Rented vs owned liquidity
The distinction the whole system rests on, and why no existing primitive captures it.
Argued in full in the whitepaper at §1, §2.
The distinction#
Owned liquidity is deposits that are indifferent to the subsidy. Remove the incentive and most of it stays, because it is there for the yield the venue generates on its own, or for exposure, or out of inertia.
Rented liquidity tracks the subsidy. It arrived because of a campaign and it leaves when the campaign does. It is not fraudulent or even unwise — renting liquidity is a legitimate way to bootstrap a market. The failure is that nothing on chain distinguishes the two, so a fourteen-day lock gets written against a six-day pool.
What this looks like at scale#
During the first six weeks of one recently launched Layer 2, nineteen concurrent campaigns paid a combined $58,351 per day, of which two accounted for 92%. The largest, at $29,514 per day, drove one synthetic dollar from roughly $17M to roughly $253M — about 43% of all stablecoins on the chain, displacing the previously dominant issuer.
Over the same period the chain’s DEX volume fell 72.5% from peak, and its share of global DEX volume fell from 16.65% to 4.32% before partially recovering. Reported TVL never showed the fragility. It showed a record.
Why nothing else covers it#
| Existing tool | What it gives you | What is missing |
|---|---|---|
| TVL aggregators | Accurate current levels, decomposed by protocol and asset | Deliberately descriptive — the state now, not its expected persistence |
| Incentive trackers | Live emission rates and end dates | An expiry date says when the subsidy stops, not how much leaves when it does |
| Risk platforms | Sophisticated parameter modelling under retainer | Advisory, human-mediated, and engaged by the protocol rather than the depositor |
| Price oracles | Off-chain facts delivered on chain with economic backing | They deliver observations. A horizon is a prediction, which cannot be verified at publication time |
Cleaton depends on the first two for ingestion. The gap it occupies is narrower than any of them: a predictive, contract-consumable, economically bonded, publicly calibrated statement about how long liquidity will persist.
The formal version#
A pool retains relative to a reference time if the minimum of its time-weighted liquidity over the whole interval stays at or above θ times the reference — default θ = 0.7.