Loading...
Loading...
Loading...
Loading...
Loading...
Loading...
Loading...
Loading...
Maya Protocol Quick Guide
Users are not required to use CACAO in order to swap/trade Assets (e.g. BTC, ETH, RUNE, DASH, KUJI or ARB). Users can simply connect to any Frontend that supports MAYAChain, and trade away.
However, should users desire to perform other types of transactions, CACAO fees may apply.
Head to one of the interfaces supporting Maya Protocol and connect your wallet.
Transfer any of the MAYAChain supported Assets (see Supported Chains and Assets below) to your newly created wallet.
Head to the swap page, select the tokens and quantity, and perform the swap.
MAYAChain supports the following blockchains and their assets:
Bitcoin (BTC) - Native BTC
Ethereum (ETH) - ETH and ERC-20 tokens including USDC, USDT, WBTC, DAI, and more
Arbitrum (ARB) - ARB and Arbitrum tokens including ARB.USDC, ARB.USDT, ARB.WBTC, ARB.DAI, ARB.WETH, ARB.LINK, ARB.PEPE, ARB.UNI, ARB.SUSHI, ARB.GRT
Dash (DASH) - Native DASH
Kujira (KUJI) - KUJI and USK stablecoin
THORChain (THOR) - RUNE
Radix (XRD) - Native XRD
Zcash (ZEC) - Native ZEC (Transparent addresses only)
The following pools are currently active on MAYAChain:
BTC.BTC
ETH.ETH
ETH.USDC
ETH.USDT
ETH.WBTC
ETH.DAI
ARB.ARB
ARB.USDC
ARB.USDT
ARB.DAI
DASH.DASH
KUJI.KUJI
KUJI.USK
THOR.RUNE
XRD.XRD
ZEC.ZEC
ETH.PEPE
Additional ARB tokens
For the most up-to-date list of pools and their current status, check the pools endpoint.
Introduction
Maya Protocol is the ecosystem that encompasses both MAYAChain and AZTECChain. These two entities, when combined, are capable of demonstrating the power & advantages of both centralized and decentralized exchanges without inheriting the associated drawbacks.
MAYAChain is an Automated Market Maker, similar to Uniswap, but utilizes cross-chain liquidity. Conventionally, cross-chain swaps have been achievable through wrapping assets and bridging, which pose a serious security risk. According to Chainalysis, $2 billion were lost to bridge hacks in 2022 alone, representing 69% of all DeFi hacks.
MAYAChain is a friendly fork of THORChain. Similarly, it does not rely on pegging or wrapping assets, instead managing funds directly in on-chain vaults and safeguarding them through economic security. This is achieved using the Tendermint consensus engine, Cosmos-SDK state machine, and GG20 Threshold Signature Scheme (TSS).
Interact with MAYAChain using one of the frontend .
AZTECChain is a Smart Contract chain. It exemplifies the potential of Maya Protocol, combining MAYAChain cross-chain liquidity with Smart Contracts and economic capabilities. Smart Contracts provide flexibility for crypto economies, allowing for the creation & use of Algorithmic stablecoins, derivatives like Synths, CEX style order book trading, and many more capabilities. AZTECChain is a fork of the Cosmos Hub (Gaia), allowing for the immediate utilization of the Cosmos mature infrastructure and Smart Contract development ecosystem. Algorithmic stablecoins will be delayed upon launch in order to complete economic design and run bounties. Neither the Maya nor the Aztec Chains will subsidize yield in order to inflate demand for their respective stablecoins or derivatives.
Maya Protocol ecosystem utilizes 3 distinct tokens within its framework:
CACAO (Live) is the primary token of the ecosystem, which is utilized to pay for all transaction fees on both the Maya and Aztec Chains. CACAO is also the settlement token, used in pools in MAYAChain.
MAYA (Live) is a revenue share token. 10% of all swap & transaction fees on MAYAChain is distributed to $MAYA holders in the form of daily CACAO rewards.
AZTEC (under development), like MAYA, is a revenue share token. 10% of all transaction fees on Aztec Chain is distributed to AZTEC holders.
MAYAChain shares numerous innovations with THORChain that were derived from the fundamental principles of being decentralized, resistant to capture, and as sustainable as possible.
Capped Proof of Bond validator selection helps to maintain the decentralization of the network and a high Nakamoto Coefficient.
Periodic Validator Churning process serves to prevent validator stagnation, verify the spendability of funds, and enhance the overall performance of the network with minimal governance requirements.
Asynchronous Network Upgrades allow validators to transition to a new protocol version at their own pace, while the network remains in consensus without disruption.
Chain-agnostic Bifrost Protocol can manage UTXO, EVM, BFT and Cryptonote chain connections with minimal differences in its core logic.
Incentive Pendulum system provides rewards to Validators and Liquidity Providers in order to maintain a Network Security ratio that ensures the security of funds at all times.
Continuous Liquidity Pools enable single-sided liquidity provision and employ liquidity-sensitive fees to thwart price attacks.
Swap Queue has been implemented which orders swaps based on the price impact in each block, thereby preventing sandwich attacks and most other forms of Miner Extractable Value (MEV).
Liquidity Synths have been developed to facilitate rapid, low-cost exchanges between L1 pool. Synths are a hybrid collateralized-pegged asset design that contribute to the liquidity of the market.
MAYANodes secure MAYAChain. They are intended to initially number 100, but can scale up to 250+. The design of MAYAChain is such that anyone with the necessary funds can join the network anonymously and securely, without requiring permission. Furthermore, MAYAChain takes this a step further by having a high churn rate, which ensures that the network is censorship-resistant, evades capture and resists centralization.
Each MAYANode is composed of multiple independent servers in a cluster, which run full-nodes for each linked chain.
Enhance the Security of the network through Functional (Solvency Checker, Node Pause, TxOut Throttler), Procedural (Stagenet testing, PR reviews) and Economic (LP units in the bond, or value of the LP units in the bond) Security measures.\
Increase the Liquidity of the network, via Total Value Locked (TVL), or better UX around providing liquidity.\
Boost the Volume of the network, via Swap UX (Synths, Order Books), or wallet Integrations (Quotes Endpoint, Dev UX, Business Development).
There are four key roles in the system:
Liquidity providers who add liquidity to pools and earn fees and rewards
Swappers who use the liquidity to swap assets ad-hoc, paying fees
Arbitrageurs who monitor pools and rebalance continually, paying fees but with the intent to earn a profit.
Node Operators who provide a bond and are paid to secure the system
Balancing pools to exploit price deltas between markets.
Prices on MAYAChain are maintained by profit-seeking Arbitrageurs. Arbitrageurs find assets that are mispriced between markets. They buy assets on markets with low prices and sell them on markets with high prices. This earns them a profit.
Arbitrageurs compare the exchange rates on MAYAChain with the rates on external markets. If they find the price is lower on MAYAChain they can buy there and sell on an external market. If they find the price is lower on external markets they can buy there and sell on MAYAChain. This process is repeated at high-frequency. Over time, price information propagates and MAYAChain settles with external markets.
This is how MAYAChain avoids the need for oracles and how prices are set.
A swap takes place in the ETH/CACAO pool. This leaves the pool unbalanced. The ratio on MAYAChain is 20:1 ETH:CACAO, but is 16:1 on external markets. This means that CACAO is undervalued on MAYAChain.
Arbitrageurs can now buy cheap CACAO on MAYAChain and sell it for a profit on external markets. To do so, they swap ETH into the pool and get CACAO out. They sell this CACAO on external markets and make a profit.
The economics of the swap formula mean that Arbitrageurs should aim to restore balance to the pool in a single trade. Rebalancing should be done incrementally. If larger rebalancing trades are attempted, arbitrage may not be profitable.
Specifically, each rebalancing trade should be 40–50% the imbalance size. So if the imbalance starts at $100 in value, the first rebalancing trade should be between $40–50. This will leave the imbalance at $50–60. The next rebalance should be $25–30. This process repeats until a satisfactory balance is restored.
Trading profits are impacted by liquidity on MAYAChain and on external markets. As an example, if the price of the asset in a MAYAChain pool is $1.20, but the same asset on an external market is $1.00, then someone can buy off that external market and sell into the MAYAChain pool for profit.
If both markets are infinitely deep, then the following will occur:
Buy on External Market for $1.00, no price slip.
Sell on MAYAChain for $1.20, no price slip.
Total Profit: 20%
The trader can then continue to arbitrage for a profit of 20% continuously.
If both markets have finite liquidity, but one is much deeper than the other, then the one of the markets will slip in price after the trade. However, the Arbitrageur will experience a price that is roughly the average of the price before and after the trade:
Buy on External Market for $1.00, no price slip.
Sell on MAYAChain for $1.20, realised price of $1.10, price slip to $1.00.
Total Profit: 10%
After the trade, there is no more price differential, but the Arbitrageur made 10% in profit. The Arbitrageur has made the pool price equal to the secondary market. They have transferred price information from one market to another.
If both markets have low liquidity, then the Arbitrageur is attempting to make trades that slip each market towards each other:
Buy on External Market for $1.00, realised price of $1.05, price slip to $1.10.
Sell on MAYAChain for $1.20, realised price of $1.15, price slip to $1.10.
Total Profit: >10%
The market now has no more price differential. The Arbitrageur has made each market equal to each other.
MAYAChain does not offer explicit incentives to Arbitrageurs – it does not reward or punish them. Trading profits are determined by the capacity of Arbitrageurs to seek out and capitalize on price differentials between MAYAChain and external markets.
The majority of arbitrage opportunities will be exercised by software bots. These are under development by 3rd party entities and will be released in due time. They will be open-source and available for anybody to run.
Node Operators
MAYANodes service the MAYAChain network, of which there is intended to be initially 120. Each MAYANode is comprised of several independent servers. All MAYANodes communicate and operate in cooperation to create a cross-chain swapping network.
Node Operators earn 80% of the system income when it is stable. You can read more here:
Follow these setup up instructions
Node Operators should stay anonymous and never socially signal that they are running a node.
There are a variety of tools available in the ecosystem for Node Operators, such as the Telegram Alerts bot:
The most important aspect is that Nodes must pay for their Bond, since this is a core assumption to the security of the network. If a node pays $1m for their bond, then they will never try to steal assets unless if they can access more than $1m of funds. If they can, then they will make a profit.
If delegation was permitted, a Node Operator that paid $100k in CACAO, can possibly receive $900k in delegated funds to qualify and meet the $1m bond requirement. They will now contemplate stealing assets the moment they get access to more than $100k in capital, which is likely.
Nodes must pay for their bond to ensure the economic assumptions of the network are upheld.
MAYAChain makes private delegation possible, because it does not erode towards the issues discussed above.
Private Delegation requires Node Operators to know and whitelist in their bonders, and there can only be up to 6 per node. This assumes the bonders are in trust circles with their operators and have their own recourse to ensure operators act in accordance to their obligations. From the point of view of MAYAChain, a solo node is no different to a delegated node. The network will operate identically.
In addition, there is no discretion as to fee commissions per operator. This means bonders will prioritise on engaging with operators based purely on their trust circles, not fees.
The limit of 6 bonders per node ensures that Operators can't try to access economies of scale. They are limited to large CACAO holders only.
MAYAChain's value proposition for Swappers.
On MAYAChain, users can swap their digital assets for other digital assets. The network aims to give users access to:
A large variety of assets through cross-chain compatibility and simple asset listing
Superior user experience through open finance protocols and permissionless access
1-transaction access to fast chains (Dash), smart chains (Ethereum, Kujira), and censorship-resistant chains (Bitcoin).
Users can swap any assets which are on connected chains and which have been added to the network. Users can swap from any connected asset to any other connected asset. They can also swap from any connected asset to CACAO.
MAYAChain manages the swaps in accordance with the rules of the state machine - which is completely autonomous. Every swap that it observes is finalised, ordered and processed. Invalid swaps are refunded, valid swaps ordered in a transparent way that is resistant to front-running. Validators can not influence the order of trades, and are punished if they fail to observe a valid swap.
Swaps are completed as fast as they can be confirmed, which is around 5-10 seconds.
Swaps on MAYAChain are made possible by liquidity pools. These are pools of assets deposited by Liquidity providers, where each pool consists of 1 connected asset, for example Bitcoin, and MAYAChain's own asset, CACAO. They're called Continuous Liquidity Pools because CACAO, being in each pool, links all pools together in a single, continuous liquidity network.
When a user swaps 2 connected assets on MAYAChain, they swap between two pools:
Swap to CACAO in the first pool,
Move that CACAO into the second pool,
Swap to the desired asset in the second pool with the CACAO from (2)
The MAYAChain state machine handles this swap in one go, so the user never handles CACAO.
See this example for further detail and the page below for broader detail on Continuous Liquidity Pools.
The output of a swap can be worked out using the formula
where
x is input asset amount
X is input asset balance
y is output asset amount
Y is output asset balance
The BTC.CACAO pool has 100 BTC and 2.5 million CACAO. A user swaps 1 BTC into the pool. Calculate how much CACAO is output:
This user swaps 1 BTC for 24,507.40 CACAO.
The cost of a swap is made up of two parts:
Outbound Fee
Price Slippage
All swaps are charged a network fee. The network fee is dynamic – it's calculated by averaging a set of recent gas prices. Learn more about Network Fees.
Note that users who force their swaps through quickly cause large slips and pay larger fees to liquidity providers.
$CACAO, $MAYA, and $AZTEC
Maya Protocol ecosystem utilizes 3 distinct tokens within its framework:
$CACAO is our flagship token, and we will have 100M of them. They will all be minted at once, and 90% of the total supply will be distributed in the Liquidity Auction. The remaining 10% will be allocated to the Impermanent Loss Protection treasury.
Aside from being required to run a node, they can be paired against other assets inside our liquidity pools to earn a percentage of the transaction fees generated by swaps.
$CACAO is the asset which powers the Maya Protocol ecosystem (MAYAChain & AZTECChain) and provides the economic incentives required to secure the network. CACAO has three key roles which are described below.
Liquidity (as a settlement asset)
Security (as a sybil-resistant mechanism, and a means for driving economic behaviour)
Incentives (paying out rewards, charging fees, subsidising gas)
Transmitting Purchasing Power
Since CACAO is pooled 50:50 alongside external assets in its pools, when the value of those assets increase/decrease, the CACAO pooled will also increase/decrease by being arbed out or in. The CACAO unit value may not change, but the quantity of CACAO in the pool does. This means the system is always aware of the value of the assets it is trying to secure - it's simply the quantity of CACAO in all its pools.
Once it is aware of the value of the assets it is securing, it can use incentives to ensure security of those assets.
Providing Liquidity Incentives
Since CACAO is the pooled asset, incentives can be paid directly into each pool. This extra capital is owned by the liquidity providers, and over time, slowly "purchases" the paired asset via arbitrage. Thus CACAO liquidity incentives can drive real yield to LPs.
Solving O(n^2) Problem
Without a native settlement currency, each asset would need to be pooled with every other asset, which would eventually result in hundreds of new pools to be created for just one new asset, diluting liquidity. Having CACAO as the base pair allows any asset to be guaranteed to swap between any other asset.
No. of Assets
(eg. BTC, ETH)
No. of Pools
(Arbitrary Pairs)
No. of Pools
(CACAO Pairs)
n
pools = (n*(n-1))/2
pools = n
12
66
12
24
276
24
100
4950
100
Sybil-resistance
Sybil-resistance refers to the ability to prevent someone masquerading as many identities in order to overcome a network. Bitcoin uses Proof-of-Work (one-cpu-one-vote) to prevent a network take-over. Ethereum 2.0 will use Proof-of-Stake (32-eth-one-vote) to prevent a network take-over.
MAYAChain is a Proof of Bond network instead. MAYANodes commit a bond in order to be churned in. However, this bond isn't just used to identify a node (give them a voting slot), it is used to underwrite the assets in the pools. If the node attempts to steal assets, then their bond is deducted to the amount of the assets they stole (1.5x), and the pools are made whole. Additionally, if nodes misbehave their bond is slashed, ensuring reliable service.
Underwriting Assets
The Incentive Pendulum ensures that Nodes are incentivised to continually buy and bond enough Cacao each time to maximise their gains - which is a maximum when there is 67% of CACAO bonded and 33% pooled in pools. If the pools are holding $100m in capital, then the value of CACAO in the aggregate bond is $200m. Thus all assets can be underwritten.
The bond is extremely liquid - any CACAO holder can immediately enter or exit their position since CACAO is the settlement asset in all pools. Thus, when a node churns in, the cost basis of their bond is known to them and not an arbitrary figure. This means a node bonding $1m in CACAO will never contemplate making a decision to steal <$1m in capital from the network, else they will lose overall.
Fees
CACAO is the native currency of MAYAChain and is consumed as transaction fees on the network. All swaps are charged both a fixed network fee, as well as a dynamic slip-based fee. This prevents various attack paths such as denial-of-service attacks, as well as sandwich attacks on a pool. Learn more about fees here:
Subsidising Gas
The network continually consumes gas as it makes outgoing transactions (as well as internal transactions). Gas on networks such as Bitcoin and Ethereum becomes complicated fast, so MAYAChain doesn't make much of an effort to track every minutia of gas consumed. Instead, nodes are free to use at-will the base assets BNB.BNB, ETH.ETH, BTC.BTC, etc in order to pay for gas. These assets are used directly from the vaults. MAYAChain then observes outgoing transactions, reports on the gas used, and then pays back the liquidity providers in those pools to the value of twice the amount of gas used (in CACAO).
Paying out Emissions
After fees are charged and gas is subsidised, then MAYAChain computes the block reward, divides it based on the Incentive Pendulum algorithm, and then pays out to Bonders and Liquidity providers.
This drives Nodes to bond the optimal amount, and pays Liquidity providers for their contribution of liquidity.
Learn about the Incentive Pendulum here:
In addition to the roles mentioned above, CACAO’s price has two factors; 1 a deterministic value based on the liquidity within the network and 2; a speculative premium.
The 1:1 pool ratio that persists in Maya means that CACAO will always be worth at least 1x the Asset TVL in Maya Protocol. Thus, if $1,000,000 worth of non-Cacao tokens are staked in Maya Protocol, the market cap of CACAO will be at least $1,000,000 as well. And like any token, stock, or asset in the world of finance, speculation around future value encourages additional upward price pressure.
The 1:1 ratio is just the minimum or the deterministic value of CACAO.
$MAYA tokens can be used to participate in our protocol's total revenues, and there are exactly 1 million of them. They serve as our initial stages' funding mechanism and, by design, keep incentives for our developer team to continue their hard work in the short-term and long term.
$MAYA captures 10% of all the protocol revenue. Those who hold $MAYA tokens will be distributed $CACAO every 24 hours to the wallet that holds the $MAYA token. For every $9 earned by LPs/nodes, $MAYA holders, including founders/devs, earn 1$, incentivizing long-term growth and value accrual.
1 Million Token in total.
Founders have 15.6% that can't be sold.
Maya Protocol Operations Wallet - used to pay the team, marketing, and other expenses- can be found in this link.
How will $MAYA Airdrop work?
7% to Rune Owners. 7% to Early Nodes. 7% to Tier 1 Liquidity Providers. 1% to Maya Mask NFT Holders (80% built into the Maya Mask, 20% airdropped as tokens)
78% Dev Fund.
Will there be a liquidity pool to trade $MAYA?
There will be no liquidity pool for $MAYA, and it will not be tradable on Maya Protocol. It is meant to represent the protocol revenue and is not easily tradable. Another DEX/CEX could list $MAYA for trading if they desire.
$AZTEC tokens are very similar in design to $MAYA tokens as they are also revenue share tokens, that capture 10% of all the AZTECChain revenue. $AZTEC will be launched with the AZTECChain by the end of year.
Providing liquidity to MAYAChain liquidity pools.
Liquidity providers provide assets to the MAYAChain liquidity pools. They are compensated with swap fees and system rewards. Compensation is affected by a number of factors related to the pool and the state of the network.
Liquidity providers commit capital to pools which have exposure to underlying assets, thus liquidity providers gain exposure to those assets, which have free-floating market prices.
While they are paid block rewards and liquidity fees, these are dynamic and may not be enough to cover "Impermanent Losses", which occur when price changes happen.
Liquidity providers should not consider they are entitled to receive a specific quantity of their assets back when they deposit, rather that they will receive their fair share of the pool's earnings and final asset balances.
Liquidity providers deposit their assets in liquidity pools and earn yield in return. They earn tokens in Cacao and the pool's connected asset. For example, someone who has deposited in the BTC/CACAO pool will receive rewards in BTC and CACAO.
Yield is calculated for liquidity providers every block. Yield is paid out to liquidity providers when they remove assets from the pool.
Rewards are calculated according to whether or not the block contains any swap transactions. If the block contains swap transactions then the amount of fees collected per pool sets the amount of rewards. If the block doesn't contain trades then the amount of assets in the pool determines the rewards.
How a block with fees splits the reward. In this example, 1000 CACAO is being divided as rewards:
Pool Depth (CACAO)
Fees
Share (of Fees)
Rewards
1,000,000
1000
33%
333
2,000,000
0
0%
0
3,000,000
2000
67%
667
6,000,000
3000
100%
1000
How a block with no fees splits the rewards. In this example, 1000 CACAO is being divided:
Pool Depth (CACAO)
Fees
Share (of Depth)
Rewards
1,000,000
0
17%
167
2,000,000
0
33%
333
3,000,000
0
50%
500
6,000,000
0
100%
1000
This ensures that yield is being sent to where demand is being experienced - with fees being the proxy. Since fees are proportional to slip, it means the increase in rewards ensure that pools experiencing a lot of slip are being incentivised and will attract more liquidity.
Ownership % of Pool – Liquidity providers who own more of a pool receive more of that pool's rewards.
Swap Volume – Higher swap volumes lead to higher fees. Higher fees lead to higher rewards for liquidity providers.
Size of Swaps – Swappers who are in a hurry to exchange assets will tend to make larger swaps. Larger swaps lead to greater price slips and therefore higher fees.
Incentive Pendulum – The Incentive Pendulum balances the amount of capital bonded in the network versus pooled. It does this by changing the amount of rewards given to node operators versus liquidity providers. Sometimes rewards will be higher for liquidity providers to encourage them to deposit assets; sometimes the opposite. Learn more.
Change in Asset Prices -- If the price of the assets change, then liquidity providers will receive more of one and less of the other. This may change yield if yield is being priced in a third asset, ie, USD.
Depositing assets on MAYAChain is permissionless and non-custodial.
Liquidity providers can propose new asset pools or add liquidity to existing pools. Anybody can propose a new asset by depositing it. See asset listing/delisting for details. Once a new asset pool is listed, anybody can add liquidity to it. In this sense, MAYAChain is permissionless.
The ability to use and withdraw assets is completely non-custodial. Only the original depositor has the ability to withdraw them. Nodes are bound by rules of the network and cannot take control of user-deposited assets.
Liquidity can be added to existing pools to increase depth and attract swappers. The deeper the liquidity, the lower the fee. However, deep pools generally have higher swap volume which generates more fee revenue.
Liquidity providers are incentivised to deposit symmetrically but should deposit asymmetrically if the pool is already imbalanced.
To deposit assets/ liquidity on MAYAChain, you need:
A compatible wallet with your assets.
Connect to one of Maya Protocol's User Interfaces (El Dorado or ThorWallet).
Add liquidity to any of the active or pending pools. There is no minimum deposit amount, however, your deposit will have to cover the deposit and later a withdrawal fee costs.
Every time you add liquidity, Impermanent Loss Protection time resets.
While Symmetrical additions are recommended, Asymmetrical additions are supported, below are the rules:
If you add symmetrically (%50 Asset - %50 CACAO) first;
You will be able to add liquidity asymmetrically with CACAO later
You will be able to add liquidity asymmetrically with ASSET later but it would create a new LP position
You will be able to add liquidity symmetrically later
If you add asymmetrically (%100 ASSET) first;
You will be able to add liquidity asymmetrically with CACAO later but it would create a new LP position
You will be able to add liquidity asymmetrically with ASSET later
You will be able to add liquidity symmetrically later but it would create a new LP position
If you add asymmetrically (%100 CACAO) first:
You will be able to add liquidity asymmetrically with CACAO later
You will be able to add liquidity asymmetrically with ASSET later but it would create a new LP position
You will not be able to add liquidity symmetrically later
Liquidity providers can withdraw their assets anytime; with the only waiting period being the confirmation time. The network processes the request and the provider receives their % of the pool and earned assets. Fees apply upon withdrawal, are placed into the network reserve.
There are 3 factors affecting returns/ yield:
Transaction volume & pool depth: if the volume of the pool is high in comparison to its depth, then liquidity providers will be presented with higher rewards. Conversely, if the volume of the pool is low in comparison to its depth, then liquidity providers will be presented with lower rewards.
Share of the pool: the higher the individual's share of a pool, the higher the returns they're granted. For instance, if a liquidity provider holds a %1 stake in a pool, they will receive %1 of the rewards for that pool.
Fee size: the fees associated with a given blockchain are determined by the blockchain itself, and the rewards received by liquidity providers are directly proportional to the fees charged. As such, a blockchain with higher fees will result in higher rewards for liquidity providers.
Liquidity providers earn a yield on the assets they deposit. This yield is made up of fees and rewards.
Fees are paid by swappers and traders. Most swaps cause the ratio of assets in the liquidity pool to diverge from the market rate.
This change to the ratio of assets is called a 'slip'. A proportion of each slip is kept in the pool. This is allocated to liquidity providers and forms part of their staking yield. Learn more about swapping.
Rewards come from MAYAChain's own reward emissions. Reward emissions follow a predetermined schedule of release.
Rewards also come from a large token reserve. This token reserve is continuously filled up from network fees. Part of the token reserve is paid out to liquidity providers over the long-term. This provides continuous income even during times of low exchange volume.
Learn about how factors affecting yield and how yield is calculated.
Passive liquidity providers should seek out pools with deep liquidity to minimise risk and maximise returns.
Active liquidity providers can maximise returns by seeking out pools with shallow liquidity but high demand. This demand will cause greater slips and higher fees for liquidity providers.
Liquidity providers must have assets to deposit and their assets must be native to a supported chain. There is no minimum amount to deposit in existing pools. However new assets must win a competition to be listed – larger value deposits will be listed over smaller value deposits.
Liquidity providers must pay for security of their assets, since security is not free. This "payment" is the requirement for liquidity providers to hold CACAO, which acts as a redeemable insurance policy whilst they are in the pool. Holding CACAO allows liquidity providers to retain an ability to economically leverage nodes to ensure security of assets. When the liquidity provider withdraws, they can sell their CACAO back to the asset they desire. H
The only direct cost to liquidity providers is the network fee, charged for withdrawing assets (pays for the compute resources and gas costs in order to process outbound transactions). An indirect cost to liquidity providers comes in the form of impermanent loss. Impermanent loss is common to Constant Function Market Makers like MAYAChain. It leads to potential loss of liquidity provider purchasing power as a result of price slippage in pools. However, this is minimised by MAYAChain's slip-based fee.
Liquidity providers are not subject to any direct penalties for misconduct.
The yield of a pool on MAYAChain is calculated using a metric called Liquidity Unit Value Index (LUVI) which can be viewed on Midgard.
When a user deposits assets into a liquidity pool, they are given ownership of Liquidity Units which represent a percentage of ownership of the pool. LUVI is a measure of the relative value of each liquidity unit and is independent of price.
Where:
The yield of a pool uses LUVI value data from the previous 30 days and extrapolates an APR if that performance is repeated over the course of a year. A period parameter may be used to change the number of days of data that are taken into consideration.
Factors that affect LUVI:
Swap fees, block rewards, and pool donations increase LUVI and are the primary yield sources
An increase of the synthetic asset liability of a pool decreases LUVI
An increase in ASSET Depth or CACAO Depth of a pool increase LUVI
Changes in the ratio of ASSET Depth and CACAO Depth in a pool change LUVI
Changes in ASSET Price or CACAO Price do not necessarily change LUVI
