Economic overview FL

Under normal operational conditions (after the Liquidity Auction finishes), all of Mayaโ€™s AMM pools will have a 1:1 ratio between native assets and $CACAO, which means that anybody wanting to participate in the protocol would ideally have to match their native asset contributions with the same amount denominated in $CACAO tokens; this is called โ€œsymmetric liquidityโ€.

If, for some reason, we would want to add only one of the two assets โ€”โ€œasymmetric liquidityโ€โ€” a slip fee would be charged because imbalances would be generated within the liquidity pool.

During the Liquidity Auction, all the external liquidity provided will be asymmetric because nobody has had the possibility of buying $CACAO yet โ€”it virtually does not exist yet! Particularly interesting is that users can participate in the Auction by contributing $RUNE into our $RUNE / $CACAO pool and the effects that this pool will have for the Maya <> THORChain interconnection, presenting many arbitrage opportunities and inviting traders and bots to bridge between the two protocols continuously to take advantage of them (the first step in our vision of a network of Layer Zeroes is becoming price leaders in the crypto market!).

It is important to mention that because $CACAO is a native coin to a CosmosSDK blockchain, it would be very easy to integrate into any wallet or exchange that can already handle $RUNE, $LUNA, $ATOM, $OSMO, and many others. $CACAO enjoys the rest of the ecosystem's advantages as well, such as cheap transaction costs, fast settlement times (<10s), ease of use, and secure wallet/transaction systems. Any exchange that wished to list our coin would be able to do so quickly and easily.

Liquidity Auction Withdrawals Tiers

To prevent rapid withdrawals/dumps right after the $CACAO distribution and subsequent lockup period ends, the concept of Liquidity Auction Withdrawals Tiers has been introduced.

With this model, liquidity providers with longer-term horizons are slightly rewarded at the expense of shorter-term players, and the protocol gets some extra time to gain traction and reach stability. These Tiers work like so:

Tier 1

Lockup Period: 200 days

Daily withdrawal limit: Up to 0.5%

You declare your intent by adding a :1 to the Add Liquidity transaction. Frontends will abstract this away.

After the LA finishes and $CACAO is distributed, Tier 1 LPs receive a portion of all ceded $LP units, which means they can end up with an effective return of 2x or more on their contributed assets (assuming constant prices).

Importantly, Tier 1 LPs also receive an allocation of the $MAYA token. Please refer to Part 2 of this Whitepaper for more details.

Tier 1 liquidity will not be able to be withdrawn during the length of the auction.

Tier 2

Lockup Period: 90 days

Daily withdrawal limit: Up to 1.5%

You declare your intent by adding a :2 to the Add Liquidity transaction. Frontends will abstract this away.

After the LA finishes and $CACAO is distributed, Tier 2 LPs cede 10% of their total LP units, which means they end up with an effective return of 1.8x on their contributed assets (assuming constant prices).

Tier 3

Lockup Period: 30 days

Daily withdrawal limit: Up to 4.5%

You declare your intent by just adding liquidity.

After the LA finishes and $CACAO is distributed, Tier 3 LPs cede 33% of their total LP units, which means they end up with an effective return of 1.34x on their contributed assets (assuming constant prices).

Risks and Lockup Period Opt-out

  • Warning! If the LA is deemed disadvantageous for any reason (for example, there was too little liquidity raised) and the community decides to undo everything via Ragnarok, Tier 2 and 3 LPs might end up receiving back less than they originally deposited and effectively take a loss.

  • LPs that prefer not to have these types of risks or withdrawal limits can wait for the Liquidity Auction to be over and manually acquire $CACAO from a pool to then add liquidity. Wallets funded this way will have no limits or lockups.

Note: The best strategy for aspiring nodes is to participate as a Tier 1 LP, given that they theoretically have a long-term commitment already. This would mean a better shot at having more Liquidity for potential Liquidity Bond Wars.

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