Building a Capital-Efficient Market for swETH: A Twitter Space with Maverick
Liquid staking, AMMs, and swETH capital efficiency with Maverick's Chief Builder Bob Baxley.
May 12, 2023
To celebrate the launch of Swell’s new boosted swETH-ETH pool on Maverick, we were joined by Chief Builder Bob Baxley to discuss liquid staking, AMMs, and building the most capital-efficient market for swETH.
In case you missed it, here are the top questions from the event:
1. What is your take on the future of LSTs and AMMs?
As the Ethereum and liquid staking industry continues to grow, we are beginning to see a lot of innovation in the space with liquid staking tokens (LSTs) becoming representative of a yield-bearing version of ETH. As more users adopt LSTs, we will begin to see LSTs, with swETH being one of them, replacing ETH as the value-holding asset.
In time, we will see fewer pairs, and less volume and activity in ETH, and more of it in LSTs. Instead of vaults paired with ETH, we will see vaults paired with swETH, and that is how swETH will gain more momentum in DeFi.
2. What is your view on LST:LST pairs and LST:LST:LST pair pools?
LST:LST paired pools add a whole new dimension to stable pairs. Each part of the pool is yielding so your yields are not impacted by splitting the liquidity with ETH.
When comparing LST:LST pools to LST:ETH pools, you might have different appreciation rates which, depending on the liquid staking token, can cause price divergence. The dynamic of needing a movement mode on these pools still applies but you will see less price movement with LST:LST pairs.
3. Why should you opt for a boosted pool on Maverick?
Maverick pools allow users to LP any liquidity distribution they want.
For example, you could create your own custom distribution by moving the bars around in the pool, or opt for a ranged distribution where each price tick has the same amount of liquidity. The former is often most convenient for LPs that want to stake.
Protocols can create a boosted pool position, also known as a "boosted position", to encourage LPs to stake a specific distribution. This is incentivized with additional token rewards that will be distributed among LPs in that Boosted Position.
4. What is the reason behind Maverick having decent natural yield for LP positions?
Most of the trade flow through Maverick pools comes from trade aggregators.
This is partly because the liquidity is concentrated and partly because the gas is low, and having these swaps is what drives the fee. The combination of gas fees and concentrated liquidity gets swapped into the pool and that is where the yield comes from. The ability to move liquidity dynamically in these pools allows LPs to follow the price in a concentrated way – which other AMMs typically don’t.
5. Where can users go to learn about Maverick pools and how to set them up?