Maverick Protocol's new AMM technology driving DeFi adoption in 2023

0:00I'm Ashton Addison from Block West capital for investment pitch media and today on the Crypto Coin Show we have Bob Baxley the CTO of Maverick protocol Bob welcome to the show and thank you for taking the time hey Ashton hey thanks for having me glad to be here you're very welcome excited to dive into your knowledge in the D5 industry what Maverick is working on

0:21let's kick off our conversation by just starting with a little bit on your background on the technical side and how that led to being the CTO at Maverick protocol and then we'll dive into all the details sure yeah so I actually started the Academia path I was a research professor at Georgia Tech studying machine learning Digital Signal processing information Theory

0:43and about 2014 I started a cyber security startup called Bastille was venture-backed we raised 50 million dollars and that was deep in the cyber security space until about two years ago when I left to join the Maverick team Africa had raised a little bit of seed funding and needed someone technical to help them build the amm so I jumped in I've been in crypto

1:05though since 2017 or so you know super excited with the to see the D5 summer a few years ago became an LP and got very fascinated with all all that is defying so it was a great match and so I've got the technical technical math background and I'm loving being here great backstory and I feel like that cyber security knowledge definitely comes in handy now you know especially

1:30in how quickly D5 is growing and you really need to stay on top of the security because that's the most important parts of you know decentralized finances is sometimes you're just trusting code and you're not trusting other people but you know if you can't read the code or you're not sure how secure it is then that could be an issue yeah I've been working in the Cyber

1:51industry you know we I was a part of part of our business was was having you know real real hardcore hackers breaking into things and seeing those those guys work and gal's work is amazing the Ingenuity that people can bring you definitely have to be on your security game to avoid incidents definitely and now let's get a high level overview on what exactly

2:14Maverick protocol is doing in the defy industry and then we can jump into the intricacies of that sure so Maverick is a is a DEX you know and the core technology under that is NAMM so it's a decentralized exchange and we've built a new new automated Market maker amm kind of technology so you can think of Maverick is serving the same sort of use case as something

2:37like uniswap or curve the difference is we've got a new amm so that's the core contract that does the pricing so LPS liquidity providers bring liquidity to an amm and then swap or swap against that and the differentiating technology you know the evolution of Technology we've seen is in the amm tech how that pricing happens and the degrees of freedom you give

2:59liquidity providers so they can be as capital efficient as they as they please okay and I want to dive into that a little bit because you know there's there's a big difference in the centralized exchanges that have people that are making the markets for them you know on binance or when these ones that where there's a lot of the trading happen and there's not as much trading

3:20that's happening on the decentralized exchanges but they're using newer technology and sort of replacing those market makers with the tech and with the people that are actually involved in the exchange which is cool what is the what is the main difference you know in terms of advantages in how the amms are working at least the new tech in Maverick

3:41compared to on the centralized trading that people are used to for the previous years in crypto yeah yeah so yeah let me talk you through that whole Evolution maybe yeah so you think about order books on coinbase or binance the centralized exchanges if you've got people placing by and sell orders and then there's a matching algorithm or engine in those exchanges

4:01so that's that's kind of the core of binance or coinbase for instance is that matching algorithm so you say I will buy it price X and if somebody says I'll sell it price X as well and they do the match and the swap happens that's called a centralized order book a club and it's hard to do a club on chain because it requires keeping all this state information and on chain it's very

4:23expensive to store data so really the uni folks you know swap folks it was revolutionary you know this idea that you could create just a an amm an automated Market maker that didn't have a club didn't have an order book and you could still have swapping on chain so you know the original amm the idea was the pricing curve is called X well x times y equals K that's what

4:47sets the price you're essentially spreading liquidity across the entire price range from zero to Infinity so you can think about an order book that's got prices for everywhere whereas most order books only have prices or orders near the price so that was that was good that was an elegant kind of first solution and then we saw a curve come along with stable

5:08swap where they said well it doesn't make sense to have these kind of virtual orders across the entire price range if we know our price is always one so I don't need liquidity at Price equals one thousand if I know my stable pairs are swapping at price of one and so that was stable swap that was curves Innovation and that made things more Capital efficient that is if you

5:30provide liquidity in those pools you get more more swaps happen against you more you get collect more fees essentially because your liquidity is more concentrated and then Unity was kind of the next level of evolution where they said well let's let's let LPS not just concentrate around one but choose where to concentrate so in uni V3 you get to pick a range of prices as an LP and

5:53that's where you put your liquidity and the more narrow you make that range the more more fees you can earn but this is where the complexity comes and this is where Maverick is solving solving the problem once you concentrate your liquidity in order to get returns if the price leaves your concentrated range all of a sudden you as an LP are not collecting any fees your Capital

6:12efficiency goes to zero and so in our experience as LPS when we when we started Maverick and then in talking with professional LPS it became clear that there's the professionals are using this complicated mechanisms off chain to rebalance their on-chain liquidity back and forth and so in Maverick we've built an amm that does that movement does your

6:36liquidity the liquidity movement for LPS automatically on chain without the LPS having to spend more gas or have complex infrastructure that does that for them so the net result the headline is you get better Capital efficiency as an LP and better Capital efficiency relates directly to fee efficiency so you can think of Maverick as often you offering LPS new degrees of freedom to

6:59maximize their Capital efficiency okay thank you so much Bob for explaining that you know that whole progression because for a lot of people that are just trading a lot of people are still trading on the centralized exchanges and they're still yet to move into the decentralized side and even beyond that you know the lp can be very confusing for people because

7:19there are risks involved and you know it sounds confusing you know rebalancing your portfolio off chain to make sure that you're writing the money and it's a whole job in itself but for the people that are just looking for an easy solution trade right and they don't want to have to send their funds to finance and do all go through all the procedures to trade and then withdraw

7:40you know they just want to do something quickly I feel like dexes are the future for that it's going to make it way easier now with these improvements from all of the technical side that you spoke about you know making it easier for LPS to add liquidity into the pool what are the sort of net benefits for just a Trader who just you know is Swing

8:02trading ever so often and doesn't really understand the technical background of the decks yes you know there's there's benefits for a few parties so the Traders is kind of the easiest to explain essentially when LPS concentrate through liquidity Traders can get better pricing so there's less slippage in their trade slippage is you know I want the prices is X now and when I

8:25trade I'll kind of swap some and that'll make the price go X plus a little bit that little bit is slippage and you want that to be as little as possible so the deeper your markets the better the slippage is I mean I totally agree with you after you go to D5 and you start trading on dexes you never go back to Sexes it's it's just night and day the power of

8:46of custodian custodying your own funds and your own wallets and just seeing on chain you know exactly where everything is it's exciting that is there's not it's not to say there's not smart contract risks there aren't risks there's certainly some risks there but the ux is really nice once you understand what's going on I think there is a barrier to entry to understanding

9:07wallets and this sort of thing but once you get there it's really nice working with dexes so from the trader side less slippage is the answer we really think of Maverick as I think Defy is going to get bigger by having more money Legos right you need these fundamental building blocks and so what we're trying to do what we've hopefully accomplished is creating

9:33a new degree of Freedom or two for LPS and maybe even more importantly for other protocols to build on top of the money Lego we've got or use our money Lego and place them to build bigger things so there is honestly a little bit more complexity in helping on Maverick but I think other protocols will come along in abstract waste and that complexity

9:53But it's certainly it's it's way less complexity than it was in something like univ3 where you're having to do off-chain things to orchestrate your position yeah okay and so I guess maybe getting into some use cases so we launched with Galaxy Lido and liquidy so galaxies you know they've got a great thing where they're kind of tokenizing participation and you know

10:19activity and protocols and then liquidy is a stable coin project and Lido of course they've got steth and they're doing that so for each one of those there's there's not enough degrees of freedom in existing amms for them as protocols to get liquidity they want the biggest use case is actually Lido where they're they're yielding their LST their their

10:42liquid staking token s t eth it grows in value like the St you're growing in value relative to eth because you're getting these validated rewards and that makes the price of those two diverge slowly so where curve kind of solve this the problem for stable swap by making an amm that works well for stable pairs Nobody Until Maverick has solved

11:05the problem for these liquid staking tokens so it's really hard to LP a liquid staking token without having to constantly interact with the contract and move your price as the price of the LST moves up relative in Maverick that's all for you the amm does that liquidity movement automatically okay that's great to know and yeah I know Lido is huge and the liquid staking

11:31is huge and that's a huge Advantage for dexes I feel like but I'm curious on the other side one of the people that are afraid to move into Texas some of the other limitations that you know I personally have also experienced is you know whether it's just the amount of the coins that you want you know aren't available whether it because it's on a

11:54different blockchain or you're trying to have ether and move to you know Cosmos or Bitcoin or something like that or also you want to short it or you want to have like orders set in lower on and uniswap couldn't do that where you sort of had to buy at the top price you couldn't set for the future so I'm curious on where you see the industry

12:18with that right now and Maverick and will that kind of stuff be solved and I feel like that will move a lot more people into D5 yeah I think so you know there's a few things there like one is these derivatives shorting and perpetuals and these sorts of things I think like the protocol for instance under the hood there's an amm and they use uniswab so one of the

12:39things back to the money Lego analogy in it in order to enable these sorts of things you need you need more flexible building blocks and so Maverick can support that Maverick's not a derivatives exchange but I think the core pricing Tech could be used for a derivatives Exchange in the future as far as as depth I think it's a really interesting story to see

13:02the swap aggregators emerge so like one inch paraswap what's super cool about Maverick is you know and Trad fire really almost any other industry if you build a new thing you need a whole bunch of user flow to your to your project in order to get any traction but with one inch in Paris swap so we're we're hooked up with these aggregators trades that anybody do does on one inch

13:28or pair swap they pick the decks with the best pricing and that's where the water flow goes so Maverick since we have the best pricing many times we're getting a ton of order flow the amm is getting a ton of order flow from those platforms so I think that's really the solution to finding better routes to coins that are hard to find and I think some of these

13:50aggregators are even going you know they're even including the bridging process as part of the swap so they're abstracting that away as well which is pretty cool to see so I think it's still super early days you know you see some of these comparisons of blockchain to the internet and the relative progress and you know if you really start the

14:09internet when it started in the in the 60s then you know we're we're in the 80s of Internet which is extremely early right definitely and yeah great great point about the aggregators I've seen you know people that are using one inch and all of a sudden it's looking across eight different exchanges for the best price to you know and that's all

14:29people care about is getting you know the best bang for their buck and if people haven't even heard of Maverick yet and then one inch is actually using it because you guys have the best amm technology that with the lowest slippage all of a sudden it's just funneling to trade on there automatically with people don't even realize it so I feel like that's a huge

14:49benefit for you guys having this technology it's cool for Maverick but you know at the end of the day I'm really just like a crypto blockchain Maxi right yeah and so the idea that there's no friction for Innovation is just super exciting right if you imagine any other industry the idea that you can permissionlessly hook up protocols via essentially abis apis and have them

15:11just interact all permissionlessly you know you don't have to ask a protocol can I can I interact with you that's what the smart chain enables or smart contracts enable is that any protocol can talk to any other protocol permissionlessly and that's where we get this kind of super rapid Innovation which is it's just super exciting definitely and following defy since

15:32around D5 summer and seeing the incremental advancements of these dexes you know it's been three years or just a little bit more which in crypto is supposed to be a long time but I feel like we're still fairly early and I feel like the next three years probably you know two or three or four times as much will happen on the decentralized side for improvements in

15:56this technology yeah you gotta imagine it's snowballing right you know we're getting the building blocks built now and we'll start seeing towers built from those building blocks in the near future I think yeah and do you think any part of the regulation or government intervention will be part of the Catalyst to push people out of centralized exchanges or to change their

16:22habits in the way that they're trading and holding custody of their funds or do you think there'll be some other catalysts that will make dexas grow I think it's I think it's going to be one of those slow things where you turn around I mean if you had told somebody 20 years ago that a computer could real time translate from any language to another language that would

16:41sound like like Terminator science fiction and now we completely take it for granted so I think if you look back at ux for the internet in the 90s you know it went from dial-up modems and you know the in the 90s everybody was just it was it was pirating music was the main use case right like Napster it was all that regulation and all those those court cases I think we're in that

17:05sort of stage in crypto and eventually you'll have the you know the music that nobody's pirating music anymore right that ux has been figured out and I think we'll have that same sort of thing in defy in blockchain the ux around wallets the education of users all that will be way easier you'll think it's ridiculous to spend three percent

17:28on a credit card transaction like three percent is absolutely insane right when you can do it for a penny on the blockchain so I think it'll just be a slow Evolution we'll turn around and not realize that we're we're in the future now yeah great perspective and working moving forward with your team what are some of the major advancements or part of the roadmap that

17:50you guys want to bring out you know throughout the summer of 23 and towards the end of this year so we think the next big Narrative of the rest of 23 and in 24 is going to be liquid stake in tokens so you know Lido's dominant now but you've got rocket eth you've got Seabees you get fraxies swell there's all kinds of protocols with their the various twists on this

18:18idea of you stake ease for validation and you get some yield on it and so we're going to see a lot more eth in those protocols and what's going to happen is those Protocols lsts are going to become the new base asset in amms so if you're an LP and usdc eth now there's really no reason for you to not instead be an LP in usdc you know name your LST so usdc rocket eth or WS

18:48teeth or whatever it is because that eth has got some native yield to it so what we see of this going is we'll see a repeat of the curve Wars so you know the curb wars were all about finding which stable coin would be dominant and they did all kinds of things to try to gain market share we're going to see the same sort of thing in the LST Market where these various LST

19:08Protocols are going to do all kinds of things to gain market share and one of those things they'll do is look for deeper liquidity on AMS and so what we're excited about with Maverick is we've got you know if you go look at say curves Capital efficiency for wste they've got like a billion and a half dollars of St Youth and they're doing just like 10 20 30 million of volume a

19:33day so the efficiency is on the order of a couple percent and Maverick the efficiency is like 400 a day and it's just because the amm tech is better at moving the liquidity with price because the price is constantly kind of Shifting so we're excited to see Maverick kind of play in that LST Wars space and we'll we'll see how that plays out very exciting and yeah I've I've been

19:57following Lido since you know you before you could sort of stake other coins and do liquid staking but it seems that it's expanding a lot now I've seen some platforms that can stake you know whether it's near token Avalanche all of these other ones for liquid staking as well do you think after you know ether liquid staking gets more mainstream than

20:18the entire ecosystem will follow along with that or yeah I think so I think that's going to become a popular model I mean really curve was the first one to do it so the curve token you lock it in convex curve and that becomes the liquid staking pair convex curve and curve that creates liquidity So you're locking in and then you want to be able

20:38to get out so you're able to trade a little bit of a discount I think that'll continue to be a popular model for protocols anything that has yield you'll be able to lock it you'll get some sort of liquid staking thing and then the way you get out of it you know get liquid again is by swapping so yeah we're excited to see that narrative and as I said I think Maverick's got some

21:01unique Tech in allowing LPS to be you know to Market make with amms for these kind of liquid staking tokens where you know the price is going to shift four percent a year for say for instance very cool and what's the best way to follow along with you know these updates for this liquid staking part that you're talking about with Maverick and just to

21:23learn about more about the protocol and test it out yeah sure so we're at MAV dot XYZ the apps live we've been live for about three weeks now two and a half weeks and yeah you know you can participate there we've got an active Discord active telegram active Twitter so would love to have some engagement feel free to reach out on all those

21:44channels and happy to chat with anybody sounds great Bob thank you so much for all the insights into Maverick and just the future of dexes and defy it's exciting times and I'm sure we'll have you back on again to talk about the next updates and see what else is new in the industry because it's growing very quickly so I do really appreciate your

22:05time today and let's follow up in the near future great yeah thanks Aston thanks for having me thank you