so what is all about is this just a new temporary narrative or a paradigm shift what are some of the most interesting D5 protocols and what does it mean for already existing G5 projects you’ll find answers to these questions in this video before we begin if you want to learn more about these centralized finance and the technology behind it make sure you subscribe to my channel hit the Bell icon and enable all notifications you can also consider supporting us on patreon and joining our community on Discord the crypto space allows the new narratives defy summer later one summer or jpeg Mania to name a few it seems like d52 is the new kid on the Block and has recently been gaining more and more traction although the ideas behind G5 2 are crystallizing in general the concept refers to a new bit of G5 protocols that try to to solve some of the main pain points of the already existing project by experimenting within protocol design on tokonomics the experimentation centers around the innovation in liquidity it’s very often associated with the protocols owning their own liquidity instead of temporarily writing it out via liquidity mining incentives now let’s impact what it all means one of the biggest problems that D5 protocols struggle with is how to attract to long-lasting liquidity in a sustainable way to bootstrap themselves most protocols decide to allocate a big chunk of their native tokens into the liquidity Mining and settings this usually attracts a lot of capital and can accelerate the growth of the protocol quickly main problem the vast majority of the liquidity is not loyal and can move to the next project if it offers better answer types it also creates a huge selling pressure for the native token and unfortunately the token price is very often associated with the overall quality of the project and can sometimes Make It or Break It some protocols try to mitigate this problem by adding investing to their liquidity mining rewards but this usually can thicken the can down the road and the same issue will have to become function in the future each protocol that offers liquidity mining programs hopes that after the liquidity mining is over the protocol can remain appealing to the users by establishing a reputable brand differentiating itself from its competitors and attracting a long-lasting liquidity this is also often called building a mode around the protocol if it decentralized the exchange the protocol aimed at having deep liquidity so the users can execute their trades at the best prices when it comes to the London protocol they aim at having an attractive and sustainable lending market for both lenders and Borrowers uniswa is one of the best examples when it comes to a protocol with a mode at the time of making this video uni swap had 67 percent market share of all this decentralized exchanges on the ethereum the market share remains extremely high despite the protocol not offer any extra incentives in the form of the unit tokens for almost a year now the reason for that a strong brand and a lot of trained in volume that allows liquidity providers to earn good yield just from the trading fees themselves uni swap also of course benefited from being one of the first protocols in its own category which is harder and harder to replicate with time these days we can see a lot of protocols attracting Millions if not billions of dollars of liquidity only to lose Traction in the long run as the capital moves to a new shiny protocol that pays better all the protocols are facing a big dilemma how to bring users and liquidity in a sustainable way instead of attracting mercenary Capital to make things even worse the liquidity mining program are usually limited to a central amount of tokens so the protocols are standing up against the wall and they either make it during the time when the liquidity Maya program is on or Break It and become irrelevant over time to resolve this problem a new group of D5 protocols decide to come up with Innovative protocol design that can change the usual liquid ability mining programs to something more sustainable to better understand how this new design Works let’s talk about a few protocols that initiated this movement and are now riding the G5 2.0 wave Olympus dial is a good place to start Olympus is a decentralized reserver currency protocol that is based on the ohm token each ohm token is big is bucket by a basket of assets stored in the Olympus treasury this is in turn creates a floor price for om that the actual price shouldn’t fall below in order to participate in Olympus the users can either State their existing own tokens and get new home from the rebase reward or trade different assets in exchange for the discount at Home the later process also called bonding is one of the main Concepts that allows the protocol to own its own liquidity the bonding process works in the following way the protocol sells its own tokens home at this account to the market value in exchange for the other assets the discounted home is vested over a period of a few days usually five at the moment the protocol supports bonding of two main asset types the all tokens that represents liquidity added to decentralized exchanges such as uni swap or sushi Swap and single assets such as dairy Flags eth only USD when users exchange LP tokens for this accounted home tokens the lp tokens essentially become controlled by the protocol itself as we know the owner of LP tokens always has total control over the underlying liquidity in the case of Olympus the protocol owns LP tokens of the most common own pairs such as Om Day omit omfrax or Uma USD which means that the protocol owns its liquidity at the time of making this video Olympus count over 99.5 percent of its own liquidity across all markets and exchanges the bounding is used by Olympus I opened a lot of new possibilities not only for Olympics itself but also for other protocols via Olympus Pro Olympus Pro were recently launched by the Olympus team allows the protocol to elaborate the same bounding mechanism that made Olympus successful and over its as a service Olympus Pro started attracting more and more protocols seeking a more sustainable way for bringing long-term liquidity some of the protocols participated in Olympus Pro include Alex Max frags steak dough and Bento Olympus Pro also launched a dedicated Marketplace for sale in bounce investors will be able to use this Marketplace to buy tokens of different protocols after this account in exchange for other assets that can when become a part of the protocol’s treasuries Olympus is also about to release a V2 of their protocol that can improve and optimize some of the existing Futures one of them improves the bonding mechanism where bounded all them will now will be also staked in the protocol during the bounding time Olympics is greedy one of the most interesting new protocols and maybe it should be fully explained in a separate video another protocol iterate in one of the concept of liquidity mining is tokamac Joker Mac focuses on creating sustainable liquidity in G5 through a decentralized market making protocol and to come back each asset has its own pool called a reactor where the reactor token is used for the redirecting liquidity liquidity providers deploy one only one token to a detected reactor and token holders become liquidity directors who decide whether liquidity should flow the design should democratize access to the liquidity and create incentives for both the liquidity providers and the liquidity directors after successfully bootstrapping the liquidity in its ease and its USD Genesis pools the tokoma community has now begun to vote the project for which reactor will be initiated soon this reactive asset will be paired with the assets from their Genesis pools and deploy echo’s G5 and the protocol’s Revelation Olympus Pro are only one or only some of the new protocols innovating in the area of liquidity mining it will be interesting to see other protocols experimenting with their protocol design even further D5 2.0 might seem like a temporary narrative but the core concept behind it it will most likely stay with us and make liquidity make liquidity money more Sustainable New D5 protocols will have a way of attracting long-lasting liquidity without being stuck in the navigating cycle of subsidizing the users with liquidity mining rewards and competing with the new Forks of their own protocol that can launch with a new token in a matter of days it doesn’t necessarily mean that the liquidity mining is going away anytime soon rather the blockchain the project will have a way of enabling it for a quick boost drop in Phase or to attract NCR Capital to a new chain or two at least this will be a choice and not on the only possible way forward so do we really need new name for all of this maybe whatever we name it it’s not going to change the fact that our protocols experimenting with the new designs are improving upon the previous things that didn’t work as well as expected a good thing about creating a new narrative is that can surely inject some of us excitement into this space and allow more people to discover the potential of defy one question that comes up every often when discussed in D5 2.0 is what happens to the already existing D5 protocols will they become upset over time I don’t think so one of the main benefits of Open Source development is the things that prove themselves to be working well can be adopted by the already existing protocols maybe it will be bound and liquidity via Olympus Pro may be redirecting liquidity using tokamike or maybe something else I wouldn’t be surprised to see some of the established D5 protocols adopting D5 2.0 Concepts in the future beside this new protocols will be able to take more risk and experiment with the protocol design as they won’t have as much Capital at stake as we already established protocols this will be beneficial for both for the whole G5 space allowing both the new and existing protocols to evolve together it’s important to notice that the whole device space hasn’t achieved even fraction of its potential and at this point we should just focus on going the whole pie together so what do you think about G5 2.0 what are some of the your favorite protocols in this category comment down below and as always if you enjoyed this video smash the like button subscribe to my channel and thanks for watching
