Maverick Protocol: Everything to Know

By  Beluga Research August 21, 2023

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Summary

  • Maverick Protocol is built to facilitate the most liquid DeFi markets for traders, liquidity providers, DAO treasuries and developers
  • It is powered by a revolutionary Automated Market Maker (AMM) model called Dynamic Distribution AMM
  • Its utility token, MAV, is used for governance, staking, rewards and fees
  • Maverick addresses DeFi issues such as capital inefficiency, liquidity fragmentation and lack of capital control

Overview

Maverick Protocol is an Automated Market Maker (AMM) built to facilitate the most liquid DeFi markets for traders, liquidity providers, DAO treasuries and developers..It is a smart contract that allows users to exchange tokens without needing an order book or a centralized intermediary. Maverick Protocol introduces a novel AMM design called Dynamic Distribution AMM (DDAMM). It aims to address the three main issues that Maverick identified with existing concentrated liquidity solutions. These include capital inefficiency, liquidity fragmentation, and lack of capital control.

Maverick Protocol is built on Ethereum and zkSync Era. By integrating with zkSync Era, it can offer fast and cheap transactions for its users, aiming to become the leading DeFi platform for liquid and efficient markets.

A Brief History

The Maverick Protocol project started in 2021 as a research initiative to explore the potential of concentrated liquidity AMMs pioneered by Uniswap v3. The team realized many drawbacks and challenges with existing solutions. This includes high gas fees, limited capital control and suboptimal liquidity distribution. The team decided to develop a custom AMM model, the Dynamic Distribution AMM. This enables users to customize pool ranges and automate liquidity provisions based on predefined parameters.

The protocol was tested on various testnets and layer 2 networks. Funding was secured from prominent investors such as Founders Fund, Pantera Capital, Coinbase Ventures, Binance Labs, Circle Ventures, Gemini and others. The team also partnered with zkSync Era. The protocol was officially launched on March 8, 2023, on Ethereum mainnet. It became one of the first DeFi protocols to integrate with zkSync Era. Maverick Protocol has processed over $1 billion in trading volume.

In July 2023, Maverick Protocol raised an investment round of $9 million from leading venture capital firms, including Founders Fund, Pantera Capital and Binance Labs. This funding will accelerate the protocol's development and expand its reach to new users. The beta version of Maverick Protocol was launched on June 13th, 2023, on Binance Launchpool, where users can stake BNB and TUSD to farm MAV tokens.

What is Maverick Protocol?

Maverick Protocol is a DeFi infrastructure provider. It aims to create the most liquid markets for traders, liquidity providers, DAO treasuries and developers. It is powered by a revolutionary Automated Market Maker (AMM). Maverick's AMM differs from other AMMs, such as Uniswap or Balancer. It is based on a unique design called Dynamic Distribution AMM (DDAMM).

DDAMM allows users to create custom liquidity pools with flexible parameters like price range, fee rate and weight ratio. It also adjusts these parameters dynamically based on supply and demand. It ensures that liquidity is always allocated to the most profitable segments of the market. Maverick Protocol has over 21 coins and 38 trading pairs on the exchange. Maverick Protocol's utility token, MAV, is used for governance, staking, rewards and fees. It has a market cap of $54,439,086. MAV holders can participate in the decision-making process of the protocol and can also stake tokens to provide security and earn rewards from the protocol fees. Additionally, users can use tokens to pay for gas fees on zkSync Era.

Getting Started

  • Create a MetaMask wallet. Maverick Protocol is an Ethereum-based protocol, so users will need a MetaMask wallet to store tokens. Users have to create a MetaMask wallet.
  • Fund MetaMask wallet. Users can fund MetaMask wallet by buying ETH on an exchange like Coinbase or Binance and then transferring it to the wallet.
  • Buy Maverick tokens. Users can buy Maverick tokens on Uniswap or another decentralized exchange.
  • Connect MetaMask wallet to Maverick Protocol. Users can connect the MetaMask wallet to Maverick Protocol by going to the website and clicking the "Connect Wallet" button.
  • Start staking Maverick tokens. Once the MetaMask wallet is connected to Maverick Protocol, users can start staking tokens.

Unique Aspects

  1. Dynamic fee adjustment. Maverick Protocol adjusts the fee rate for each pool based on market conditions and the demand for liquidity. This ensures liquidity providers are compensated adequately for risk or opportunity costs, especially in volatile or low-volume markets. It also incentivizes traders to use the protocol when low fees increase the volume and liquidity.
  2. Flexible liquidity provision. Maverick Protocol allows liquidity providers to specify a price range for liquidity pools. However, unlike other AMMs that use concentrated liquidity, Maverick Protocol does not fragment liquidity across different pools and segments of the market. Instead, it uses a dynamic distribution mechanism that allocates liquidity to the most profitable segments of the market. This increases efficiency and reduces arbitrage opportunities for traders.
  3. Cross-pool arbitrage. Maverick Protocol enables cross-pool arbitrage within its ecosystem. This means traders can exploit price differences between pools on the protocol without paying gas fees. This creates more trading opportunities and improves price discovery.
  4. Liquidity mining. Maverick Protocol rewards liquidity providers and traders with MAV tokens for using the protocol. This creates a positive feedback loop that attracts more users and increases the token's value.

Advantages

  • Lower slippage. Maverick Protocol reduces slippage by using a dynamic distribution mechanism. This ensures traders can get the best price for trades and liquidity providers can maximize returns.
  • Higher returns. Maverick Protocol increases returns for liquidity providers. This is by adjusting the fee rate for each pool based on the market conditions and the demand for liquidity.
  • Lower gas costs. Maverick Protocol reduces gas costs by integrating with zkSync Era. Users can execute transactions faster and cheaper on zkSync Era without compromising security or decentralization.
  • Greater security. Maverick Protocol enhances security using zkSync. This means users can trust that transactions are valid and secure without relying on third parties or intermediaries.
  • More control. Maverick Protocol gives more power to users by allowing them to create custom liquidity pools with flexible parameters. Users can customize pools according to preferences or strategies.

Disadvantages

  • Complexity. Maverick Protocol is more complex than other AMMs in the market, as it involves multiple parameters, mechanisms and layers. This means users need to learn more about how the protocol works and how to use it effectively.
  • Volatility. Maverick Protocol is more volatile than other AMMs in the market. This is due to the fact that it adapts to market conditions and optimizes capital efficiency and control. Users may face more price fluctuations, fees, and returns.
  • Competition. Maverick Protocol faces competition from other AMMs, such as Uniswap or Balancer. This means that users may prefer to use these protocols instead of Maverick Protocol, especially if they offer better features, services or incentives. It also means Maverick Protocol may need to innovate and differentiate itself from its competitors.
  • Regulation. DeFi protocols or tokens may face restrictions or sanctions from governments and authorities. This could affect Maverick Protocol and its users. Users may face legal or compliance issues when using Maverick Protocol. Maverick Protocol may need to comply with the relevant laws and regulations to operate legally and safely.
  • Adoption. Users may be reluctant to use DeFi protocols, tokens or transactions. This poses adoption challenges. Maverick Protocol may need to raise more awareness and education among users. Users may also need more trust in the protocol, especially if unfamiliar or inexperienced with DeFi.