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The Cost of Liquidity
To better illustrate the cost of liquidity to DAOs, we have gathered data from the pool 2 emissions of a well known DeFi protocol and broken down the annual cost to that DAO based on a desired amount of liquidity. This cost is then compared to a scenario where the DAO utilizes a tPool and a Token Reactor.
By utilizing a Token Reactor and a tPool, the DAO in this example is able to achieve a 400% cost saving to maintain the same amount of liquidity as well as improve the liquidity efficiency from $1.18 of liquidity created for each dollar of incentives to $4.65. The DAO can then use the TOKE rewards to direct further liquidity for their token as a Liquidity Director, accelerating the flywheel of attracting assets into Tokemak for deployment.