What Is Maya Protocol?Sponsored
Maya is a decentralized liquidity protocol for exchanging assets across blockchains
By: Rahul Nambiampurath •DeFi Explainers
Following the FTX meltdown, we have seen a series of bank runs from centralized exchanges. While none have collapsed as a result (yet), the FTX taint is still firmly placed in the public consciousness. Fortunately, solutions are already present to fill in the demand.
ThorChain and Maya Protocol go hand-in-hand to provide the deservedly distrustful traders with a self-custodial, permissionless, and decentralized exchange. But first, what is the relationship between ThorChain and Maya?
After four years of development, the ambitious project ThorChain finally launched its mainnet in June 2022. Powered by RUNE tokens, ThorChain is a cross-chain liquidity network that runs Thor nodes across the top 8 blockchain networks: Bitcoin, Ethereum, Binance Chain, Avalanche, Cosmos Hub, Dogecoin, Litecoin, and Bitcoin Cash.
Working together between these chains, Thor nodes create a permissionless network for exchanging cryptocurrencies. In a centralized exchange (CEX) like the now-bankrupt FTX, customers rely on the honesty of counterparties to swap assets. And if that honesty turns out to be an illusion, customers’ custodian wallets (exchange accounts) go defunct.
In stark contrast to such hazards, ThorChain uses a cross-chain tech dubbed Continuous Liquidity Pools (CLPs). Without relying on counterparties, each asset in a CLP is represented by its own liquidity pool. In turn, these pools are continuously rebalanced by arbitrageurs and liquidity providers.
ThorChain’s total volume across liquidity pools since the network’s launch. Source: thorchain.org
As a result, the exchange rate between two assets is maintained, allowing users to access them with their self-custodial wallets.
The role of RUNE tokens is to both facilitate cross-chain transactions and pay for network fees. Although ThorChain is not a Proof of Stake blockchain in the traditional sense, its Tendermint consensus engine does use validators’ staked RUNE capital to confirm transactions and maintain the network’s security.
Interestingly, the popular Trust Wallet uses ThorChain’s innovative tech to enable the revolutionary cross-chain swaps.
What Is the Role of Maya in ThorChain’s Ecosystem?
Just like ThorChain itself, Maya uses Cosmos SDK infrastructure as a modular framework for building decentralized applications (dApps). As such, Maya is a decentralized liquidity protocol for exchanging assets across the aforementioned blockchain networks.
Unlike vampiric forks that siphon value from the original network, MayaChain is a friendly fork that complements ThorChain. Following two years of hard work, Maya developers have finally set a date for the protocol’s launch on March 7, 2023.
To get a taste of Maya’s capabilities, it is possible to swap cryptocurrencies before that date. For instance, if you want to swap native Bitcoin for native Ether, go to Maya stagenet, a beta precursor to the mainnet launch. Nevertheless, in this sandbox environment, the likelihood for slippage is high.
Previously, one would have to first convert Bitcoin to an ERC-20 token, such as Wrapped Bitcoin, and only then convert it to ETH.
Why Is Maya Needed With ThorChain Already Around?
As a friendly ThorChain fork that inherits the chain’s security, Maya will have a public and transparent “Fair Launch” rollout. This means that, unlike with typical token drops, Maya’s CACAO drop will have no early whales/investors nor core teams that benefit from early pricing.
Moreover, Maya’s capital efficiency is doubled compared to ThorChain. Capital efficiency is the hallmark of liquidity pools, as the liquidity pool’s capacity to maximize available assets to generate revenue via swap fees.
For example, a liquidity pool with high capital efficiency is able to generate more revenue with less capital, benefiting both traders and the protocol. Typically, liquidity pools have greater capital efficiency than traditional order book exchanges because the latter’s capital is tied until a matching trade is executed.
Consequently, this leaves capital idle, i.e., not generating revenue. As an evolution of order-book-based exchanges, assets in liquidity pools are always available for trade, generating revenue continuously through fees.
So, the goal of capital efficiency in liquidity pools is to reach a balance between sufficient liquidity for token swaps and minimizing idle capital. Maya Protocol tweaked this balance in such a way as to allow node operators to provide liquidity with their staked capital.
Additionally, Maya’s native liquidity token, CACAO, can be transferred (exported) to secure other sidechains on the protocol. These could be future NFT marketplaces and other EVM-compatible smart contract platforms. Maya also brings reliability and redundancy to the space, like MasterCard or Visa.
What Does Maya Rollout Entail?
To fill its liquidity coffers, Maya will run a CACAO fair-drop starting from the mainnet launch on March 7, 2023. For instance, if you deposit $10,000 worth of BTC, you receive $10,000 worth of CACAO tokens, while still keeping all the BTC.
This “liquidity auction” (LA) will last 21 days, allowing you to participate with a wide range of assets: BTC, ETH, USDT, USDC, and RUNE.
During that period, MAYA tokens will also be distributed. Nonetheless, MAYA tokens will only serve as the protocol’s revenue-collecting token, similar to RUNE, instead of being paired with other tokens for swaps or used to pay for network fees.
To become eligible to receive MAYA tokens, one has to hold either RUNE tokens or Maya Mask NFTs, available on OpenSea or participate in the fair launch with liquidity using the Tier 1 option.
As you may have already noticed, the dual tokenomics system of CACAO/MAYA is designed to facilitate a fair launch. After all, the selling pressure for MAYA tokens is reduced due to their limited rollout.
Maya, After the Rollout
Once launched, Maya will provide token swaps for the following cryptocurrencies: Bitcoin, Ether, and ThorChain. BTC and ETH were purposely included as pseudo-stablecoin carriers in these uncertain macro conditions, given their large market cap status that is less volatile than other altcoins.
Nevertheless, when the liquidity auction (LA) is completed after the 21-day period, Maya will support Dash and Kujira, followed by Osmosis and BSC.
After the four cryptocurrencies are integrated, Maya will likely support Cardano as well, which is yet to be determined.
If it happens that Maya’s LA is discontinued, all assets will be refunded (returned) minus the network fee. On the other hand, if the LA is successfully completed, but there are insufficient funds in liquidity pools, there will be a Ragnarok event.
The Ragnarok event happens when the protocol’s minimum viability to continue, set at $3–5M, hasn’t been reached, resulting in refunds. Below that minimum, and if the LA is finalized, the protocol’s tier 2 and 3 take respective 25% and 15% cuts, while tier 1 will remain whole. These are the 3 tiers available.
So, based on users’ liquidity contributions during Maya’s liquidity auction (LA), they will receive different withdrawal limits and rewards.
For yield farming, BTC, ETH, and RUNE will have similar real yields as with ThorChain’s asymmetric staking. Case in point, if a liquidity provider stakes a token for one side of the token pair’s pool and leaves the pool to balance itself out on the LP’s behalf, the LP will be left with fewer RUNE tokens than from the starting point.
In the immediate Maya roadmap following the launch, users can also expect to see saver vaults. They will serve as BTC, ETH, and RUNE repositories but without users becoming liquidity providers (LPs). This upcoming feature is a popular carryover from ThorChain’s own saver vaults.
How To Start Early on Maya’s CACAO Fair Drop?
Given its ThorChain legacy, the best way to participate in the liquidity auction is through the ThorWallet, a self-custodial wallet for the cutting edge of decentralized finance (DeFi). The ThorWallet is available on both Apple and Google stores.
Maya Protocol itself has been audited by Halborn Security, founded in 2019 by ethical hacker Steven Walbroehl. Since then, Halborn Security’s team has grown to over 100 security specialists who ensure that there are as few exploits as possible on the Web3/DeFi frontier.
Note: This explainer was sponsored by Maya Protocol
This series article is intended for general guidance and information purposes only for beginners participating in cryptocurrencies and DeFi. The contents of this article are not to be construed as legal, business, investment, or tax advice. You should consult with your advisors for all legal, business, investment, and tax implications and advice. The Defiant is not responsible for any lost funds. Please use your best judgment and practice due diligence before interacting with smart contracts.