5 advantages of Liquidify

# 1 creating more liquidity for long-tail assets

“Liquidity is the oxygen for a financial system.” — Ruth Porat

Following the words of Ruth Porat — CFO of Alphabet and according to Forbes Magazine one of the most powerful woman´s today — liquidity is very important key component for financial systems.

That is also true for the vast majority of crypto projects, as they are beside some community or governance token knitted around financial services or aspects.

What are long-tail assets in crypto?

According to CoinMarketCap, there are currently more than 10.000 (!) listed cryptocurrencies. Only a few make it into the influential top 100 by market capitalization. This means there is huge potential when targeting these so-called long-tail assets or small cap coins.

As Chris Anderson noted back in 2004, many of these low-demand or low-selling products can do as well or better in aggregate than the so-called a-listed or short-tail assets.

For us, long-tail assets are characterized by low trading volume, low liquidity, and low market capitalization.

What is Liquidity?

Liquidity is the term used to describe the ability to liquidate an asset or, so to speak, to translate the inherent value of an asset into a form that allows it to be traded for other form of value. For example, gold has tremendous inherent value, but it’s hard to liquidate it or buy food with it in a normal store. You first have to convert gold into a currency that is accepted in that store — in other words, make it liquid.

The same is true for long-tail crypto assets. In many cases, they have value, but it’s hard to sell or trade them because they often lack liquidity. This problem is already experienced by many institutional and retail investors.

Why liquidity is so important, especially for small projects?

Small projects often struggle to get liquidity on the one hand; on the other hand, they urgently need liquidity for further project development, marketing or expensive listings on exchanges. Using the Liquidify Accelator Token (LAT) by locking tokens into the Liquidify asset pool could provide this important liquidity and help small projects unlock or reactivate their full growth potential.

In general, this will help make the crypto market more active, less volatile and healthier overall.

How does Liquidify improve the liquidity of long-tail assets?

Assets that are accepted into the Liquidify asset pool go through a synthesization (lat. synthesis = to assemble) process. This means that you receive a certain amount of LAT and later additionally LFY token. The amount is calculated from the underlying values of your assets in the pool. The LAT token can be used for further trading or mining on third-party protocols such as Uniswap, Balancer or Curve — to name a few. The LFY token is for governance issues. By owning a certain amount of it, you can to some extent influence the further direction Liquidify will take.

What are the benefits for investors?

Many more investors get access to these huge amounts of long-tail assets that are otherwise not attractive to them.

If you already hold long-tail assets, you may not want to sell them, but need the liquidity locked in them to invest in other projects or token. You can lock your assets into the Liquidify asset pool to receive LAT tokens and use them for further trading, staking, or liquidity mining. In this way, you can save additional costs.

Increased liquidity for the long-tail projects also give them the “oxygen to breathe” as Ruth Porat pointed out, so the value of token investors already hold will get a higher chance to increase.

Key takeaways

Liquidify can help to provide Liquidity to projects and investors.

Especially for small projects this can be essential for full growth potential.

Liquidify can help to save costs for investors or token-holder.

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Good to know

LAT tokens are also compatible with the Etherium Virtual Machine (EVM) — that is, the infrastructure for smart contracts based on Etherium. For those who want to dive deeper, the EVM is also a quasi-Turing complete machine. A Turing complete machine is code that runs until an answer to the posed question is found. “Quasi” here means that the actions are based on gas (fees), so the code only runs as long as the fees are paid. This is basically a good thing to prevent so-called Denial of Service (DoS) attacks.