Biswap

<p>The recently released <a href="https://biswap.org/investment_pool?utm_source&#61;blog&amp;utm_medium&#61;social&amp;utm_campaign&#61;pol_article_SMM" rel="noopener noreferrer nofollow">BSW Investment Pool</a> is an advanced token lock mechanism on Biswap and the first model launched on DEX. With this tool, Biswap aims to reduce the BSW circulation supply to ensure a stable native token value and create a Protocol Owned Liquidity (POL). This liquidity pool allows the inflationary model to be replaced by a self-sustaining model.In this article, you will find out how the POL impacts the renewed Biswap ecosystem, how it fuels a self-sustained model and what crucial role it plays.</p><h2 id="header-0"><strong>What is Protocol Owned Liquidity?</strong></h2><p>Protocol Owned Liquidity (POL) model refers to an approach in which a DeFi protocol owns and controls a certain amount of liquidity in its ecosystem. The protocol itself holds and manages token reserves instead of relying solely on external market participants to provide liquidity.</p><h2 id="header-1"><strong>Role of POL in the BSW Investment Pool Ecosystem</strong></h2><p>Basically, POL functions as a regular liquidity pool. At Biswap, this pool will consist of two tokens, BSW and USDT, as they play a crucial role in the BSW Investment Pool ecosystem. The name of the pool may make you wonder who owns the protocol? The owner is Biswap DEX. However, just because Biswap has ownership doesn&#39;t mean the funds in the pool are part of the team&#39;s earnings. They are a critical part of the new Biswap ecosystem. Since Biswap is the owner of the liquidity pool, the project receives LP rewards as a liquidity provider. These rewards allow the Biswap team to:</p><ul><li>Sponsor BSW Investment Pool not only by token emission</li><li>Enhance the BSW price and value on the market</li><li>Improve trading of the BSW\USDT pair regardless of market conditions and external events.</li></ul><p>In this way, POL also empowers a self-sustaining model of DEX, that is to say, it automatically impacts several key areas of progress that Biswap has identified as key targets. Such a model is becoming increasingly popular in the decentralized world because it demonstrates higher efficiency than the deflationary one.</p><h3 id="strong-what-is-treasury-how-does-it-relate-to-pol-strong"><strong>What is Treasury &amp; How Does it Relate to POL?</strong></h3><p>Treasury is a separate contract that allocates 10% of the V3 trading commission, a share of POL rewards and other future revenue streams. Thus, the treasury is also responsible for providing users with Real Yield rewards. As a reminder, staking in the BSW Investment Pool gives access to the Real Yield Pool, which in turn rewards users with USDT tokens. The share of rewards from the treasury will be determined by the Biswap team to maintain a certain APR in the Real Yield pool.</p><h3 id="strong-how-is-pol-formed-strong"><strong>How is POL Formed?</strong></h3><p>POL replenishes with tokens, BSW and USDT, through oBSW staking and exchange mechanics.</p><p><strong>BSW</strong></p><ul><li>Once the unused oBSW points burn, the backed-up BSW tokens are sent to the POL.</li><li>Once the 30% discount for the oBSW exchange gets to 0% in the Real Yield Pool, the backed-up BSW are sent to the POL.</li><li>BSW<strong> </strong>which was charged as a 50% penalty fee for early withdrawal and directed to the POL.</li></ul><p><strong>USDT</strong></p><ul><li>When users buy BSW at a 30% discount through oBSW in the BSW Investment Pool, they pay USDT tokens, which are sent to the POL.</li><li>When users buy BSW at a discount through oBSW in the Real Yield Pool, they pay USDT tokens, which are sent to the POL.</li></ul><h3 id="strong-targets-of-biswap-pol-strong"><strong>Targets of Biswap POL</strong></h3><p>It’s already clear that POL is an integral part of the BSW lock mechanism. At this point, we want to declare the main goals of the protocol owned liquidity.</p><ul><li>Ensure constant liquidity and BSW stability on the market;</li><li>Decrease pressure on BSW price thanks to enlarged BSW/USDT liquidity;</li><li>Reward users with Real Yield from the POL instead of emission (a share of POL tokens is directed to the Treasury).</li></ul><p>For a long time of development, Biswap had been applying a deflationary approach to positively impact BSW token in the industry by conducting regular token burnings. As decentralized platforms evolve, new mechanisms are being developed and used to bring many innovative approaches for token growth. In the next block, you’ll find out why Biswap has put BSW burn on pause and why it contradicts the lock instrument.</p><h3 id="strong-why-burn-lock-mechanism-can-t-function-simultaneously-strong"><strong>Why Burn &amp; Lock Mechanism Can’t Function Simultaneously?</strong></h3><p>Like any growing project, the Biswap DEX places a high priority on implementing new tools that enhance its ecosystem and bolster the value of its native token. Our objective is to curtail the circulation of BSW tokens and establish a robust protocol liquidity that aligns with the DeFi 2.0 principles.</p><p>While burning tokens can be effective in reducing the overall supply, it only proves beneficial when a greater number of tokens are burned compared to those entering the market through emission. The BSW token burn reduced circulating supply but had no impact on the DEX&#39;s liquidity.</p><p>Therefore, burning tokens contradicts our goal of decreasing BSW circulation and creating protocol liquidity (POL) as part of our broader aim to transition from inflationary models to a self-sustaining approach.</p><h2 id="header-2"><strong>Uncover the Purposes of POL in the DeFi World</strong></h2><p>We’ve already talked about functionality, adoption and objectives of POL, but let&#39;s take a look at the aspects of POL’s operation in a more general spectrum. In the DeFi world, liquidity is essential for the smooth functioning of various decentralized applications, such as decentralized exchanges (DEXs), lending protocols, and such other projects. Users typically provide liquidity by depositing their assets into smart contracts, and they are incentivized with fees or rewards for doing so.</p><p>Protocol Owned Liquidity refers to a scenario where the DeFi protocol itself supplies a portion of the liquidity required for its operations. In such a case, the protocol would use its own reserve funds or locked assets to ensure there is enough liquidity available for users to trade, lend, or participate in various DeFi activities. Look at the list of objectives which POL streams for:</p><ul><li><strong>Stabilizing the protocol</strong>By providing liquidity, the protocol can ensure a more stable trading environment, reducing the impact of large price swings and improving the overall user experience;</li><li><strong>Encouraging participation</strong>By supplementing user-provided liquidity with protocol-owned liquidity, the DeFi platform may attract more users, as they would have more confidence in the availability of liquidity;</li><li><strong>Bootstrapping new protocols</strong>For new DeFi projects or protocols, initially owning some liquidity might help bootstrap the ecosystem, as there might not be enough user-provided liquidity initially;</li><li><strong>Control and governance</strong>Owning some liquidity may give the protocol more control over certain aspects of its functioning, allowing for better governance and decision-making.</li></ul><p>So, the POL itself is an innovative tool which can cause positive changes in the platform’s development. Each DApps picks its way of growing further, but new approaches can help them to reach set goals much more effectively.</p><h3 id="strong-summing-up-strong"><strong>Summing Up</strong></h3><p>The Protocol Owned Liquidity is a powerful tool for Biswap DEX as it represents a self-sustained model of funding. It is a source to finance the BSW Investment Pool, provide better trading conditions and positively influence BSW in the crypto industry.</p>

Protocol Owned Liquidity Explained | Crucial Part of a Self-sustained Model

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Biswap DEX

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