What is Maverick protocol?

What is Maverick protocol?

Maverick Protocol offers a groundbreaking infrastructure for decentralized finance (DeFi) that is designed to create highly liquid markets for traders, liquidity providers, DAO treasuries, and developers. At the core of Maverick Protocol is its innovative Dynamic Distribution Automated Market Maker (AMM).

Key features of the Maverick AMM include:

1. Custom LP Distributions: Liquidity providers (LPs) are no longer constrained to stake their liquidity within a uniform price range. They have the flexibility to customize their liquidity distribution.
2. Low LP Maintenance: The Maverick AMM automatically compounds the liquidity fee, reducing the need for manual intervention by LPs.
3. Increased Capital Efficiency: LPs can optimize their capital utilization by allowing the Maverick AMM smart contract to automatically reposition their liquidity distribution, ensuring it tracks the price movement and stays within the desired range more frequently.

Concentrating liquidity has revolutionized capital efficiency, but current AMMs require users to manually adjust their liquidity positions. This leads to inefficiencies and misallocations when prices move beyond the concentrated range.

Existing concentrated liquidity AMMs, such as Range AMMs, enable LPs to concentrate their liquidity within a defined range. As long as the pool price remains within that range, their capital efficiency remains high, generating more fees compared to a constant product AMM.

The challenge arises when the pool price moves outside an LP’s range. In such cases, their capital efficiency drops to zero as none of their capital is utilized in the AMM. LPs must then manually readjust their liquidity to a new range, incurring additional time and gas fees. In practice, many LPs struggle to keep up with price movements, resulting in stagnant liquidity within Range AMMs.

Maverick AMM tackles this issue by automating the reconcentration of liquidity as prices move. LPs can choose from various liquidity shifting modes that monitor price changes and automatically reconcentrate liquidity on their behalf.

By maximizing capital efficiency, Maverick AMM creates more liquid markets, benefiting traders with better prices and providing increased fees for liquidity providers. This built-in feature also helps LPs avoid high gas fees associated with manual position adjustments.

In traditional AMMs, LPs implicitly bet on the price of the asset pair remaining stable to collect trading fees without significant shifts in the ratio of their deposited assets. However, this limitation restricts LPs from expressing directional beliefs about the assets they hold. For example, LPs bullish on ETH have no existing LPing option to make a simple bet on ETH’s price going up and earning trading fees from that bet. This deficiency hinders user participation, resulting in thin markets and suboptimal pricing.

With Maverick AMM, liquidity providers now have the option to follow the price of a specific token in a single direction, essentially making a directional bet on the price trajectory. These directional bets resemble single-sided liquidity strategies, where LPs are primarily exposed to a single asset within a pool.

As the price moves in the chosen direction, the AMM automatically adjusts the liquidity distribution to capture more fees. If LPs correctly predict the price direction, they can leverage this mode to enjoy re-concentrated liquidity around the price movement without experiencing impermanent loss (IL).

Maverick AMM: the most intelligent and versatile AMM in DeFi

Maverick AMM aims to provide advanced tools that empower liquidity providers (LPs) to design and automate their own unique strategies for concentrating and shifting liquidity.

With Maverick AMM, users have access to a diverse range of pre-designed liquidity modes, including both static and moving modes. These modes offer LPs the flexibility to execute a wide array of liquidity strategies according to their specific needs and preferences.

The static liquidity mode allows LPs to maintain a fixed liquidity distribution within a defined range, ensuring capital efficiency and generating fees as long as the pool price remains within that range.

On the other hand, the moving liquidity mode enables LPs to dynamically adjust their liquidity distribution as the price moves. This mode allows LPs to capture more fees by automatically reconcentrating liquidity around the price movements, optimizing their capital utilization and maximizing returns.

By offering these customizable liquidity modes, Maverick AMM empowers LPs with greater control and flexibility in managing their liquidity. LPs can choose the mode that best aligns with their investment strategies and market expectations, enabling them to adapt to changing market conditions and optimize their performance.

Overall, Maverick AMM provides LPs with a comprehensive set of tools and liquidity modes, allowing them to design and automate individualized strategies for concentrating and moving liquidity, enhancing their capital efficiency and potential profitability in decentralized finance (DeFi) markets.