The incentive system allows token issuers such as liquid staking protocols or stablecoin issuers to create so-called “boosted positions,” offering extra rewards to liquidity providers in a customized price range in Maverick’s liquidity pools.
The protocol’s latest upgrade comes as decentralized exchanges (DEX) are fiercely competing to attract traders and traffic onto their platforms as crypto investors seek decentralized trading venues after multiple blowups of centralized marketplaces and increasing regulatory stranglehold.
To do so, some DEXs offer extra rewards on top of the transaction revenues to liquidity providers to deploy their capital, such as Curve Finance’s “gauge” system. These rewards are generally paid by the token issuers in the liquidity pool.
However, “current incentive systems are too blunt,” Bob Baxley, core developer of Maverick, said.
Maverick’s tool is more efficient than existing offerings because it allows token issuers to concentrate reward payouts to a certain price range and build price walls, Baxley explained in an interview.
This can also help pegged assets such as stablecoins and liquid staking derivatives keep their prices more stable, while liquidity providers can earn additional revenue, according to the press release.
Token issuers, such as decentralized finance (DeFi) protocols or stablecoin issuers, can pay out rewards in the form of any token of their choice over a period between three and thirty days, the press release said.
Baxley said the development would help position Maverick as the go-to marketplace for ETH liquid staking derivatives after the highly anticipated Shanghai upgrade, which allowed users to withdraw locked-up tokens from the Ethereum blockchain. Liquid staking lets investors earn staking rewards while maintaining their ability to borrow and lend with a derivative token representing their locked-up assets in staking.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.