The purpose of this protocol is to reduce middlemen and bring faster and easier transfer of assets across chains.
Running in a world of gazillion blockchains and interesting protocols and projects is an enduring problem. The need for interoperability leads to many practical issues, one of which comes to token liquidity and crypto exchange between blockchains.
Bridges are fragile
Moving tokens from one blockchain to another has become an important part of the DeFi industry. This allows users to use these tokens on different chains than their own ecosystem. However, most blockchains are closed systems and thus not directly compatible with each other. The problem can be compared to using a European power plug in the US – it doesn’t fit. At least, not without an adapter.
Within DeFi, these adapters – called bridges – can be found everywhere. With bridges, users lock tokens on one blockchain so that their closed versions can be unlocked on another chain. These enclosed tokens can be used in any DApp on that blockchain.
One caveat of this approach is that bridges are an important attack vector. Hackers can exploit a vulnerability and either steal all locked tokens or create a large amount of locked tokens. Hackers were able to steal 120,000 wrapped Ether worth $321 million. This vulnerability also applies to other centralized platforms.
Bridges can be considered a kind of intermediary in the crypto space. Without them, users cannot use BTC in Ethereum-based DApps. However, as hacks in the past have shown, bridges create a significant vulnerability surface for the crypto ecosystem. Fortunately, some projects are working hard to solve this problem and reduce the risks of exchanging tokens between chains.
Native swapping and a fair initialization
One of the projects dealing with this is the Maya Protocol, a decentralized liquidity protocol. Its goal is to enable unmonitored and efficient native swaps on the blockchain. In simple terms, this translates into a protocol that transfers underlying assets to its users without the need to lock liquidity into a third-party platform, such as Bridge or closed tokens like WETH. For example, a BTC holder can easily convert these tokens into ETH without folding through Maya and transferring through bridges.
Some of the innovations built into the project include liquidity nodes and integrated chains for greater efficiency, including names like Dash, Gujira, Osmosis, and potentially Cardano. Liquidity Nodes allow operators to not only support the network but also benefit from double capital efficiency as their assets participate in the liquidity pool.
March 7 marks the start of the fair launch of the project, while also starting the liquidity auction. Investors and supporters of the protocol can then participate in liquidity auctions with native BTC, ETH (including USDC and USDT) and RUNE. According to developers, the benefits of a fair startup approach include better transparency, a permissionless approach to participation, and less volatility. What’s more, with fair releases, all investors have access to the network and its underlying token at the same time, meaning there are no pre-emptive investors or groups ahead of retail users.
No intermediaries required
In an ideal world, middlemen would no longer be needed. This is one of the main reasons why Bitcoin was invented and created by Satoshi Nakamoto
. They wanted to make it possible to transfer value without requiring a bank or payer to serve as an intermediary. With the help of a blockchain, Nakamoto made the digital transfer of value as straightforward as putting a $1 bill directly into someone else’s hand.
The goal of eliminating middlemen is also an important part of DeFi. All kinds of applications can be found in this field, where middlemen usually play a role. Borrowing tokens on the blockchain, for example, require at least one intermediary to bring borrower and lender together in traditional finance.
In the busy DeFi industry, new implementations and solutions are essential for successful end products. The crypto industry is evolving with innovative and high-tech approaches to enable decentralized and more human capital. The Maya Protocol is intended to address current disruptions in the blockchain and crypto sectors.