2025-08-30
In the decentralized finance (DeFi) ecosystem, liquidity providers (LPs) earn profits by injecting funds into platforms such as decentralized exchanges (DEXs). However, this model has problems such as easy liquidity loss and protocol dependence on external funds. The Protocol-Owned Liquidity (POL) model has emerged, which aims to allow DeFi protocols to control liquidity and improve ecological stability and autonomy. So, what exactly is the POL model? How does it work? And what changes can it bring to DeFi?
The POL model refers to a design in which DeFi protocols take control of liquidity into their own hands through various mechanisms. Unlike traditional liquidity models that rely on external users or third-party fund pools, under the POL model, the protocol accumulates and holds liquidity assets through token repurchase, pledge incentives, and other means, directly managing the allocation and use of funds. For example, the protocol can use its own tokens to repurchase liquidity tokens from the market, lock them in smart contracts controlled by the protocol, and form a protocol-exclusive liquidity pool. This model reduces the protocol's dependence on external liquidity providers, reduces the market volatility risk caused by liquidity providers' withdrawal of funds, and allows the protocol to flexibly adjust its liquidity strategy according to its own development needs.
The operation of the POL model mainly involves three aspects: liquidity accumulation, strategy optimization, and risk control. In terms of liquidity accumulation, protocols usually use token incentives, asset swaps, and other methods to attract users to provide liquidity. For example, the protocol publishes governance tokens, encourages users to deposit assets into the protocol's liquidity pool, and rewards them with governance tokens; or cooperates with other protocols to obtain the required liquidity assets through swaps. In terms of strategy optimization, the protocol dynamically adjusts liquidity allocation according to market conditions and its own development goals, such as allocating funds to high-yield trading pairs or lending protocols. In the risk control aspect, the protocol ensures the safety of the liquidity pool by setting collateral rates, clearing mechanisms, etc., to prevent asset losses caused by market volatility. HashKey Exchange pays close attention to the operation mechanism of the POL model when exploring innovative DeFi businesses, and studies how to integrate its advantages into platform services to provide users with a more stable liquidity environment.
The POL model has multiple application values in the DeFi ecosystem. For the protocol itself, controlling the flow of sexual suggestion means having stronger risk resistance and independent development rights, and being able to respond more flexibly to market changes and launch new functions and services. For users, the POL model reduces the risk of unpredictable losses caused by sudden withdrawal of liquidity, providing a more stable trading and investment environment. From an ecological perspective, the POL model helps to enhance the synergy effect between DeFi protocols, improve the efficiency and stability of the entire ecosystem by sharing liquidity resources. HashKey Exchange closely follows the development trend of POL mode, continuously explores its application scenarios in platform business, and hopes to optimize liquidity management by introducing POL mode to create a better DeFi service experience for users. However, when applying POL mode, attention should also be paid to issues such as smart contract risks and the impact of token price fluctuations on liquidity to ensure the security and Sustainability of the mode.