What can Maverick do?
Official documentation:
Swap - Trading interface for executing spot swaps on the Maverick AMM
Pools - Liquidity provider interface where LPs can add liquidity to Maverick AMM pools
Portfolio - Once you add liquidity, your liquidity positions will appear here
We only talk about his innovations:
Maverick Protocol uses Maverick AMM to automatically pool liquidity when prices change
What is Maverick AMM? In fact, liquidity providers can now also choose to follow the asset price in one direction, effectively betting on the price trajectory of a specific token
Explanation: Each bar chart in the above figure is a range. If you distribute LP liquidity in different positions and charge transaction fees for different positions, it is no longer like the traditional LP that concentrates liquidity. This seems to be smoother. Because the price is different, the liquidity position you provide is also different.
For example, in USDT-USDC, the liquidity you provide will be automatically divided into 11 positions. The difference of each position is 0.0001, which is the range of 0.9995-1.0005. When the price is between 1.0001-1.0002, it will be traded in the corresponding separate position you provided, because your position has already covered 0.9995-1.0005 when it was provided, and each position contains "different" funds.
Secondly, we have four strategies for providing liquidity on its protocol:
Maverick AMM provides four liquidity modes to choose from out of the box:
1: Right mode
2: Left mode
3: Two modes
4: Static mode
Next, explain them one by one:
-1.Right mode:
We can understand it as the optimal mode for rising. Why? - Because when the market is good, when you choose the right mode, your lp will continue to move to the corresponding position as the price rises.
For example: Now you provide liquidity at ETH: 1800, select the right mode, then when the ETH price reaches 1900, the u in the lp|U+E| you provided will move to 1900, instead of stopping at 1800 (this is just a simple example)
One of the reasons why providing liquidity in traditional DEX results in such serious uncompensated losses is that you cannot adjust the position of your group LP in real time like traditional CEX market makers. Unless you keep withdrawing and providing liquidity, you will lose a lot of transaction fees and it is unrealistic.
-2. Left mode:
Contrary to the right pattern, you can understand it as the optimal downward trend.
The advantage of these two modes is that they can face extreme market conditions, such as sharp rises and falls. As we all know, when you provide group LP in common protocols, the most worrying thing is sharp rises and falls, because when it rises sharply, you cannot get the increase of the token you provide, and when it falls sharply, you will only be treated as a ruthless trash can.
-3. Two modes:
In fact, you can do 1+2 at the same time. Whether the price moves to the right or left, it will follow the price in the pool.
In other words, it follows the pool price up and down. This is in contrast to 1 and 2, which only move LP liquidity when the price moves in a single direction.
So if there is a single left or right extreme market, 1.2 is the best choice, if it is a swing market, 3 is more profitable
-4.Static mode:
You can understand it as the traditional univ3 mode, that is, your lp will not move left or right with price changes: but you can make different choices in static mode:
(1 Exponential - Starts with a concentration of liquidity near the current pool price, then distributes the remaining liquidity to the boxes on the left and right in exponentially decreasing amounts.
(2 Flat - Evenly distributes liquidity into a series of bins centered around the current pool price (similar to a constant product AMM).
(3 Single Bin - allocate your liquidity only in the active bin (the range you choose e.g. ETH-U {1600-1800 range}).
The biggest benefit of the Maverick protocol’s innovation is that it solves the problem of uncompensated losses when we provide liquidity:
So what is gratuitous loss?
That is, when users provide liquidity to an AMM, they implicitly agree to accept any trade. This means that the asset balances they provide to the AMM are likely to change over time. For example, if the LP's initial position consists of a 50-50 ratio between USDC and ETH, but later trading activities will change that ratio.
IL is calculated by comparing the real-time value of an LP’s position in the AMM with the value of the initial deposit it just held.
If the market value of ETH rises, traders will likely come to the USDC-ETH pool and buy ETH for USDC, changing the balance of our LP 50-50 position (e.g. to 60-40 USDC/ETH). At this point, they will suffer a loss compared to holding (i.e. IL) because holding a 50-50 position outside of the AMM would retain more value during the ETH surge.
You can understand it this way: For example, now ETH is 1000u, you build a 1000usdt + 1eth (eth is worth 1000u), then your total value of this lp is 2000u (50-50 usdt/eth), then the price starts to fluctuate, the price of eth rises to 1500u, at this time your lp pool becomes (75-25 usdt/eth) with a total value of 1500u of usdt plus 0.5 eth (worth 750) At this time, a comparison is formed, if you only take 1000u plus 1eth, then the value is now 2500u, but the lp you build is only worth 2250u. ——This is just an example, everyone just needs to know this logic
Of course, such losses are called “impermanent” for good reason: as the value of the asset changes, the value of the LP position may return to its original position, at which point they are essentially back to a zero-loss hold.
That’s all for today! I’ll update the video later with more details!
