This is great analysis - thinking back to the discussion with @verto0912 and @overanalyser on Index Coop Liquidity Mining Strategy it seems increasingly clear that the DeFi Summer LM approach is both in-efficient and outdated. AMMs will only continue to grow more capital efficient from here. This is a good thing because it will free up significant capital and allow us to focus much more on product market fit - which needs to be a priority going forward.
v2 is similar to an old inefficient Ford Truck while v3 is like a hybrid. It is still not perfectly efficient but it is orders of magnitudes more efficient than the previous model. This is a good thing because it forces DeFi protocols to focus on product vice simply spending more and more capital on liquidity. It also means that we can use more innovative methods to incentivize smaller levels of liquidity ( i.e. treasury loans or UMA options).
We are both a financial and tech organization. When I first came to IC my thinking was very much skewed towards the financial side of our organization and the importance of liquidity. Increasingly I see that at this stage of our growth we need to focus on the tech side of our organization. Which means focusing on developing and delivering compelling products.
Once again this is awesome work! Really helped clarify v3. Firmly believe this will provide the foundation for a compelling long-term strategy around AMMs.