We are entering an era of Liquid (Re)Staked BTC, during which we might see many similarities to the journey of Liquid Staked ETH in terms of liquidity growth and market strategy. The rise of Liquid Staked BTC presents both opportunities and challenges, particularly in managing liquidity across volatile market conditions.
This blog serves as a case study to explain why Maverick Protocol is the ideal liquidity operating system to support and manage the growth of Liquid Staked BTC tokens.
Capital Efficiency
Capital efficiency is a key metric for DEX liquidity success, defined by the ratio of trading volume to TVL (Total Value Locked). It measures how effectively liquidity is utilized for LPs, as well as the market depth a DEX can support.
Why Maverick’s AMM Excels at Capital Efficiency:
Customizable Liquidity Distributions
Maverick allows liquidity providers to distribute liquidity with precision, eliminating wasted liquidity in non-targeted price ranges and maximizing flexibility.
2. Automated Liquidity Movement*: Maverick’s AMM dynamically adjusts liquidity positions based on market conditions, making concentrated liquidity more efficient. This mechanism captures more swaps, even during market fluctuations.
Instead of rebalancing the liquidity like a vault would do, Maverick AMM moves the liquidity natively, eliminating extra gas costs in the process.
*The movement is triggered by the swap activity in the pool; it does not rely on any external price oracle. On the contrary, due to their high capital efficiency and market depth, some Maverick pools are actually integrated into price oracles to provide on-chain price feed for lending protocols.
Using wstETH-ETH pair as an example:
Maverick’s innovative Dynamic Distribution AMM has already proven its product-market fit. On chains like Base and zkSync, Maverick has consistently supported the highest capital efficiency for tokens like wstETH. Since launching these pools, Maverick has enabled the most decentralized volume for wstETH and other LSTs.
On Ethereum mainnet:
Screenshots of capital efficiency of wstETH-ETH pools on multiple DEXs on Ethereum 2023.
On Base:
When Lido shifted its incentives to Maverick v2 Base, Maverick started leading in capital efficiency for the wstETH-ETH pair on that chain.*
wstETH-WETH pool on Aerodrome on September 30, 2024.
*This analysis is based on on-chain data from September 30, 2024.
If we compare wstETH-ETH pool on Maverick vs Aerodrome as of September 30, 2024:
TVL:
Mav TVL = 1.5M
Aero TVL = 15M
So Aerodrome has 10x the TVL
Volume:
Mav Volume (24 h) = 4.31M
Aero Volume (this epoch, i.e. past 5 days) = 24M, which is roughly 4.8M per day.
So, Mav has roughly the same volume each day despite having one tenth the TVL.
Fees
Mav Fees (24 h) = $86.20
Aero Fees (this epoch, i.e. past 5 days) = $494, which is ~$99 per day
So, Aerodrome is generating 10% more fees despite having 10x the TVL.
Fee APR (Pool wide)
Mav = 86.20/1.5M*365 = 2.09% APR
Aero = 99/15M*365 = 0.24% APR
Since Maverick is producing 90% of Aerodrome’s fees with one tenth the TVL, each Maverick LP actually earns almost 10x the fee APR from their liquidity.
Overall: LPs have the potential to earn nearly 10x more trading fees on Maverick vs Aerodrome. Additionally, Maverick Boosted Position rewards are distributed pro-rata by TVL in the BP, offering more predictable yields from incentives compared to Aerodrome’s rewards, which are only distributed to the most active liquidity bin and are therefore harder to chase.
As Jordan Yeakley, CFA stated in his Delphi Digital report, “Maverick’s natural synergies with LST-fi and the growth of activity on zkSync could unlock its potential for sustained growth and broader adoption.”
Market Depth
While capital efficiency measures how effectively liquidity is being utilized, it’s largely driven by the trading volume (or demand) between a pair of tokens. For a liquidity infrastructure to be effective, it not only needs to support active markets but also efficiently bootstrap and maintain liquidity to ensure sufficient market depth. This allows traders to execute large trades with minimal price impact.
Current liquidity infrastructures often struggle to effectively bootstrap market depth due to key issues:
Static Liquidity: On concentrated liquidity AMMs like Uni v3, liquidity tends to remain static and doesn’t adapt to price changes.
Lack of Targeted Incentives: There’s a lack of incentive mechanisms that precisely target concentrated liquidity.
Maverick solves these issues with its dynamic distribution AMM and Boosted Positions by offering:
Concentrated Liquidity with Customizable Distributions: You can create liquidity bins as narrow as 1 basis point wide, allowing for highly specific liquidity deployment.
Automated Liquidity Movement: Concentrated liquidity automatically moves to stay close to the current pool price, ensuring liquidity remains efficient.
Boosted Positions: This feature allows you to incentivize a liquidity distribution that is customized based on the first two features, making incentives more effective and targeted.
Incentivization Efficiency: Precision Targeting for Projects
One challenge for token builders is the inefficiency of traditional liquidity incentives. Protocols often lack control over which part of the liquidity curve is incentivized, leading to a waste of resources. First-generation liquidity programs (e.g., Curve Gauges, Sushi Farms) incentivize the entire price range from zero to infinity, which is far from efficient.
With Maverick Boosted Positions, projects can direct incentives to specific price ranges, ensuring that only the liquidity they need is rewarded. This allows for maximum impact with minimal spend.
For example, the wstETH-weETH pair on zkSync and Base uses Mode Both to maximize capital efficiency by only incentivizing high-efficiency liquidity distributions–in this case, a single bin of liquidity that automatically moves to follow price. This approach ensures deep liquidity with minimal incentives, bootstrapping the pair effectively.
Cross-Chain Liquidity Management: A Unified Solution
Maverick v2 simplifies liquidity management across multiple chains. With its multi-chain view, LST holders can browse yield opportunities on different chains, while LST builders can streamline incentive management across six chains with a unified toolkit.
Projects like Lido (wstETH), EtherFi (weETH), KelpDAO (rswETH), and Swell (rswETH) have collectively bootstrapped over $20M in TVL on Maverick v2, all while minimizing incentive spend thanks to Maverick’s capital-efficient infrastructure.
Capital Efficiency + Incentivization Efficiency = Optimized + Bespoke Liquidity Growth Strategy for LSTs
Beyond Capital Efficiency, Market Depth, and Incentivization Efficiency: Unleashing New Potential with Community-owned Liquidity on Maverick V2
Maverick’s tools optimize both capital efficiency and incentivization efficiency, providing LSTs with the most effective liquidity growth strategy. But beyond efficiency, Maverick enables more nuanced control over liquidity objectives, including:
Maintaining a token peg
Building quote assets in a pool
Creating token launch liquidity ramps
Setting up buy/sell walls a certain percentage away from market prices
A Real-World Example: GHO and Maverick
In 2023, Aave’s GHO token utilized Maverick’s liquidity tools to stabilize its dollar peg. By using targeted liquidity incentives, Aave was able to build buy walls and gradually push the GHO price back toward its peg.
As TokenBrice, a former GHO liquidity committee lead, explained: “…one of the most fascinating things you can do with Maverick’s static pool is an even liquidity distribution within a given range (something Uniswap can’t do, sadly, as the distribution is linear). It means you can create static pools enforcing buy/sell walls within a given price range, and this is precisely what we [did] with GHO!“
“We don’t just pay for liquidity somewhere, we pay for a specific type of liquidity, biased toward the buying side. This helped create price support and progressively pushed upward pressure on GHO.”
The Future: veFlywheel and MAV Incentive Matching
With the launch of Maverick v2’s veFlywheel, projects can benefit even more from liquidity incentives. Liquidity incentives will be matched by MAV tokens, plus additional votes from veMAV holders that direct even more incentives.
Read more about Maverick veFlyhweel and its emissions: https://docs.mav.xyz/guides/veflywheel
Integrate with Maverick v2 Today: Optimize Your Liquidity Strategy
Ready to make your liquid staking token liquidity more efficient, composable, and sustainable?
Fill out the form to nominate the token you believe should adopt Maverick tools to optimize liquidity growth and strategy: https://forms.gle/PrTwvggeAGaoTT369
About Maverick
Maverick Protocol is DeFi’s Liquidity Operating System, offering one-stop liquidity solutions for token projects, liquidity providers, and blockchain ecosystems to bootstrap efficient markets with optimized liquidity and reduced budget spending.
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Entering the Liquid Staked BTC Era: Why Maverick is the Ultimate Liquidity OS for LSTs was originally published in Maverick Protocol on Medium, where people are continuing the conversation by highlighting and responding to this story.
