No complex IDO, Maya will launch $CACAO with our own Liquidity Auction design!
Maya has aimed to maintain its motto from the beginning: a multi-chain liquidity protocol in the hands of the community, protected by code and open to exchange. Initially, we felt that the most successful way to achieve this goal was through an Airdrop allocation, but it’s time to upgrade to something that will boost liquidity in the system even further: a Liquidity Auction.
1. Different strategies are used to raise funds every time a new crypto/DeFi project is born. Some models might be better, but that depends on the team’s needs and creativity. There are many different ways in which DeFi projects can distribute their tokens to their users or community. Some examples include holding public sales —2017 ICOs are the classic example— Airdrops, farm rewards, and more.
2. Maya Protocol’s token distribution will work using a Liquidity Auction with the following cool pros:
Lots of transparency – everybody knows when everything is happening and how.
Permissionless – anybody can participate, and there are no prohibitive minimum amounts or whitelists.
Reduced volatility – there is the symmetry of information. No one is excluded or earns less because they participated later.
3. “Liquidity Auction” sounds sophisticated, but it is actually straightforward:
A) Anybody can contribute supported assets, such as $BTC, $USDC, $ETH, $USDT, and even $RUNE, to the auction during a 21-day timeframe by sending them to a specified address. No KYC or registration of any kind is required except creating a Maya wallet beforehand (User Interfaces can do this for you). Also, no swaps will be allowed during this period, only adding and withdrawing liquidity! —More on the Liquidity Auction Tiers later.
B) After the auction, 90% of the $CACAO tokens are distributed to the participants proportional to their liquidity contributions, and the remaining 10% goes to the ILP reserve. For example: if $BTC is 40% of the liquidity raised, that pool receives 40% of the $CACAO allocation.
C) That’s it! Participants become Liquidity Providers by having their contributed assets + their new $CACAO tokens deposited inside Maya’s pools, facilitating swaps to other users and earning a share of the fees generated.
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Under normal operational conditions (after the Liquidity Auction finishes), all of Maya’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 “symmetric liquidity”.
If, for some reason, we would want to add only one of the two assets —“asymmetric liquidity”— 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 —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.
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 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 , 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.
We truly believe that our Fair Launch process is one to be proud of. Learning from the experience of other protocols and DAOs, we came across what we think is something really open to anybody in the DeFi space to participate in. Compared to an IDO, where investors with large amounts of tokens can manipulate the price and cause disadvantages for the rest, in Maya, there is no minimum entry ticket. There is no previous whitelist, no special allocation for larger investors, and the time range is wide and pre-announced.
In the end, we are pushing towards the objective of having one more protocol in a network of decentralized, Layer Zero cross-chain facilitators that dictate prices over the market. We want to concentrate the markets’ liquidity there instead of how it currently concentrates around centralized venues, and that is why we are looking to attract a diverse and wide user base that will become part of a community from the moment they get their first tokens.
The process also takes advantage of the built-in Asymmetrical Liquidity functionality from the THORChain codebase. We aim to:
A. Reduce Founding Team risks.
B. Make a decentralized protocol that is completely owned by its community.
C. Create incentives for the Founding Team to continue developing over the long term.
D. Bootstrap the largest amount of external asset liquidity possible to secure the sustainable future of our protocol.
How does the Liquidity Auction tackle these issues? Let’s look at its advantages:
01 The community ends up owning the token
So the system governance is decentralized and permissionless. No founding person or investor can pump & dump, rug pull, etc. The team gets only a percentage of the fees, which means we only earn money if the community does. The team simply cannot create sell pressures for the token.
02 Symmetry of information
Everyone has the same chance to participate during the 21 days duration of the auction. There are no discounts, no privileged information, front running or unfair allocations. Everyone has the same chance to make the same ROI as everyone else during the launch regardless of how much money is raised and what kind of assets they contribute. There are no disincentives to share the liquidity auction details with others since everyone gets the same terms regardless of participation size and depth.
03 Dynamic inflation
To prevent situations where too much $CACAO sits idle outside of our pools, the concept of Dynamic Inflation has been introduced.
Whenever more than 10% of all issued $CACAO is withdrawn from the liquidity pools, new $CACAO emissions will occur at a rate of (1- y) * 40% + 1%, where y is the total number of $CACAO in our pools divided by the total number of existing $CACAO tokens.
Newly minted $CACAO is then distributed in equal proportions to current depositors (i.e., LPs) and to Node operators (via system income, according to the incentive curve). This has the nice effect of leaving all participants in constant economic conditions, except for those holders of $CACAO outside of the system, who now have inflationary erosion and a bigger incentive to become LPs again.
Here’s an example of how Dynamic Inflation could look under different y scenarios:
04 Large incentives to participate
Remember, there will not be any other $CACAO issuances, so anybody that wants to own the token will have to acquire it from somebody that got it during this mint. It is very likely that $CACAO’s price will be the cheapest ever (in $BTC terms) right after the auction. This makes it more attractive for people to invest heavily during the Liquidity Auction —which is, of course, what we want, as it leads to deeper pools, reduced slippage and slip fees, attractive arbing opportunities, and overall liquidity depth. Deep liquidity attracts swap volume.
05 Simplicity
Only one open permissionless cross-chain liquidity event to rule them all. The rules are clear: there are no KYC processes, people will have to understand and use Maya to participate —the Liquidity Auction will serve as a live Demo to our target participants—, the whole thing happens during an extended period of time, and everyone participates under the same conditions. Everything is also managed directly in the Maya Blockchain, so it becomes very secure, and everyone becomes a liquidity provider!
A Liquidity Auction simply makes sense to secure the long-term future of Maya. It keeps us honest as a team, it gives everyone a fair set of rules to participate in, and it will surely raise significant resources to start up a virtuous cycle for our liquidity blackhole. By having only one event, we are ensuring it will be simple, interesting, and even urgent for anyone to participate while helping Maya jump into the big leagues!
To make the Liquidity Auction work, as well as THORChain, we will use existing attributes of Mimir. These attributes will control the actions that all liquidity providers can take on a specified time frame to successfully execute our Fair Launch.
Using Mimir Key terms, we want to accomplish the following:
Users should only add/withdraw liquidity.
Users should not be able to swap or send.
Users should not be able to get $CACAO until the end of the Liquidity Auction.
The process we will follow starts by enabling the new “LiquidityAuction” Mimir attribute, which stops users from being able to swap between any assets because all swaps between native assets without $CACAO would be discarded. This behavior will work for 21 days, after which the $CACAO is distributed, and “LiquidityAuction” is disabled.
Here are the already existing transactions, along with the new ones and the specific actions that they disable:
Distributing $CACAO tokens after the Auction process is simple and will require the use of the “Donate” message to dispense them into our pools proportionally to their depth in USD terms, using an End-of-Auction overall market price.
Any user that contributed their native assets ends up having their original assets plus their newly earned $CACAO. Any and all UI’s supporting the Maya Stagenet —and therefore our Mainnet— can host the Liquidity Auction. Code Savvy individuals may also use the API/Transaction Memos directly.
User stories:
As a user, I should only be able to provide asymmetric liquidity throughout the Fair Launch to get $CACAO in the Liquidity Auction. Acceptance criteria:
Users should only add/withdraw liquidity.
Users should not be able to swap or send.
Users should not be able to get $CACAO until the end of the Liquidity Auction.
2. As a Liquidity Provider, I should be able to withdraw my liquidity at any point in time to recover my money if I no longer want to participate in the Auction.
Our first nodes will be called “Genesis Nodes”, and there will be six of them. Because they will start running the protocol with no $CACAO bonds —remember there will still be no $CACAO tokens until after the Liquidity Auction is finished— we will need them to already have some dependable reputation, which is why they will need to be pseudo-doxxed nodes, run by decentralized organizations close to Maya. Once our chain and systems have been started, these initial nodes will exit over time as other nodes enter the network.
Genesis nodes will be approved using a specific custom-made token for this purpose. They will not be entitled to any fees, special allocations, or pre-mines of any kind. For more details on our Genesis Nodes, please refer to
A partition value will be created on Mimir and set initially to 1. This will override the real measured value of the, which initially would be 0, so that yield is paid to Liquidity Providers despite the lack of bonded liquidity. The mimir set value will be gradually decreased to incentivize more node bonding, pushing the measured value higher, until they eventually equal somewhere above 75%. Once they equal, genesis nodes churn out and the system is safe and sustainable.
User story:
1. As a genesis node, I should be able to be a validator in the chain without contributing economically and without affecting the $CACAO supply. Also, I should not get any sort of pre-mine or reward during this period.
As well as THORChain, we will use Bifröst, a module that makes it possible to generate a native asset exchange network.
User story:
1. As a user, I should be able to add and withdraw $RUNE liquidity on Maya during and after the Liquidity Auction.
2. As a user, I should be able to swap $RUNE for any other asset in Maya after the end of the Liquidity Auction.
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