THORChain has been our inspiration from the beginning, find out the steps we have taken and the ways in which we differentiate.
As a THORChain investor, user, bonder or liquidity provider, the news of our fork of THORChain might catch you off-guard.
How could this affect the protocol you have vested time and interest into? This article aims to explain why Maya is a friendly fork of THORChain, and how its success will ultimately benefit THORChain protocol, its security, its user-friendliness, and its user base.
Remember when you were first Rune-pilled? Was it @RuneRanger or @THORBull on Twitter? Chad Barraford or Erik Voorhees in a Twitter Spaces session? Was it the LP University? @Danku_r or another ‘Runatic’?... Chances are that you fondly remember the exact moment that THORChain started making sense to you.
And now here we are, inviting you to come down the Mayan rabbit hole, let’s Cacao-pill you!
The impressive feat of first designing and building a technically viable, completely decentralized, permissionless exchange is credited to THORChain and its relentless team of developers. Maya Protocol is an effort to create a backup system, an alternative to $RUNE and to THORChain that complements and strengthens the ecosystem, for reasons detailed at length in our Whitepaper and summarized below.
If you are like us, you have listened to Chad Barraford or Erik Voorhees giving their vision of how the exchange industry will look like in the years to come, you also probably believe that Cross-Chain Decentralized Liquidity Protocols will serve as the backend to most of the volume moving across wallets, central exchanges, protocols and crypto businesses.
It is very important to have a backup to any such system in case any problem could affect it and to prevent critical failure across the market. Think of somebody carrying a Visa and a Mastercard, both networks generate loads of transaction volume when people use their debit or credit cards to pay for goods and services but, if for any reason the Visa network would temporarily fail, said person could still use their Mastercard instead. There is a similar duality between THORChain and Maya.
THORChain cannot grow fast enough to capture all the addressable market and this is not a lack of trust in THORChain’s ability to grow, rather a statement that stems from the understanding of the protocol.
Both THORChain and Maya have some sort of a virtuous cycle that cannot be artificially accelerated: the growth of their security and the growth of their liquidity. Because one cannot grow without the other, a constant “chicken and egg” problem is created. Security scales as more nodes join, bonding bigger amounts of $RUNE - or $CACAO, in our case - but if the bonds grow too much then the protocol becomes very capital inefficient.
On the other side, if too much liquidity is provided relative to the bonded capital, then the system becomes riskier. This process is continuously being optimized by preprogrammed economic incentives, but it takes time to do so. We believe there is more demand for liquidity in the market and more people willing to provide it than what THORChain can currently capture.
Even though THORChain continuously increases its capacity, they will eventually hit the Transactions Per Second (TPS) limit, which is probably around 100 - 500 t/s. At that point, swappers will either start clogging the network or will need to rely on another protocol, enter Maya Protocol. We want to be ready, up and running when the time comes, to avoid the negative effects experienced by other chains whenever they hit a congested state.
There are still naysayers of what THORChain has created and achieved. Once more protocols, like Maya, enter the picture and continue with the mission that THORChain set out, we will provide validation to the market and increase the confidence in this product and model.
The mission is clear: for Decentralized Exchanges to manage more liquidity than Centralized ones. Former smart contract DEXs do not have what it takes, we need a new generation of cross-chain Layer Zero DEXs that actually and definitively handle the majority of the market’s transaction volume in an efficient, simple, quick and instantly-final way.
THORChain and Maya are not rivals, quite the opposite. Our real competition comes from CEXs and traditional DEXs. Any user that we bring from those alleys is a net positive for both, THORChain and Maya. In other words, this is a game of adoption, and Maya will help drive the adoption forward!
Any user that comes from a CEX to Maya and then switches to THORChain for any given reason will still make us very happy. We believe that increases in THORChain’s market share will help Maya Protocol, and that the reverse will also hold true!
The Total Addressable Market is huge and, although there might be commonality with some of THORChain’s users, especially hardcore yield seekers, Maya will be focused more into LATAM and into much less technically oriented audiences.
Maya’s emphasis is geared towards DeFi education, even using marketing channels like TikTok and Instagram, to inform a segment of crypto users that has not been addressed by THORChain —or anybody else— yet.
We believe big institutional liquidity investors and swappers will take advantage of the compatibility between both protocols and that the same will be true for wallets, exchanges, and other platforms. Having code compatibility —due to the forked nature of Maya— will lead to easy implementation for bigger players that cannot rely on only one option. We believe most end users will eventually use THORChain and Maya interchangeably and unknowingly, kind of how we can use VISA and MasterCard with the same user experience.
Simply put, today THORChain is dancing in an empty room. The arbitrage opportunities are constantly big since they have to be carried out against centralized exchanges and order books. This in turn creates more impermanent loss on THORChain’s books, which although insured through ILP, still have a negative effect on the protocol’s economy.
Having a partner with whom to dance will create tighter arbitrage, distributed amongst both protocols and creating a smaller percentage of economic capture. We believe eventually an ecosystem of Thorlikes will exist that will dictate the actual prices of assets in a decentralized fashion. This would further drive down arbitrage value capture as a percentage of Total Value Locked in the protocols, protecting the liquidity capital of both Maya and THORChain. The objective is to create a network of Layer Zero’s like Maya, THORChain and others who become price leaders over CEXs since at that point, impermanent losses would be negligible.
Some users look for new features and opportunities, others look for reliability and dependability. The first group will probably not choose Maya over THORChain since we will always lag behind them in updates and versions, making sure their implemented upgrades have been battle-tested first. These users will be using THORChain to take advantage of its exciting opportunities and rapid pace, but there will always be room for both groups.
Our community will grow in parallel to THORChain’s and in turn bring more developers to both networks. Our teams and driving forces can help increase the rate of improvement of the THORChain ecosystem through both cooperation and healthy competition.
Think of how Polkadot and Kusama complement each other. Maya can be the canary in the coalmine for certain economic model changes, case in Point:
These are three innovations in our protocol that will be closely observed and that will serve in THORChain if they prove to be viable and useful for their economic models.
By the way let’s have a glimpse at two of these innovations:
An airdrop with no minimum entry ticket, no previous whitelist, no special allocation for larger investors and a time range which is wide and pre-announced? Yes ser.
Maya will be a decentralized protocol, completely owned by its community from the get-go, while bootstrapping the largest amount of external asset liquidity possible to secure the sustainable future of our protocol.
The internal team’s efforts will be rewarded only with a reasonable cut of the protocol fees, via the $MAYA token. You can read more about the Liquidity auction here. You can read more about the $MAYA token here.
Nodes in our protocol need to buy and bond a big amount of $CACAO for the exact same security reasons as $RUNE in THORChain. But instead of sitting idly, bonded $CACAO in Maya is deposited inside our Liquidity Pools! Any $CACAO bonded by our node operators participates in the fees generated by the pools in which they are deposited, making our use of capital much more efficient!
We invite you to read about the Polkadot and Kusama duality in the following resources:
https://wiki.polkadot.network/docs/learn-kusama-vs-polkadot
https://polkadot.network/blog/kusama-network-the-canary-network/
While not exactly the same approach as THORChain and Maya, what we are trying to convey is that in the cutthroat-competitive landscape of crypto, collaboration and synergies are a net positive for blockchains, technology, teams, and users.
Thorchads, until here our sermon of the day. We hope you can see the launch of Maya as yet another milestone, reflecting the coming of age of THORChain and we definitely hope to have all of you onboard for our Liquidity Auction launch!
Onwards!
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