Liquidity is finally getting the attention it deserves in the SNS ecosystem. For far too long, projects launching via the Service Nervous System (SNS) framework have struggled with a major gap: what happens once the tokens are out there? More often than not, the answer has been “not much”. Swap participants may walk away with SNS tokens, but those tokens have often sat idle, unlisted on decentralised exchanges (DEXs), or painfully illiquid. Now, that’s beginning to change—and it’s not just talk.
ICTO has announced its upcoming v2 release, built to work with a much-needed shift in how liquidity is handled across SNS projects. The proposal? A Liquidity Pool Extension designed to plug into SNS treasuries and automate what has long been a clunky, error-prone process. This feature won’t be sitting on the sidelines—it’s central to SNS 2.0 itself, which will require projects to allocate liquidity as part of their launch, making it a standard rather than an afterthought.
The current workaround is far from smooth. SNS projects hoping to become tradable on ICP-based DEXs like Helix or ICPSwap often end up buried in proposal chaos. They need to approve treasury transfers manually, one step at a time, while dealing with each DEX’s quirks and custom interface. Even when those hurdles are cleared, actual liquidity is often thin, limiting utility and making price discovery clumsy and unattractive for newcomers.
The Liquidity Pool Extension addresses this by creating a purpose-built canister that SNS DAOs can use to interact directly with DEXs. This is no one-size-fits-all tool; each DEX gets its own version, custom-coded to suit its mechanics. But crucially, these extensions all slot into the SNS interface using the same API—meaning users only have to learn one system. Whether you’re allocating liquidity to DEX A or DEX B, the proposal structure and flow remain the same.
It’s a long-overdue move to streamline the mechanics of token distribution and usability. For years, SNS users and developers alike have flagged the awkward post-launch environment: even successful swaps often led to stagnation. Without liquidity, tokens couldn’t be exchanged efficiently, and potential participants had little reason to get involved if they couldn’t later trade their assets without bottlenecks or off-chain intervention.
ICTO isn’t just talking about it—they’re already baking these changes into their platform and prepping a testnet that will reward participation. Their testnet will not only showcase how the Liquidity Pool Extension operates, but also encourage broader community engagement in its fine-tuning. Incentivising feedback and testing in a live environment could be the push needed to make this new design a community standard.
But beyond the tool itself lies the bigger idea: making liquidity a first-class citizen of the SNS launch process. Under this approach, SNS projects won’t just focus on governance mechanics or initial fundraising—they’ll be required to consider market function from the start. Allocating part of the treasury to liquidity pools becomes automatic, giving projects a more level playing field once tokens hit the market.
The Liquidity Pool Extension provides four core capabilities: deposits, observability, efficiency, and withdrawals. Deposits allow SNSs to allocate SNS and ICP tokens into DEXs, either during the creation of the SNS or later via critical proposals. Observability ensures a full audit trail—every transaction can be tracked and verified via the ledger, making it easier for communities to trust what’s happening with their funds. The efficiency mechanism is particularly useful, automatically sending back unused tokens to the treasury, avoiding waste. And when needed, an SNS can withdraw its liquidity entirely via another critical proposal.
Because each DEX can implement its own Liquidity Pool Extension—so long as it meets technical standards and is approved via the Network Nervous System (NNS)—the framework avoids centralising around one exchange. This opens the door to competition and innovation between DEXs while keeping the SNS structure clean and consistent.
It also creates a clearer line between the launch and the liquidity phases of a project. Previously, the end of the swap period marked a kind of cliff. Tokens were distributed, but the market was underprepared. Now, launch can blend directly into active trading, creating momentum and making the token genuinely usable right away.
The implications go beyond just token availability. With better liquidity comes better price discovery, easier entry and exit, and a healthier perception of project viability. Even simple features like being able to track a DAO’s assets via its DEX position help to build community trust and signal project stability.
ICTO’s decision to release their V2 with this feature shows they’re serious about helping the ecosystem mature. It also positions them as a key collaborator with SNS itself, suggesting the Liquidity Pool Extension could become a core piece of future launches, not just an optional bolt-on. Their messaging around this has been deliberate—rather than racing ahead solo, they’ve called for community feedback on the proposed design, particularly before locking in technical details.
The problems being addressed here aren’t hypothetical. Multiple SNS projects launched in the past year have struggled to get listed on DEXs or establish enough trading volume to sustain interest. The slow manual proposal process has meant that even willing treasury teams couldn’t act quickly, often delaying vital liquidity decisions by weeks or months. Meanwhile, users left swaps with tokens that felt more like souvenirs than financial instruments.
Part of the difficulty lies in managing interactions with several different DEX protocols. Without a unified standard, each liquidity proposal has to be handcrafted to work with a specific platform. The Liquidity Pool Extension solves this by doing the DEX-specific work inside a dedicated canister, while presenting a simplified interface to the DAO and its voters. It reduces the margin for error, simplifies education for participants, and shortens the time from token distribution to real-world use.
There’s still work to be done before it’s ready for rollout. The current proposal is high-level and awaiting broader community feedback, particularly from DAO contributors and DEX operators who’ll need to build and maintain their own extension canisters. But the direction is promising—and overdue. With SNS 2.0 making liquidity provisioning a must-have, and platforms like ICTO stepping up with implementation plans, the days of post-swap paralysis may finally be numbered.
It’s a move that puts action behind the talk of decentralised finance. Without liquid tokens, decentralised governance loses much of its power. The Liquidity Pool Extension gives SNS projects the infrastructure to support healthy markets from day one, without forcing communities to become part-time engineers or token wranglers.
As testing begins and specifications solidify, there’s a chance here to raise the standard not just for SNS, but for all token-based governance projects trying to build on-chain utility. If the community backs it—and the implementation proves secure and usable—this could shift how launches are handled across the board. And for a space that thrives on autonomy and speed, that might be the most useful upgrade yet.
