#dusk $DUSK @Dusk
So if an asset can be transferred in seconds, does that make it liquid?
In the past I would have said yes without hesitating. Liquidity felt like a speed problem, and blockchains are fast, so the problem seemed solved by definition.
But thinking about what tokenized securities actually need, I stopped believing that.
Liquidity is not about how quickly a transfer completes. It is about whether someone is willing to be on the other side of your trade at a price you find acceptable. If nobody wants to buy, the settlement layer being instant changes nothing at all. You are holding something you cannot sell, very efficiently.
What caught my attention is that restricted assets make this harder rather than easier. If an instrument can only be held by people meeting certain conditions, then your pool of possible buyers is not everyone with money. It is everyone with money who also qualifies.
So the same rules that make an asset legally usable on-chain also narrow the market for it. That is not a flaw in the design. It is the nature of the asset. But it means adoption cannot be measured by how fast the chain is.
I am genuinely unsure how this resolves. It may simply require far more participants than exist today, which is a slow problem rather than a solvable one.
From here I stopped treating settlement speed and market depth as related. One is engineering. The other is people deciding to show up.
So if an asset can be transferred in seconds, does that make it liquid?
In the past I would have said yes without hesitating. Liquidity felt like a speed problem, and blockchains are fast, so the problem seemed solved by definition.
But thinking about what tokenized securities actually need, I stopped believing that.
Liquidity is not about how quickly a transfer completes. It is about whether someone is willing to be on the other side of your trade at a price you find acceptable. If nobody wants to buy, the settlement layer being instant changes nothing at all. You are holding something you cannot sell, very efficiently.
What caught my attention is that restricted assets make this harder rather than easier. If an instrument can only be held by people meeting certain conditions, then your pool of possible buyers is not everyone with money. It is everyone with money who also qualifies.
So the same rules that make an asset legally usable on-chain also narrow the market for it. That is not a flaw in the design. It is the nature of the asset. But it means adoption cannot be measured by how fast the chain is.
I am genuinely unsure how this resolves. It may simply require far more participants than exist today, which is a slow problem rather than a solvable one.
From here I stopped treating settlement speed and market depth as related. One is engineering. The other is people deciding to show up.