Maximizer Docs

Benefits for partner protocols

Maximizer mission and vision are rooted in making the Avalanche ecosystem better, fostering growth and innovation. As such, there are several issues that Maximizer is aiming to fix for new projects.

Liquidity incentivization, or the DeFi's rent-seeking problem

Every project needs liquidity for their token to be tradable. Low liquidity will result in high volatility, and the token price could easily be manipulated by ill intended actors. But acquiring liquidity isn't easy an easy task, and usually comes at a great cost for the project itself.

Incentivization, usually through isseing a token as reward, is needed in order to attract users and get them to provide liquidity. This usually results in a heavy sell pressure on said token, as people who do not care about the future of the project just relentlessly dump it. Another issue with this system, is what can be referred to as mercenary liquidity. Incentivization through the issuing of a token is an effective way to attract liquidity, but not to retain it. As those incentive dry up over time (due to their unsustainable nature), so does the liquidity they managed to acquire at first, as providing liquidity becomes less and less attractive for the user.

This leaves projects with a terrible price action, low liquidity, which is hard on both teams and communities, putting a brake on growth and innovation.

How does Maximizer aims to fixย this?

Maximizer provides stability in the form of POL (Protocol Owned Liquidity) that won't be sold, in exchange for an allocation in that project's IDO. The project that IDOs benefits from this Startup Boost in several different ways :

  • Provides a project with a baseline level of protocol owned liquidity and ongoing advice on LP structure, emissions, and liquidity targets

  • Reduces sell pressure early in the project's lifecycle

  • Provides long term protection against sell pressure as the project tokens are deposited into Maximizer's no-sell auto-compounding vaults where they will continue to generate additional yield

  • Gains a long term and committed partner in Maximizer, focused on the success of the entire Avalanche ecosystem

Selling Pressure