We have now entered the mid-term of the bull market, with unprecedented increases in on-chain liquidity, and major public chains are striving to capture market liquidity. The Desci, AI, Depin, and RWA tracks have begun a new round of narratives aimed at attracting new capital. So, in this rare bull market cycle, how should we achieve rapid wealth growth?
In my view, there are discernible patterns in each bull market, and making money during a bull market mainly relies on three directions:
1. Completing asset multiplication through speculative trading requires strong investment research capabilities and position management, as well as a certain degree of luck. Only a small number of people can succeed through this path in each bull market; most people find it easier to be 'washed white' during a bull market.
2. Achieving transaction fee income through exchanges/trading tools: This is the most obvious way to profit during a bull market. For example, Pump.fun, Moonshot, and the explosive DEXX can accumulate substantial transaction fees in a short time. The difficulty of this path lies in the need for a certain technical threshold and addressing the actual needs of traders. Additionally, this field is highly competitive, with many competing products diverting profits, and only by being at the forefront or excelling in a niche can there be profit opportunities.
3. Issuing new narratives and new assets. Each bull market brings in a large amount of new capital, while the funds in the market are also seeking good targets to achieve wealth multiplication beyond mainstream assets. The influx of these funds creates a consensus value bubble for new assets, which can easily help project parties and early participants make money.
What is the consensus value bubble?
In a nutshell, for example, if there is $1 million entering the market, it will bring about a $10 million increase in market value for new assets. At this point, if the project party has only 5% of the project's circulating tokens, they can capture $500,000 in value. Although the tide reveals who is swimming naked, this is the underlying principle of how new assets operate in a bull market. Leveraging this effect can earn money in a bull market; otherwise, it's just 'someone else's bull market, your anxiety.'
To get back on track, today I mainly want to introduce a protocol based on joint curves to build the liquidity layer of the intelligent society—Solio. Solio is a liquidity layer protocol created by a development team from Berlin, Germany. This protocol can facilitate asset issuance, trading, liquidity aggregation, and liquidity innovation in financial derivative scenarios. Solio's goal is to create a liquidity layer for the intelligent society and help users better create and manage the liquidity of new assets through SDKs, SuperAPPs, and liquidity aggregation layers.
So, what is the intelligent society?
To understand the intelligent society, we first need to clarify one question: what can blockchain and Web3 bring to our real world? In traditional society, the cost of changing the mode of socio-economic operation is usually huge and heavily dependent on the will of a particular organization or individual. However, with the development of society, technological productivity will significantly improve, and the main contradiction that society needs to resolve is no longer how resources are produced, but rather resource distribution and how to build a fair and transparent economic system. Therefore, the vision of the intelligent society is that anyone can use tools to build an economic system and complete social experiments through fast on-chain consensus, achieving the construction of new assets and new economic mechanisms from 0 to 1.
Currently, the intelligent society has become one of the most promising development directions of Web3. Led by the ETH Foundation, the leading project in this field, Praxis, has completed $500 million in financing, and the Popup City movement has emerged worldwide like mushrooms after rain. In the near future (by 2025), we will welcome a new wave of innovative asset issuance.
What kind of assets can become assets of the intelligent society?
The most important factors for asset issuance in the intelligent society are: fairness, transparency, and sustainability. From inscriptions to MEMEs, the habits of Web3 users have changed, shifting from relying on VC and project teams to paying more attention to whether the token economic model is fair, which is the primary concern for users entering the market. However, for the intelligent society, mere fairness is not enough; the economic model also needs a certain degree of robustness to withstand the test of time, making the sustainability of the economic model crucial.
Soilo builds the liquidity layer of the intelligent society based on joint curves.
Solio provides SDKs to help users customize asset issuance based on actual circumstances through joint curves and manage asset liquidity, thereby supporting the asset layer of the intelligent society.
What is the liquidity layer?
The five layers of the Web3 architecture are: consensus layer, protocol layer, liquidity layer, application layer, and interaction layer.
Consensus layer: Provides the security and trust foundation for decentralized networks.
Protocol layer: Provides core protocols and standards on the blockchain for building interoperable infrastructures.
Liquidity layer: Connect assets, users, and markets to enhance the financial efficiency and liquidity of decentralized ecosystems.
Application layer: Decentralized applications (DApps) aimed at users, providing practical use cases and functionalities.
Interaction layer: The interface layer where users interact with Web3 applications, simplifying operations and enhancing user experience.
In simple terms, the main tasks of the liquidity layer are: asset issuance, liquidity management, liquidity aggregation, and liquidity re-release.
Asset issuance: Provides tools and mechanisms to support users or project parties in creating tokens or assets.
Liquidity management: Ensure that issued assets can be effectively traded in the market, possess sufficient liquidity, and avoid excessive transaction slippage or insufficient market depth.
Liquidity aggregation: Integrate liquidity from multiple chains or protocols to solve fragmentation issues.
Liquidity re-release: Improve the circulation efficiency of assets and reactivate dormant liquidity.
Why is Solio a better liquidity layer solution?
First, we need to know what liquidity is. Liquidity is a term for assets that can be traded in the market, and it is the basis for asset issuance and DeFi. Whether it is asset issuance, trading, or various DeFi scenarios, its essence is to construct a liquidity distribution. This may be difficult to understand, but it becomes clearer when rephrased: when we participate in asset issuance, asset trading, or in some DeFi scenarios (such as lending) or prediction markets, we are actually counterparts to the liquidity in the contracts, and our inputs and outputs are determined by the liquidity distribution in the contracts.
Mathematically, any liquidity distribution can be achieved through joint curves (a type of mathematical transformation). Therefore, joint curves are a universal liquidity construction solution. Previously, asset issuance, trading, lending, and prediction markets required an independent contract or platform, but on Solio, all can be achieved through joint curves.
So what are the benefits of this implementation? The biggest benefit is that liquidity can be aggregated on a higher level using joint curves (horizontally and vertically). For example, in trading scenarios, traditional DEXs usually use Reserved Curves as the underlying AMM, requiring constant verification of the asset status in the contracts. However, with joint curves, only the function of the joint curve and the current supply state need to be known. This allows for both horizontal and vertical aggregation.
Horizontal aggregation: For the same type of scenario, such as asset issuance, if assets A and B use the same Anchor Token, the liquidity can be shared, thus obtaining additional yielding benefits from liquidity. Solio achieves liquidity re-release by issuing sToken stable assets.
Vertical aggregation: For different types of scenarios, such as asset issuance and lending, liquidity aggregation can also be achieved through the coupling of joint curves. Specific scenarios include helping issued assets provide native lending to meet users' leverage needs. As long as it remains below the zero boundary of cyclical clearing mathematically, the system is absolutely safe, and vertical aggregation can bring positive externalities to the system.
To give a not-so-appropriate example, the innovation brought by Solio is somewhat like the operating system in the intelligent society. It not only achieves the programmability of the economic system but also enhances the composability of the economic system based on liquidity layer aggregation.