Understanding Maya's Economic Model
• Like a traditional company, Maya needs a capital reserve and income sources to operate sustainably.
• Maya's source of revenue is the fees it charges for trades that are executed on the network.
• Maya's "System Income" (SI) comprises the total revenues generated within the Maya ecosystem, primarily derived from fees such as transfer fees and outbound fees.
In a similar fashion to a traditional company, Maya needs a capital reserve and income sources to operate and work sustainably. In this context, Maya’s “System Income” (SI) refers to the total revenues generated by all the activity in the Maya ecosystem such as transfer fees and outbound fees.
Although Maya's economic model will probably evolve over time and there may be additional or modified mechanisms related to the System Income - particularly whenever the Aztec Chain is launched - today SI in Maya is primarily derived from fees.
By now we know that every time users make a trade using Maya a fee is deducted from their transactions. However, it is important to note that the total costs for a swap can actually be broken down into smaller fees, which have different purposes, like adequately paying for network resources, disincentivizing pool imbalances (through slippage), paying LPs for their capital, and more.
This is the reason why swap fees vary for every trade and why it is always necessary to quote or preview the swap details when trading in Maya. The base fee can be set to start at a certain amount but then it can change depending on the depth of the liquidity pools and the size of the swap.
Any amounts deducted from a swap transaction are affected by the protocol’s Liquidity Fee and Outbound Fee, but they can also involve an Affiliate Fee. It is recommended to refer to the latest Maya documentation for the most up-to-date information on fees.
The System Reserve (or Protocol Reserve) is a treasury of sorts that collects and holds the Maya System Income and that is controlled jointly by the Maya Nodes. It serves mainly for the following purposes:
1. Impermanent Loss Protection (ILP) Fund: The System Reserve contributes to the ILP mechanism that compensates liquidity providers who experience impermanent loss. This is a feature designed to attract and retain liquidity providers by reducing one of the key risks associated with participating in AMM platforms.
2. Future Development / Operational Expenses / Insurance. Because the Maya Nodes share the responsibility of managing the System Reserve, they can also vote and agree on using it to fund future developments in the Maya network, use it as insurance to offset potential losses in case of bugs or attacks or even cover unexpected operational costs and unforeseen expenses.
Overall, the System Income is an important part of the Maya design since it implicitly rewards stakeholders and supports the protocol's growth. Our roadmap also considers that more diversified income sources will benefit the protocol in the long run. To learn more about this and other concepts of the Maya Economic Model, please join our official Discord Server, where you can connect with our growing community, and ask us any questions you might have. See you there!
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