Maiar Exchange: Next Generation Automated Market Maker

AMM Automated Market Maker Elrond Maiar Exchange

Image: Maiar Exchange works as an Automated Market Maker

Maiar Exchange works as a so called Automated Market Maker (AMM). Sounds complicated, but isn’t. An AMM is a protocol on a decentralized exchange and a core concept of the DeFi ecosystem. Instead of using an order book like a traditional exchange, assets are valued according to a mathematical formula – in this case a pricing algorithm.

In the world of automated market making users don’t need a counterpart (another trader) to make a trade. Instead, they interact with a smart contract that “makes” the market.

The liquidity in the smart contract is provided by users (liquidity providers) of the exchange in so called liquidity pools. This essentially allows anyone to become a market maker on Maiar Exchange and – that’s the best part – earn fees for providing liquidity.

AMMs have carved a niche for themselves in the DeFi space due to their simplicity and ease of use. No wonder, then, that they are an essential part of the overall crypto vision.

Features of Maiar Exchange

Currently there are three main components within Maiar Exchange:

  • Swapping
  • Liquidity pools
  • Farming

All components mentioned are self sustaining. They create a positive feedback loop that grows with user adoption. Swapping generates rewards for farming, which will generate rewards for providing assets into the liquidity pools so that people can swap without liquidity problems.

Swapping

Swapping is exchanging one digital asset for another at a given price. Maiar Exchange offers a very simple swapping mechanism. Assets are being swapped against the Liquidity pool (details below) and not directly with other market participants.

From recent Elrond blogposts we can see that we can currently trade 3 digital assets on the Maiar Exchange:

  • EGLD (Elrond’s native token)
  • MEX (Maiar Exchange token)
  • BUSD (Binance USD stablecoin)

The tokens mentioned are bundled into 2 trading pairs, which are EGLD/MEX and EGLD/BUSD that will be available on the launch of the exchange. With the swap feature users can buy or sell directly at any given price.

Liquidity pools

Liquidity pools are are basically a big shared pot of tokens provided by liquidity providers (LPs), that the users of the platform can trade against. In exchange for providing liquidity to the protocol, liquidity providers earn rewards from the trades that take place in their pool.

Because of the way liquidity is pooled, Maiar Exchange takes into account the liquidity of each individual. Even if prices and overall liquidity fluctuate, users can view and withdraw their liquidity at any time.

Farming

Farming is a novel tool that enables any liquidity provider or market maker to lock their liquidity in and “farm” rewards on the trading platform. It is offered as an extra incentive and creates a positive feedback loop where more liquidity is added in for people to trade. The result: a better trading experience and less disruption due to insufficient liquidity. This, in turn attracts even more liquidity to be locked in.

The MEX token: incentive und governance functionality

On Maiar Exchange farming is rewarded with the platform’s token called MEX. The token works as an incentive to entice people to provide liquidity, but most importantly to govern the platform and decide the path for the future of financial services offered on it.

Access to Maiar Exchange

Maiar Exchange works as a second layer on top of an Elrond wallet and doesn’t require users to create an account with the platform. Access is easy by creating an Elrond wallet at wallet.elrond.com or in the mobile app Maiar.com. The process of connecting is simple (once Maiar Exchange is officially launched!).

Once Maiar is set up, go into the connection part of the maiar.exchange website, select “wallet connect”, open the Maiar wallet and scan the QR code that appeared on the screen.

For the web wallet just select “Elrond wallet” which will redirect you to the wallet.elrond.com website where you can log in with your credentials.

Please note that individual labels, buttons and navigation elements may still change after the end of the test phase and before the official launch of the Maiar Exchange. As soon as the platform is live, we will offer a screencast that will guide you step by step through the range of functions.

The Maiar test phase has begun

On August 12, 2021, Elrond released a test version of the Maiar Exchange and made it available to the Elrond community for validation. If you would like to participate in the ongoing testing process, we recommend the following article: https://elrond.com/blog/maiar-dex-public-test/

Maiar Exchange MEX Elrond

Image gallery: screenshots of the Maiar Exchange test environment

Conclusion

As a novel decentralized exchange, Maiar Exchange is technically based on the robust Elrond blockchain. Compared to centralized exchanges and direct competitors, this makes it not only faster, but also much more user-friendly. With built-in AMM mechanisms, Maiar Exchange offers a high level of security. The ability to connect to the Maiar wallet, attractive incentives through the MEX governance token, and a strong focus on user experience make Maiar Exchange a hot contender for a leading DEX platform.

Related links

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Comments (1)

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