Maverick Review: The 34th Launchpool Project On Binance With Dynamic Distribution AMM
This Maverick Review post will help you discover how Maverick Protocol’s Dynamic Distribution AMM revolutionizes liquidity management models through smart contracts in the DeFi ecosystem. Learn about the benefits and features of Maverick and how it maximizes capital efficiency by automating liquidity concentration in price volatility conditions. Explore its unique staking modes and how they optimize capital efficiency and express directional price beliefs for liquidity providers. Check out the token distribution, allocation, and Maverick team behind this exciting infrastructure.
Introduction – Maverick Review
Maverick Protocol (MAV) has caught the attention of many investors since it became the 34th Launchpool project on Binance. Even though it is a relatively new project that launched only three months ago, Maverick has already achieved impressive figures in terms of fee revenue on the protocol.
Maverick stands out for its Automated Market Maker (AMM) technology, which optimizes capital utilization through automatic liquidity concentration in price volatility conditions. This leads to enhanced capital efficiency and increased market liquidity, resulting in better prices for traders and additional fee revenue for liquidity providers. Additionally, Maverick’s integrated feature eliminates costly gas fees by automatically adjusting trading positions around the price level.
Liquidity providers now have the option to track the price of an asset in a single direction and effectively bet on the price trajectory of a specific token. This investment approach is similar to one-sided liquidity strategies, where liquidity providers primarily or exclusively concentrate on a particular asset within a specific group.
These technological innovations are revolutionizing liquidity management models through smart contracts. Maverick is the first Dynamic Distribution AMM protocol that can automate liquidity strategies that previously required daily maintenance or complex super protocols. Maverick is pioneering a new approach and bringing new prospects to the decentralized finance sector.
The project has raised 17,460,000 USD from three rounds of private token sales, where 360,000,000 of the 2,000,000,000 MAV total token supply has been sold. In the most recent private token sale round, the MAV price was 0.1 USD. As of June 13th 2023, the total supply of MAV is 2,000,000,000, and the circulating supply upon listing will be 250,000,000 (~12.5% of the total token supply).
What is Maverick?
Maverick Protocol is a decentralized finance infrastructure that aims to create more liquid markets for traders, liquidity providers, DAO treasuries, and developers. Powered by a revolutionary Automated Market Maker (AMM), Maverick AMM maximizes capital efficiency by automating liquidity concentration as price moves. This feature helps eliminate high gas fees for liquidity providers who need to adjust their positions around price themselves.
Liquidity providers can also follow the price of an asset in a single direction, making a bet on the price trajectory of a specific token. These directional bets are similar to single-sided liquidity strategies. Maverick is the first Dynamic Distribution AMM that automates liquidity strategies that previously required daily maintenance or metaprotocols.
With these technological innovations, smart contracts can manage liquidity paradigm-shiftingly. By increasing capital efficiency, Maverick Protocol creates more liquid markets, which means better prices for traders and more fees for liquidity providers. This new infrastructure represents a significant advancement in decentralized finance and is worth exploring for those interested in cryptocurrency and the future of finance.
Maverick dApp has launched on Ethereum and zkSync Era for users to trade and provide liquidity on Maverick AMM. The app has three pages, namely Swap, Pools, and Portfolio, which cater to trading, liquidity provision, and display of liquidity position(s). Users can deposit tokens into Pools, where traders can swap them at prices set by the AMM. The app’s guides provide detailed information on each element of the process.
What is Dynamic Distribution AMM?
Decentralized finance (DeFi) platforms have become increasingly popular, and automated market makers (AMMs) are a key feature of these platforms. However, current AMMs have their limitations, particularly when it comes to liquidity providers (LPs) making directional bets on asset prices. LPs are currently unable to bet on price changes, which means they can experience losses if prices move in any direction other than sideways.
Maverick’s Dynamic Distribution AMM introduces a new concept known as Directional LPing, which allows LPs to make directional bets and earn excess returns if they make the correct prediction. This new feature provides LPs with better capital control and significantly improves capital efficiency. LPs can now concentrate their liquidity in any price range of their choosing, which saves them time, effort, technical expertise, and gas fees.
Capital Efficiency is a measure of how much volume a given amount of capital generates for a given price movement. The more efficiency, the better. Maverick’s AMM smart contract is designed to shift liquidity as often as each swap, which allows LPs to keep their capital working regardless of the price. This new dimension to liquidity concentration that is not present in existing AMMs offers LPs a new degree of freedom to put their capital to work in a risk position.
Specifically, Maverick is a Dynamic Distribution AMM where LPs can both stake a range and specify how that liquidity should move as price moves. The Maverick AMM smart contract natively shifts liquidity as often as each swap so that LPs can keep their capital working regardless of the price.Maverick team wrote in a blog post
With Maverick’s Dynamic Distribution AMM, LPs can now make directional bets, allowing them to better control their capital and generate higher fees. This new concept provides a solution to the limitations of current AMMs and offers a better way for LPs to put their capital to work in the DeFi ecosystem.
Maverick is a decentralized exchange (DEX) that offers unique features to liquidity providers (LPs). One of these features is the ability to provide liquidity across a non-uniform distribution of prices. This differs from existing range automated market makers (AMMs), where LPs must provide liquidity across a uniform range.
Each Maverick pool has a set of parameters, including a pair of assets, bin width, and fee rate. LPs choose the pool they want to add liquidity to and then decide how to distribute their liquidity across the price range. The smallest unit of the price range is called a “bin,” LPs can choose to stake liquidity in one or more bins.
When a pool is initiated, the user can specify the bin width for that pool. For volatile assets, a bin width of 2% is suggested; for stable pairs, a bin width of 0.02 to 0.05% is suggested. The bin width determines when each bin becomes active as the price moves: in a pool with 2% bins, a new bin will become active whenever the price moves by 2% in either direction; in a pool with 0.02% bins, the active bin will change more quickly.
LPing a non-uniform distribution is helpful for implementing risk-optimized LP positions, such as the exponential distribution described in a paper from Harvard. This paper showed that LPs could balance their impermanent loss risk with their fee reward by providing an exponential liquidity distribution across prices. LPs who want to operate in a high-risk, high-reward regime should use a narrow exponential distribution. In contrast, those who want to operate in a low-risk, low-reward regime should use a broad exponential distribution.
Directional LPing with Maverick Staking Modes
Maverick has introduced a new opportunity for liquidity providers (LPs) to increase their capital efficiency and express their directional price beliefs. LPs can now choose to have the automated market maker (AMM) move their liquidity as the price in the AMM shifts. When opening a position in a pool, an LP can stake one of four modes: Mode Static, Mode Right, Mode Left, and Mode Both. Depending on their choice, their bins and associated liquidity will move with price accordingly.
Mode Static functions similarly to the existing range AMM LPing. Mode Right is a bullish bet on price, while Mode Left is a bearish bet. To stake Mode Right or Mode Left, the LP is typically expected to add liquidity to the bin immediately to the left or right of the current active bin, respectively. Assuming their bet is correct and the price swaps past the edge of the active bin, that bin will hold only one asset. The liquidity in that bin can then be moved freely to a new bin that is closer to the price or intermingled with other single-asset bins.
The AMM smart contract tracks the time-weighted average price (TWAP) with a configurable lookback period. As trades occur, the price and TWAP change. When the TWAP moves through a bin edge up, Mode Right and Mode Both bins move up to the next bin. Conversely, as the TWAP moves down through a bin edge, Mode Left and Mode Both bins shift down one bin.
By utilizing Maverick’s staking modes, LPs can optimize their capital efficiency and express directional price beliefs, allowing for more flexibility in managing their positions.
In certain scenarios, liquidity providers (LPs) may find it advantageous to provide liquidity on only one side. Automated market makers (AMMs) typically require LPs to provide liquidity on both sides, which can result in impermanent loss. However, in Maverick, directional LPs can provide liquidity with just one asset and still maintain high capital efficiency thanks to the platform’s liquidity shifting mechanisms. This is not possible in other AMMs, like Uniswap v3, where single-sided LPing risks leaving capital stagnant as the AMM price moves away from the range.
Impermanent Loss Considerations
When you provide liquidity in an automated market maker, you may experience impermanent loss (IL) if the price of assets moves away from the price at which you entered the pool.
This happens because the market maker sells the more valuable asset for the less valuable asset, resulting in a net loss for you. You can address IL by hedging or relying on high volume and little net price movement to offset the loss with collected fees. However, IL is difficult to hedge in constant product automated market makers because it is nonlinear and bi-directional, meaning a price movement in either direction results in loss.
With directional liquidity provision, such as Mode Right or Mode Left, you are only exposed to IL in one direction, making it easier to hedge once the price moves beyond your range. However, with bi-directional liquidity reconcentration, or Mode Both, you expose yourself to permanent loss (PL) because you agree to buy high and sell low as liquidity is repositioned.
This mode should be used cautiously because PL risk increases with wider price swings. Bi-directional reconcentration has hindered previous attempts to reconcentrate liquidity through Curve v2 or vaults like Arrakis because it can leak liquidity to traders faster than you can make up for the loss with fees.
MAV is the native utility token of the Maverick ecosystem, which is designed to be primarily used for staking, voting, and boosting. Recently, Maverick launched a Voting Escrow (ve) contract that allows users to stake their MAV tokens and receive veMAV. The user’s veMAV balance determines their voting power within the protocol.
The Maverick community has demonstrated strong self-governance in recent months through initiatives such as the Maverick Warrior Program. At token launch, community members will be able to stake their MAV tokens to earn veMAV and use it to vote on governance proposals. The longer a user stakes their MAV, the more veMAV they will receive in return and the more voting power they will have.
Token Distribution & Allocation
|Binance Launchpool||1.50% of the total token supply|
|Investors||18.00% of the total token supply|
|Public Goods Fund||16.50 of the total token supply|
|Liquidity Mining and Airdrops||30.85% of the total token supply|
|Foundation/ Treasury||10.00% of the total token supply|
|Team||19.00% of the total token supply|
|Advisors||4.15% of the total token supply|
The Maverick development team brings together creative experts in the cryptocurrency space. Between them, they have built many original infrastructures for cryptocurrency: swap aggregator, Ethereum layer2, PoS public blockchain, DEX, decentralized storage networks, crypto lending, a crypto debit card, and quantitative digital asset investment. Members and advisors of the team have worked at leading companies such as Metamask, BitTorrent, Abra, TrueFi, Paxful, and LedgerPrime.
Maverick is supported by:
- Q3 2023:
- Deploy on BNB Chain
- Launch Voting Escrow and Governance contracts
- Q4 2023 (subject to DAO votes):
- Launch Boosted Pool Voting
- Launch AMM on more chains
- H1 2024 (subject to DAO votes):
- Launch AMM on more chains
- MAV LayerZero support on more chains
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.