP/STEEM stakeholders are not debased (diluted) with my solution as compared to any liquidity incentive scheme you could come up with. The STEEM/SD printed for autonomous market making liquidity stays on the on-chain books for eternity, for the purpose of market making. It never makes its way into the STEEM off ramps as downward pressure on the market.