Compared to Uni V3, average daily capital efficiency of more than 100%
Within a month of its launch, Maverick, TVL and Curve were once in the top three in terms of transaction volume on the main Ethereum network, and were less than 1% of Uniswap and Curve.
Following the completion of Ethereum's Shanghai upgrade on April 12, more than 18 million ETH were unlocked, clearly seeing increased activity and some significant changes in the DeFi market.
However, there is still an obvious problem, namely the enormous limitations of the current AMM space. One is that AMM's capital utilization rate is low. Both the early xy=k model and the later Uniswap V3 model, most trades are not deep enough on decentralized exchanges. Secondly, the impermanence loss has not been essentially solved, and the compensation relying on Token economics is not sustainable after all.
For example, most liquidity providers on Uniswap are still losing money despite dominating in gross locked value (TVL) and volume. Transaction fee gains are often insufficient to offset volatile losses, especially for concentrated and passive liquidity.
There is an urgent need for the DeFi industry to address this issue, and the Maverick agreement has come to users' attention at just the right time.
According to Defillama, Uniswap topped the Ethereum Network DEX rankings as of April 21, with $1.24 billion in 24-hour transactions, a weekly gain of 73.17%; It was followed by Curve ($131 million), with a weekly gain of 24.71%.
Remarkably, Maverick Protocol managed to break into third place, with 24-hour trading volume of $36.45 million, up 58.86% for the week.
How does Maverick AMM improve liquidity efficiency
The Maverick Protocol is a dynamically distributed automated market maker (AMM) that moves according to the price of a trade and is designed to provide tools to maximize transaction fee gains or reduce or avoid gratuitously charged losses by providing deeper liquidity, bringing optimal liquidity to decentralized financial markets, and improving capital efficiency.
The protocol is unique in that Maverick AMM pioneered the design of Dynamic Distribution AMM, which includes the following three features:
1. The first AMM has the underlying native ability to automatically move and concentrate liquidity based on the transaction price
2. Provide tools to enable LP to execute different liquidity market making strategies: move only with rising prices and stay put when prices fall; Move only with falling prices and stay put when prices fall; As prices move up and down; And fixed liquidity to a certain price point.
3. AMM helps LP compound income in real time
The left and right modes of the four liquidity modes introduce the innovative AMM concept of Directional LP for the first time, allowing the liquidity provider (LP) to move in the direction of liquidity following the price of the trading pair, achieving excess returns when choosing the right direction while avoiding volatile losses.
It allows liquidity providers the freedom to choose to have their liquidity move automatically to keep it close to current prices. This liquidity movement can improve capital efficiency and provide LP's with better capital utilization, while allowing them to make strong bets while collecting fees.
Maverick AMM is designed to help users maximize capital efficiency, thereby creating more liquid markets; This means better prices for traders and higher fees for liquidity providers. In addition, the built-in functionality helps reduce the high GAS costs associated with adjusting positions.
Liquidity providers can choose to follow asset prices in one direction, effectively betting on the price trajectory of a particular Token. These directional bet classes can be understood as unilateral liquidity strategies in that the liquidity provider is largely or fully exposed to a single asset in a given pool. The flexibility of the Maverick Protocol makes it one of the most liquid markets in decentralized financial markets, and facilitates linear hedging between advanced or high level LP and the protocols above it, ensuring delta neutrality and safer income earning.
In addition, Maverick AMM allows liquidity providers to customize their liquidity distribution, either by providing liquidity unilaterally or in any liquidity distribution shape.
The three functions of AMM bottom automatic mobile centralized primary liquidity, custom centralized liquidity movement direction, and LP cost automatic compound interest, Maverick AMM enables DeFi users such as liquidity providers, DAO Treasury, and project development teams to maximize capital efficiency and the most accurate liquidity management tools possible.
Unilateral bullish or bearish directional LP
In the current AMM world, liquidity providers cannot set a single definitive call or put when providing liquidity.
For any existing AMM in the DeFi space, the liquidity provider would implicitly bet that the price of the pair of assets in their pool would move sideways, allowing them to charge transaction fees without the ratio of their deposited assets changing significantly. If the bet turns out to be wrong - that is, if prices move in any direction other than sideways - liquidity providers will suffer fickle losses that could exceed any fees they charge.
In a static liquidity AMM, it is advantageous for an LP to have a bilateral allocation of assets, so that an LP has immediate access to the volume and is charged for it. However, bilateral LP will increase the possibility of erratic loss.
In AMMs like Uniswap V2 xy=k, even single side LP is not supported. Unilateral LP is possible in existing interval AMMs such as Uniswap V3, but with unilateral LP, your capital may stagnate as the AMM price deviates from your range. Without a built-in mechanism to move its liquidity close to the price, the capital efficiency of a unilateral LP is zero.
In Maverick, directional LP can provide liquidity to an asset while still maintaining high capital efficiency due to the underlying Maverick liquidity transfer mechanism.
Liquidity providers can now choose to follow asset prices in one direction, effectively betting on the price trajectory of a particular Token. These directional bets are similar to unilateral liquidity strategies in that the liquidity provider is largely or fully exposed to a single asset in a given pool.
As the price moves in the chosen direction, the AMM will automatically refocus liquidity to follow it in order to capture more fees. If liquidity providers make the right bets on the direction of prices, they can enjoy liquidity around price reconcentration as prices move in their chosen direction without suffering any impermanence losses (IL).
That is, oriented LPS in Maverick with a single asset (that is, LPS using Mode Right or Mode Left) are exposed to IL in only one direction. If LP chooses a change Mode that corresponds to a change in price (for example, LP is in Mode Right and the price goes up), LP will not experience IL. In this way, IL is only one-way, that is, LP is only exposed to the risk of price changes in one direction instead of two.
Four modes of liquidity transfer
Facing concentrated liquidity is not always capital efficient and can lead to misallocation and inefficiency problems. Maverick AMM helps users improve capital efficiency by automatically refocusing liquidity. Liquidity providers can choose from four liquidity transfer modes, thereby eliminating high GAS fees from self-positioning around prices.
The four modes include:
Static mode - Liquidity does not move
Right pattern - Liquidity changes as prices rise, but not when prices fall
Left pattern - Liquidity changes as prices fall, but does not change when prices rise
Two-way model - Liquidity moves as prices increase and decrease
After more than a year of research and development, Maverick built the next generation of General Purpose AMMs from scratch. Smart contract-based Automatic Market Making (AMM) engines provide support to integrate automated mobile management of liquidity into smart contracts. Maverick reinvented a whole new set of smart contracts, AMM helps users move liquidity without any interaction with the interface, thus avoiding high GAS bills. Because liquidity flows are automatically carried out by AMM smart contracts, liquidity providers do not pay GAS fees when servicing their liquidity. The only time they have to pay for GAS is when they increase or decrease liquidity.
Maverick AMM is intended to be a sophisticated enough set of tools to allow LP to design and automate individual strategies to centralize and move liquidity. Offering a range of out-of-the-box liquidity modes -- static and mobile -- enables users to execute a wider variety of liquidity strategies. This innovative solution helps liquidity providers manage their liquidity more efficiently, resulting in higher returns, while also providing traders with a better trading experience.
In a previous interview, Bob Baxley, Maverick's core developer, said, "If liquidity providers in existing AMMs want to keep their capital as active as possible, they are forced to adjust their liquidity positions every hour, which wastes their time and fuel." "By giving liquidity providers the option to choose whether and how their liquidity moves with prices in a given pool - something other AMMs themselves don't do - Maverick enables the market to function more efficiently, resulting in more consistent fees."
In the case of the wstETH-ETH pool on Maverick, the pool has seen a significant increase in 24-hour trading volume since the launch of Ethereum amid solid TVL growth.
At the same time, Maverick's wstET-ETH pool capital efficiency (24 hour volume divided by pool TVL amount) has consistently maintained market leading levels. Based on market data dated April 5, its capital efficiency is 8.17 times that of Uni V3:
In addition, Maverick launched a "Boosted Position" feature on May 2, enabling projects to boost their token-boosted positions in Maverick with precision and flexibility. This function provides the project side with the grasp of liquidity incentive:
1, accurate to the accuracy of a single position
2. The maximum flexibility of excitation for the liquidity distribution of arbitrary shapes and mobility patterns.
The DAO organization of the LSD header project Lido has approved in early May to add the LDO incentive to the gain position of wstETH-ETH on Maverick, which will go live at Maverick in May.
What's Maverick?
Maverick Protoco has raised two rounds of funding, led by Jump Crypto and Pantera. Other participants are: Circle Ventures, Gemini, Spartan Group, Coral Ventures and others.
On March 9, Maverick Protocol, a decentralized encrypted derivatives protocol, officially announced the launch of Maverick 1.0, a decentralized trading platform (DEX), on the Ethereum mainnet. After it launched Ethereum, Maverick was basically in the top three to top five transactions on the main Ethereum network. And launched zkSync Era mainnet two weeks ago.
Recently, Maverick Protocol announced an official partnership with the OKX Web3 wallet to access the OKX Web3 wallet. Users can connect to the OKX Web3 plugin wallet for low slip point transactions and pledges in Maverick Protocol.
Currently, Maverick's smart contract code has been audited by three audit firms and one audit community: Zellic, Certik, ADBK, and Code4rena. In addition, the code was externally audited by professional smart contract developers at companies that invested in Maverick.
Speaking about Maverick's future, core developer Bob Baxley said, "Our goal is to be a top three decentralized exchange by volume within the next six months." I believe Maverick AMM will continue to integrate with cutting-edge de-centered protocols as the latest generation of DeFi infrastructure, including LSD, perpetual futures, quant strategies, DeFi hedge funds, lending, leveraged trading and other tracks.
This shows that the Maverick team is confident in its growth prospects and will continue to strive to provide users with an even better service and experience. With more partners and investors on board, Maverick Protocol is expected to be more successful in decentralized finance.
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