Innovations that push boundaries tend to generate buzz before they’re fully adopted by the broader DeFi community. Protocol Monetary Trade Policy is the newest one on the horizon. It’s already considered by some as the evolution of liquidity mining, despite being relatively new in the space. The policy’s proponents say it will greatly benefit the DeFi ecosystem, but it’s worth examining exactly what Protocol Monetary Trade Policy is, how it compares to traditional DeFi economics, and whether it truly has the potential to revolutionize the crypto-economic space. What is Protocol Monetary Trade Policy? Protocol Monetary Trade Policy (PMTP) is a set of monetary policies that use a cryptocurrency protocol’s influence over currency trade or transfers to support the health of the protocol and its core token(s). In theory, it may eventually eliminate the need for inflation. The policy was invented by a team of crypto economists at Sifchain. One of the main goals of Protocol Monetary Trade Policies is to help attract external liquidity while increasing total value locked (TVL). It does this by incentivizing a cryptocurrency token such as ROWAN, creating an attractive option to earn rewards in. In turn, this helps to drive external demand to pool assets and encourage the purchase and staking/holding of the specified token. “Sifchain sees Protocol Monetary Trade Policy as an innovative suite of tools that can provide flexible &...
