What is Binance's latest Launchpool project Maverick all about?
Maverick aims to become one of the top three decentralized exchanges by trading volume within the next six months.Author: Rhythm BlockBeats
Binance announced the launch of the new Launchpool project Maverick Protocol (MAV). Users can deposit BNB and TUSD into the MAV mining pool on the Launchpad website starting from June 14, 2023, at 08:00 to earn MAV rewards. MAV will be available for mining for a total of 25 days. Once the liquidity requirements for the MAV Token are met, Binance will open trading markets for MAV/BTC, MAV/USDT, and MAV/TUSD. The date and time will be announced once confirmed.
One month after its launch, Maverick, which ranked among the top three in trading volume on the Ethereum mainnet, has a TVL of less than one percent of Uniswap and Curve.
After Ethereum completed the Shanghai upgrade on April 12, over 18 million ETH were unlocked, leading to a noticeable increase in the activity of the DeFi market and some significant changes.
However, there remains a clear issue: the significant limitations in the current AMM space. Firstly, the capital utilization of AMMs is relatively low. Whether it is the early xy=k model or the later Uniswap V3 model, most trading pairs lack sufficient depth on decentralized exchanges. Secondly, impermanent loss has not been fundamentally resolved, and relying on token economics for compensation ultimately lacks sustainability.
For example, despite dominating in total locked value (TVL) and trading volume, most liquidity providers on Uniswap are still at a loss. Trading fee earnings are often insufficient to offset impermanent losses, especially for concentrated and passive liquidity.
The DeFi industry urgently needs to address this issue, and the Maverick protocol has entered users' sights at just the right time.
According to data from Defillama, as of April 21, Uniswap ranked first on the Ethereum network DEX leaderboard, with a 24-hour trading volume of $1.24 billion and a weekly increase of 73.17%; followed by Curve ($131 million) with a weekly increase of 24.71%.
Notably, Maverick Protocol successfully ranked third, with a 24-hour trading volume of $36.45 million and a weekly increase of 58.86%.
How Maverick AMM Improves Liquidity Efficiency
Maverick Protocol is a dynamic distribution automated market maker (AMM) that moves according to trading prices, aiming to provide deeper liquidity, bring optimal liquidity to decentralized finance markets, and improve capital efficiency. On this basis, it offers tools to maximize trading fee earnings or reduce and avoid impermanent losses.
The uniqueness of the protocol lies in the fact that Maverick AMM is the first to introduce the design of Dynamic Distribution AMM, which includes the following three major features:
- The first AMM with the ability to automatically move concentrated liquidity based on trading prices.
- Provides tools that empower LPs to execute different liquidity market-making strategies: only moving with price increases while remaining stationary when prices decrease; only moving with price decreases while remaining stationary when prices increase; moving with both price increases and decreases; and fixing liquidity to certain price points.
- The AMM helps LPs compound earnings in real-time.
Among the four liquidity modes, the left and right modes introduce the innovative AMM concept of Directional LP for the first time, allowing liquidity providers (LPs) to choose the direction of liquidity movement based on the price of the trading pair, thus earning excess returns when making the correct choice while avoiding impermanent losses.
It allows liquidity providers to freely choose to have their liquidity automatically move to stay close to the current price. This liquidity movement can enhance capital efficiency, providing LPs with better capital utilization while allowing them to make strong bets while earning fees.
Maverick AMM aims to help users maximize capital efficiency, thereby creating more liquidity markets; this means traders can get better prices while liquidity providers can earn higher fees. Additionally, built-in features help reduce the high GAS fees incurred from adjusting positions.
Liquidity providers can choose to follow asset prices in one direction, effectively betting on the price trajectory of specific tokens. These directional bets can be understood as unilateral liquidity strategies, as liquidity providers will be mostly or entirely exposed to a single asset in a given pool. This flexibility of the Maverick Protocol makes it one of the most liquid markets in decentralized finance, facilitating linear hedging for advanced or high-level LPs and the protocols above them, ensuring delta neutrality and safer profit earning.
Moreover, Maverick AMM allows liquidity providers to customize liquidity distribution, providing liquidity unilaterally or in any shape of liquidity distribution.
The three features of underlying automatic movement of concentrated native liquidity, customizable direction of concentrated liquidity movement, and automatic compounding of LP fees make Maverick AMM a tool that maximizes capital efficiency and provides precise liquidity management for liquidity providers, DAO treasuries, and project development teams in the DeFi space.
Directional LP for Bullish or Bearish Bets
In the current AMM space, liquidity providers cannot set a single definitive bullish or bearish position when providing liquidity.
For any existing AMM in the DeFi space, liquidity providers implicitly bet that the prices of the assets in their pool will oscillate sideways, allowing them to earn trading fees while the ratio of their deposited assets does not change significantly. If this bet is wrong—meaning if the price moves in any direction other than sideways—liquidity providers will suffer impermanent losses that may exceed any fees they earn.
In static liquidity AMMs, LPs benefit from a bilateral asset allocation, allowing them to immediately access trading volume and thus earn fees. However, bilateral LPs increase the likelihood of impermanent losses.
In AMMs like Uniswap V2's xy=k, unilateral LPs are not even supported. In existing range AMMs like Uniswap V3, unilateral LPs are possible, but with unilateral LPs, as the AMM price deviates from your range, your capital may stagnate. Without a built-in mechanism to move liquidity closer to the price level, the capital efficiency of unilateral LPs is zero.
In Maverick, due to the underlying Maverick liquidity transfer mechanism, directional LPs can provide liquidity for one asset while still maintaining high capital efficiency.
Liquidity providers can now choose to follow asset prices in one direction, effectively betting on the price trajectory of specific tokens. These directional bets are similar to unilateral liquidity strategies, as liquidity providers will be mostly or entirely exposed to a single asset in a given pool.
As prices move in the chosen direction, the AMM will automatically re-concentrate liquidity to follow it, allowing for more fee earnings. If liquidity providers make the correct bet on price direction, they can enjoy liquidity re-concentrated around the price as it moves in their chosen direction without suffering any impermanent loss (IL).
That is to say, directional LPs in Maverick with a single asset (i.e., LPs using Mode Right or Mode Left) are only exposed to IL in one direction. If LPs choose a movement mode corresponding to price changes (for example, LPs are in Mode Right and the price rises), LPs will not experience IL. Thus, IL is only one-sided, meaning LPs only face the risk of price movement in one direction rather than two.
Four Liquidity Transfer Modes
Facing concentrated liquidity does not always have capital efficiency, which can lead to misallocation and decreased efficiency. Maverick AMM helps users improve capital efficiency by automatically re-concentrating liquidity, allowing liquidity providers to choose from four liquidity transfer modes, thus eliminating the high GAS fees incurred from adjusting positions around the price.
These four modes include:
- Static Mode - Liquidity does not move
- Right Mode - Liquidity moves with price increases but remains unchanged when prices decrease
- Left Mode - Liquidity moves with price decreases but remains unchanged when prices increase
- Bidirectional Mode - Liquidity moves with both price increases and decreases
After more than a year of research and development, Maverick has built the next generation of universal AMM from scratch. The smart contract-based automated market maker (AMM) engine provides support, integrating automated liquidity movement management into smart contracts. Maverick has re-engineered a brand new set of smart contracts, allowing AMM to help users move liquidity without any interaction with the interface, thus avoiding high GAS fees. Since liquidity movement is automatically conducted by the AMM smart contract, liquidity providers do not need to pay GAS fees when providing services for their liquidity. The only time GAS fees need to be paid is when they increase or decrease liquidity.
Maverick AMM aims to be a sufficiently complex tool that allows LPs to design and automate personal strategies to concentrate and move liquidity. It provides a range of out-of-the-box liquidity modes—static and moving—enabling users to execute a wider variety of liquidity strategies. This innovative solution helps liquidity providers manage their liquidity more efficiently, thereby achieving higher returns while also providing traders with a better trading experience.
In a previous interview, Maverick's core developer Bob Baxley stated, "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 allowing liquidity providers to choose whether and how their liquidity moves with price changes in a given pool—something other AMMs do not do—Maverick enables the market to operate more efficiently, generating more consistent fees."
Taking the wstETH-ETH pool on Maverick as an example, since its launch on Ethereum, the pool has seen a significant increase in 24-hour trading volume with robust growth in TVL.
Meanwhile, the capital efficiency of Maverick's wstETH-ETH pool (24-hour trading volume divided by pool TVL) has consistently maintained a market-leading level. Based on market data from April 5, its capital efficiency is 8.17 times that of Uni V3:
The capital efficiency of this pool peaked at 442% on March 14, far exceeding the data of Uni v3's wstETH-ETH pool and Curve's stETH-ETH pool on that day:
Additionally, on May 2, Maverick launched the "Boosted Position" feature, allowing project parties to flexibly and precisely incentivize any liquidity distribution through their tokens in Maverick. This feature provides project parties with:
- Precision down to individual positions.
- Maximum flexibility in incentivizing liquidity distributions of any shape and liquidity movement mode.
The DAO organization of the leading LSD project Lido approved the addition of LDO incentives to the boosted positions of wstETH-ETH on Maverick in early May, which will go live on Maverick in May.
What is Maverick?
Maverick Protocol has completed two rounds of financing, led by Jump Crypto and Pantera, with other participating investment institutions including Circle Ventures, Gemini, Spartan Group, Coral Ventures, and others.
On March 9, the decentralized crypto derivatives protocol Maverick Protocol officially announced the launch of the decentralized trading platform (DEX) Maverick 1.0 on the Ethereum mainnet. Since its launch on Ethereum, Maverick has consistently ranked among the top three to five in trading volume on the Ethereum mainnet. It also launched on the zkSync Era mainnet two weeks ago.
Soon, Maverick Protocol announced new news, officially partnering with the OKX Web3 wallet to integrate the OKX Web3 wallet. Users can conduct low-slippage trading and staking on Maverick Protocol by connecting the OKX Web3 plugin wallet.
The latest news is that Binance announced the launch of the new Launchpool project Maverick Protocol (MAV). Users can deposit BNB and TUSD into the MAV mining pool on the Launchpad website starting from June 14, 2023, at 08:00 to earn MAV rewards, with MAV available for mining for a total of 25 days.
Currently, Maverick's smart contract code has been audited by three auditing firms and one auditing community: Zellic, Certik, ADBK, and Code4rena. Additionally, professional smart contract developers from the companies investing in Maverick have conducted external audits of the code.
Regarding the future of Maverick, core developer Bob Baxley stated, "Our goal is to become one of the top three decentralized exchanges by trading volume within the next six months." It is believed that Maverick AMM will continue to integrate with cutting-edge decentralized protocols, including LSD, perpetual futures, quantitative strategies, DeFi hedge funds, lending, leveraged trading, and other sectors.
This indicates that the Maverick team is confident in its development prospects and will continue to strive to provide users with better services and experiences. With the addition of more partners and investors, Maverick Protocol is expected to achieve greater success in the decentralized finance space.
