There are many incentive-based protocols out there. Most of which, incentivize Liquidity providers to provide liquidity on a specific pool. However, by its nature, liquidity providing is a passive activity. Liquidity providers as users are lazy, unlike traders.
Everyone is crypto is a trader, but only a small subset of us are liquidity providers.
Why isn't there a protocol to incentivize people to trade and earn rewards the more they swap (buy or sell)
Trading leads to LP fees, once LP fees are higher, Liquidity providers would want to capture this new volume, so they increase liquidity which leads to less slippage, which leads to more volume and the cycle continues.
This means, that focusing on volume "demand" instead of liquidity "supply" could lead to much better results for any pool.
Thoughts?
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