A detailed explanation of Maverick's four interval change modes and operation tutorials
Original author: Biteye core contributor Crush
Binance has been plagued by trivial matters recently, and the dispute with the SEC also caused its own BNB to plummet to 220 at one time. However, the new phase of mining that was suddenly launched has brought everyone's attention to this project called Maverick.
According to Binance, Maverick is a composable decentralized financial infrastructure that enables builders and liquidity providers to achieve high capital efficiency and execute their desired liquidity provision (LP) strategies.
Just looking at the introduction of this sentence, you may be confused and don’t know what this is for, so let’s start with Uniswap v2 and find out what problems they solve.
1. The gameplay of Uniswap v2
If a user adds liquidity in Uniswap v2, how does the liquidity flow?
Take ETH as an example, if you want to add liquidity to Uniswap v2 when ETH is 2000 U, prepare 4000 U, of which 2000 U will buy one ETH, and the remaining 2000 U will be added to the pool according to the ratio of 1 ETH: 2000 U.
In order to simplify the model, we assume that there is only your liquidity in the pool.
At this time, when others sell 0.5 ETH, it is equivalent to giving 0.5 ETH to your liquidity. According to the price of 2000 U per ETH, your liquidity provides 1000 U to this person.
After one transaction, the liquidity in the pool becomes 1.5 ETH: 1000 U.
Because of that person's selling, 1.5 ETH can only be exchanged for 1000 U, that is to say, the price of ETH was dropped by him to 1000/1.5 ≈ 666.67 U, while the previous price was 2000 U.
LP (Liquid Provider liquidity provider)
Since you added 1 ETH and 2000 U into the pool, you are what we often call LP. Without your money, the above user would have no way to smash the market.
impermanent loss
impermanent loss
You initially invested 4000 U (1 ETH + 2000 U), and then the price of ETH was smashed to 666 U, and your liquidity became 1.5 ETH: 1000 U. According to the principle of equal value of left and right, the value of your assets at this time I only have 2000 U, so I lost 2000 U all at once.
And if you don’t do liquidity, just hold 1 ETH and 2000 U, even though ETH has fallen to 666 U, your assets still have 2666 U, thanks to 666 U is impermanent loss.
Slippage
When you place an order to sell and there is insufficient liquidity in the pool, the price when you create the order may be different from the final transaction price, that is, the price you sell is lower, and this is due to insufficient liquidity The resulting slippage problem.
interval
In the Uniswap v2 version, once your liquidity is placed, it is spread across the entire price range. If ETH keeps rising, you have to keep selling ETH, and if ETH keeps falling, you have to keep buying ETH.
This brings up three bad places:
1. The efficiency of fund utilization is low, and most of the funds are left idle
The price of ETH will not skyrocket to infinite heights in a short period of time, nor will it plummet to zero. It usually hovers in a range, such as 1800-2200.
Spread all the liquidity in the entire range, and ETH is only bought and sold at 1800-2200, then most of the funds before and after it will be wasted and become idle funds.
2. The thickness of the pool is the same in all price ranges, and the extreme market slippage is high
As can be seen from the above figure, if the price is only hovering between 1800-2200, in case there is an extreme market here, since the pools in all price ranges are the same thickness, the price is likely to be smashed very low, while the idle funds are Standing on the sidelines and watching, did not play any role.
Assuming that the idle funds are utilized to form a part of the green triangle in the above figure, which is concentrated in the price range of 1800-2200 and has a lot of liquidity support, then the ETH price will not fluctuate excessively, and the slippage will be small. Raise a few steps in an instant.
3. LP fee income is low
This is also caused by the low efficiency of capital utilization. Users deposit liquidity to earn handling fees. As a result, most of the funds are not used, so the handling fees obtained by users must be reduced in disguise.
2. Uniswap v3 upgrade
After the Uniswap v3 upgrade, the above problems were quickly resolved. v3 launched centralized liquidity, users can fix their liquidity in the range of 1800-2200, once this range is exceeded, the user's liquidity will no longer go to work, and the benefit of centralized liquidity is the utilization of funds The increase in the rate and the optimization of the slippage, I believe everyone can already answer.
But then the problem came again. If I am a user who specializes in mining on Uniswap v3, I set a range of 1800-2200. In this range, the liquidity works normally and helps me earn fees, but What should I do if I exceed this range?
The common operation is to take out the liquidity first, then set a new range, such as 2200-2600, and finally import the liquidity back into the pool. Only in this way can the liquidity continue to make money for me.
Two problems arise here:
1. It takes a lot of energy to move the price range back and forth
2. The handling fee for changing the range is accumulated over time, and it is also a considerable expense
3. The innovation of Maveric
Finally, Maveric is coming to the stage. Yes, they have solved the problem of moving the range above, turning the original manual operation into an automatic operation, and there is no handling fee for the automatic movement of this range.
You only need to set a price range size, then set a handling fee, and then choose the preferred mode, and your price range will move along with the price.
For example, when the price is at 1126 at the beginning, your range is between 1000-1400.
When the price rises to 1866, Maveric will automatically adjust your range to near the new price line. After successfully entering the new range, your liquidity can still earn handling fees.
4. Maveric practical exercise
official websiteofficial website, to connect the wallet, here we use the ZkSync Era network, on the one hand, we have the opportunity to get ZkSync’s future airdrops, on the other hand, its handling fee is lower than that of the main network.
The upper left corner of the official website is "Swap", "Boosted Positions" and "Pools". The first "Swap" is the normal token exchange, and the latter "Pools" is where liquidity is added.
(1) The relationship between the handling fee and the interval
You can directly search for keywords, join the pool that others have created, or create a new pool in the upper right corner, add a pair of tokens that you want to provide liquidity, for example, use an altcoin and ETH to form liquidity, and link them to make the altcoin Coins generate a price.
Here we can directly join other people's pools. The pool with the highest APR ranks first in the search results. You can see that the handling fee of this pool is 0.1%, and the price range is 2%.
If you want to change this information, you can click into the pool and select "Edit" to customize, but pay attention to the following two points:
1. The higher the handling fee, the fewer orders may be executed. After all, people who trade are not stupid, and they will definitely give priority to liquidity with low handling fees;
2. If the interval is set too large, some liquidity may be idle and cannot earn handling fees, depending on the fluctuation of the token pair and the accuracy of the interval setting.
Based on the above two points, we can know that the smaller the price range is set, the higher the handling fee can usually be charged. But some people will ask, I set a large interval, and then charge a high handling fee, what can I do?
The result is also obvious. The APR of this pool will drop a lot. For example, the highest APR in the above picture is 281.88%, while the lowest is even less than 1%. The gap between rich and poor is extremely serious.
It can be seen from this that if we want to earn the most money when providing liquidity, we need to do more research on how to set a reasonable price range and handling fee.
(2) Four interval change modes
Continue the above operation, after confirming that the interval and handling fee are correct, click "Next" to enter the interval change mode selection.
There are four change modes for users to choose from:
1. Mode Static - the price range is fixed, but the range distribution can be adjusted
2. Mode Right——When the price of the token rises, the range changes with the price
3. Mode Left——When the token price falls, the range will follow the price change
4. Mode Both——No matter the token price rises or falls, the range will follow the price change
As mentioned in the previous article, the capital utilization rate of Uniswap v2 has not increased, and while users bear the risk of impermanent losses, they still cannot earn too much handling fees;
Then Uniswap v3 updated the range setting function, which improved the utilization rate of funds and also increased the user's fee income, but the range is fixed and needs to be adjusted manually;
When it comes to Maveric, let the range follow the price change, which further improves the income of handling fees and the utilization rate of funds. At the same time, in Mode Right and Mode Left, since there are only unilateral range changes, only unilateral losses are borne. Compared with Uniswap v3, the impermanent loss under unilateral market conditions has been optimized, but the impermanent loss of Mode Both is still have greater uncertainty.
From this optimization process we can find:
1. Although the user earns more transaction fees, the benefits are still accompanied by risks;
2. From the selection mode, it is not difficult to see that tools can only provide you with convenience forever, and whether you make money in the end still depends on your own judgment.
When you choose Mode Static, although the range is fixed, the distribution of the range is different.
The first is exponential distribution, which divides liquidity funds into 11 price ranges. The closer to the price line, the more liquidity funds are allocated, which allows your funds to be effectively used in a short period of time, but once the price Stay away from your heavy positions, such as the price line running to the left and right, and your income from handling fees will decrease at this time.
The second is the average distribution, so that the liquidity funds distributed in the 11 intervals are equal. The advantage is that as long as it is within the interval, no matter where it is, the handling fee will not be less.
But if the price line only hovers in the middle most of the time, and you don't put the main funds in the middle, then the funds on both sides will be wasted.
The third type is a single interval distribution, which is more radical than the first type. All funds are directly studded into the middle interval, all funds are effectively used, and the most handling fees can be obtained at the same time.
But as long as it is outside the range, there is no fee for a penny. Since there is only one range, it is also a breeze for the price line to jump out of the range.
When you choose Mode Right, as shown in the figure, your liquidity range will be on the left side of the price line, and the price has not entered the range at all. You only need to provide USDC, wait for the price to fall back to your range, and receive other people’s ETH to earn fees That's it.
If the price of ETH continues to rise, that is, the price line goes to the right, then your USDC as liquidity will be shifted to the right by a range, and you will continue to use USDC to receive ETH sold by others. Sell ETH and exchange it for USDC to earn handling fees.
But if the price continues to fall, the interval will not move to the left anymore, because the Mode Right you choose will only move when the token price rises, and the same is true for the later Mode Left.
Mode Both means that both tokens need to be added, because the price line will be falling in the middle of your liquidity range, and the range will change with the price, whether the price is rising or falling.
(3) Liquidity Incentives
There is also a "Boosted Positions" option on the homepage of Maveric. Click it to see which pools have extra rewards. For example, a pool here has an extra 1.95% APR, which is mainly used to attract users to this pool. added liquidity.
In Engage on the top right, you can see a "Liquidity Shaping" button. Do not click this button randomly. It does not provide liquidity, but donates money to provide a source of funds for the pool's liquidity incentives.
If you have deposited money in Liquidity Shaping, then this money will not help you earn service fees, it will directly become an additional APR reward in a certain pool, and then when others come to this pool to provide liquidity, additional rewards give others.
In the previous webpage, Liquidity Shaping was placed directly behind the pool. Many users did not pay attention to it. It was regarded as a place to provide liquidity. Once the money was deposited, it became a reward for others. This is a bit deceptive. It's better now that it's changed.
According to the MOD of the community, this function seems to be used by the project side to increase the rewards of a certain pool to attract users to provide liquidity for this pool. But from the point of view of actual effect, it may automatically change when the innovation is not as good as the above price range.
