The Art and Science of Native Token Liquidity

Nonetheless, liquidity for a project’s token plays a large role in opening up the project to the community. Native token liquidity is worth paying for because it can kick off a reflexive flywheel that brings more users and attention to the protocol.* However, it’s worth noting that liquidity for the native token doesn’t make or break an otherwise s... See more

Fundamentally, having liquidity for a token is important so far as it allows new investors to easily buy into a project and inactive ones to exit. Any less will not derail a strong project and any more is just in vain.

There is no exact science to achieving liquidity for a protocol’s native token. But between the various approaches we have explored here—liquidity cap targets, uneven (i.e. 80/20) pools, treasury liquidity provision—there are a variety of ways that thoughtful founders and investors can tackle the problem of native token liquidity.