Months ago we wrote a analysis on DEX, especially we observed liquidity migration on Uniswap V3, that the liquidity of large trading pair such as WETH/USDC, moving from 0.3% fee tier to 0.05% fee tier, to capture higher trading volume, and thus earn more trading fees. This makes sense, as in reality trading volume of WETH/USDC 0.05% is ~17x more than that of WETH/USDC 0.3%(Thus the LPs on 0.05% fee tier earn 2.8x than those LPs on 0.3%).

Below shows that on 1% fee tier, most of pools are highly risky assets. And among those most of them are top 200 tokens listed on Coingecko, still there are liquidity providers who are willing to take the risk and earn the fees. 1% high trading fee is a compensate for them to take such a high risk.

For other more risky assets, most of them are on Uniswap V2 with high-APR liquidity mining.

NFT is actually a more "inferior" asset, with greater volatility, poor liquidity, and higher single-point risks, which are difficult to predict; so the current low liquidity of the NFT market is actually a feature.

Blur and X2Y2 adopt list/bid mining (airdrop), which is essentially the same as what happened in Uniswap V2 LP mining before: with additional token incentives to compensate the risks of liquidity providers.

NFT's AMM tries to improve the liquidity of the NFT market, but the difference from NFT Marketplace is that on NFT's AMM, the only maker is the liquidity provider, and other roles have become takers. The inventory risk is borne by LP, and an AMM model with a custom fee tier may also be required, instead of Sudoswap's single fee rate of 0.5%. For more risky collections, LPs shall be compensated with high rates.

Moreover pricing for rare NFTs is yet another issue. Linoswap proposes a rarity pricing curve, but the rarity curve of each NFT collection is different. It may be a good choice to use a rarity pricing curve + dynamic fee rate to allow a market balance to adapt to a certain NFT collection through market supply and demand .