Stablecoin pegging

Stablecoins rely on liquidity provided to AMMs as a mechanism for maintaining their peg. However few of these protocols own the liquidity in these AMMs, and instead incentivize liquidity provision through incentives and governance tokens.

Example: Abracadabra heavily relied on Alameda's (market maker) supplying of MIM/3CRV on Curve. When the market maker exited the pool, they caused the MIM stablecoin depeg to 0.95. The lack of Protocol Owned Liquidity in the 3CRV meant Abracadabra was not the one in control of its peg.

Lumio offers a different tokenomics model to stablecoin issuers, allowing them to purchase their own LP tokens from the market, adding stability to their peg.

This in essence creates the idea of renting vs. owning liquidity. Protocols will no longer be at the mercy of its liquidity providers, reducing the risk of their stable coins de-pegging. Along side this, the protocols now get to benefit from the fees generated from the volume in their pools bringing increase income and stability to the projects and their stablecoins.