My gumby assumption has always been that as the price of ERG (or BTC) increases, it automatically means more liquidity, given the liberal divisibility of the fundamental asset. If 1 ERG = $100, then it will mean more when a miner sells their latest rewards.
But the reality of the situation is that liquidity is also a function of the velocity of money, which is quite low for ERG, BTC, and all other crypto assets. The hope that liquidity could increase with price should be moderated by the recognition that HODL is detrimental to the cause.
Here is how the Fed sees it: https://www.stlouisfed.org/on-the-economy/2022/aug/market-liquidity-quantity-theory-money
To my understanding, we must focus on using the Ergo Platform to generate a useful currency, that can expand and contract in market cap with velocity, not pegged to some arbitrary limit based on collateral in volatile and fixed quantity assets, like ERG or BTC.
I am very inspired by the work Kushti has put into Chain Cash, for this purpose. It seems to me that this is the pure essence of what crypto should enable, with regard to developing a currency that is elastic and responds to real market conditions.
Now we need a market. Perhaps Palmyra will provide a way.