DeFi
Decentralized exchange (DEX) platform Maverick Protocol has unveiled a novel incentive system that can help stablecoins and Ether (ETH) liquid staking derivatives hold their price pegs, the protocol said in a press release on Tuesday.
The incentive system allows token issuers such as Liquid Staking Protocols or stablecoin issuers to create so-called “boosted positions” that offer liquidity providers additional rewards in an adjusted price range in Maverick’s liquidity pools.
Maverick is based on an Automated Market Maker Algorithm (AMM) that allows traders to trade digital assets into liquidity pools without intermediaries. Token holders can also stake their assets in the pools to provide liquidity for trading while earning a portion of trading fees.
The protocol’s recent upgrade comes as DEXs struggle bitterly to attract traders and traffic to their platforms, as crypto investors seek decentralized trading venues following multiple explosions of centralized marketplaces and increasing regulatory stranglehold.
To this end, some DEXs offer liquidity providers additional rewards on top of transaction earnings for deploying their capital, such as: B. 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,” said Bob Baxley, founder of Maverick.
Maverick’s tool is more efficient than existing offerings because it allows token issuers to focus reward payouts on a specific price range and build price walls, Baxley explained in an interview.
This can also help pegged assets like stablecoins and liquid staking derivatives keep their prices more stable, while allowing liquidity providers to generate additional revenue, according to the press release.
Token issuers such as decentralized finance protocols or stablecoin issuers can pay out rewards in the form of any token of their choice over a period ranging from three to thirty days, the press release states.
For example, Lido Finance, the largest Ether (ETH) liquid staking protocol and issuer of the stETH token, has already approved to incentivize Maverick’s wstETH ETH liquidity pool in May, which Lido says is in Lido’s governance token LDO to be disbursed Post in the Governance forum.
Baxley said the development would help position Maverick as the marketplace of choice for ETH liquid staking derivatives following the much-anticipated Shanghai upgrade that allowed users to withdraw locked tokens from the Ethereum blockchain. Liquid staking allows investors to earn staking rewards while maintaining their ability to borrow and lend, with a derivative token representing their locked assets when staking.
Liquid staking protocols are gaining popularity among investors and analysts are predicting further growth for the sector after the Shanghai upgrade.
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