Protocol Owned Liquidity (POL)
Protocol Owned Liquidity is a key innovation that SLOHM inherits from Olympus DAO. Instead of renting liquidity through yield farming incentives, SLOHM owns its own liquidity permanently.
The Problem with Rented Liquidity
Traditional DeFi protocols incentivize liquidity providers with token emissions:
- Protocol emits tokens to LP providers
- LPs stake for high APY
- When emissions decrease, LPs withdraw
- Liquidity disappears, price crashes
- Protocol must emit more tokens
This creates a race to the bottom with unsustainable token inflation.
The POL Solution
SLOHM acquires liquidity through bonding:
- Users bond LP tokens to treasury
- Users receive discounted SLOHM (vested)
- Treasury permanently owns the LP tokens
- Liquidity never leaves
Benefits
For the Protocol
- Permanent liquidity - Can't be withdrawn
- Trading fees - Treasury earns swap fees
- Price stability - Deep liquidity reduces volatility
- No emissions - Don't need to pay for liquidity
For Users
- Better trading - Less slippage
- Reliable exits - Liquidity is always there
- Aligned incentives - Protocol and users benefit together
How It Works
User Protocol
│ │
│ Bond LP tokens │
├───────────────────────►│
│ │ LP tokens go to treasury
│ Receive discounted │
│ SLOHM (vested) │
│◄───────────────────────┤
│ │
│ 5 days later... │
│ │
│ Claim vested SLOHM │
│◄───────────────────────┤
LP Bonding Discounts
LP tokens receive higher discounts than single assets to incentivize POL growth:
| Asset Type | Typical Discount |
|---|---|
| Single asset (MOTO) | 5-15% |
| LP tokens | 15-25% |
POL Targets
The protocol aims to own a significant percentage of its trading liquidity:
| Metric | Target |
|---|---|
| POL % | 80%+ |
| LP Types | SLOHM-MOTO, SLOHM-PILL |
High POL means the protocol controls its own destiny, independent of mercenary capital.