I spent some time looking at the market-maker side of @TermMax .
What stands out is that liquidity providers aren't simply choosing an APR and leaving everything else to the protocol.
They can define range orders.
That means the rate itself can change across different levels of the order.
This creates a more explicit relationship between liquidity and price.
For example, a lender may be comfortable deploying a smaller amount at a lower rate but require additional compensation for deploying more capital.
The curve communicates that preference.
I think this is important because liquidity isn't one homogeneous thing.
The first dollar and the millionth dollar don't necessarily have the same opportunity cost.
A pricing curve gives the market maker a way to express that.
It also puts more responsibility on the market maker.
Bad pricing can mean poor execution or an order that simply sits unused.
That's a reasonable trade-off.
More control usually means more responsibility.
#TermMax
What stands out is that liquidity providers aren't simply choosing an APR and leaving everything else to the protocol.
They can define range orders.
That means the rate itself can change across different levels of the order.
This creates a more explicit relationship between liquidity and price.
For example, a lender may be comfortable deploying a smaller amount at a lower rate but require additional compensation for deploying more capital.
The curve communicates that preference.
I think this is important because liquidity isn't one homogeneous thing.
The first dollar and the millionth dollar don't necessarily have the same opportunity cost.
A pricing curve gives the market maker a way to express that.
It also puts more responsibility on the market maker.
Bad pricing can mean poor execution or an order that simply sits unused.
That's a reasonable trade-off.
More control usually means more responsibility.
#TermMax
