We finally get to test the Maiar Exchange – Elrond’s automated market maker (AMM)
Last week Elrond CEO Beniamin Mincu took to Twitter to announce the release of the Maiar Exchange for community testers. This is the first time we (the public) are able to interact with Elrond’s next big release. It gives us a a taste of what it will be like to generate passive income through farming on the Elrond blockchain.
As you can see from the URL (https://devnet.maiar.exchange/), this version of the Maiar Exchange lives on Elrond’s devnet blockchain.
The transactions you perform on this exchange are not using real money, even though you can operate this release with your live Maiar app.
All of this means you can test with test tokens, while your real funds are far removed from the DEX on the mainnet blockchain. If you run out of test tokens, just wait another day to request some more.
Connect with your wallet
- Start by loading up your wallet with xEGLD* here. You can use your Maiar wallet or create a new test wallet.
- Once you have xEGLD, navigate to the devnet Maiar Exchange.
- Sign in with your wallet:
- Web wallet – choose between the different options
- Maiar app – the preferred and faster method. Make sure you have the latest version, and then log in by heading to Profile > Settings > Wallet Connect and scanning the QR code and approve.
- Try the features: swap, create liquidity tokens and stake. Read more below!
*The x is commonly used to indicate ‘testnet’ currency.
Navigating the DEX
Once connected, let’s figure out how we can use the Maiar Exchange to make money and generate passive income.
Observe the links in the navigation bar from left to right: Home, Swap, Liquidity, Farms, Analytics, Account details, Settings and more.
Swap – “Trade tokens in an instant”
Here you can swap the xEGLD you got earlier for other currencies supported by Maiar. This feature is usually the cornerstone of a DEX, as it is used in creating liquidity tokens or converting winning to another currency for easy witdrawal.
My first impression of the Swap interface is very positive. It’s easy to use and very informative. Estimates are generated fast and the flow with Maiar is sweet! I like the notice informing me of the the multiple transactions that will need to be signed by my wallet.
We now see the first three currencies on Maiar. By comparison, Sushiswap or Uniswap have a lot more. It’s a good start of course, and these tokens should provide maximum utility to existing Elrond users. The three currencies are:
EGLD (or xEGLD on devnet) is the native currency of the Elrond network. Hopefully everyone reading this will have used the recent dips to accumulate as much as possible.
MEX is the token powering the Maiar Exchange. It facilitates governance and fee collection for the protocol. MEX will soon be airdropped to all qualifying EGLD holders, based on the amount they had during snapshot weeks.
The Binance version USD stablecoin. This one confused me somewhat, why not USDC which seems to be favoured on other chains?
After choosing your swap pair and initiating a swap you will need to confirm (or sign) the transactions with your wallet. Once you’re done this, the GUI will show you the status of transactions bottom right:
Liquidity – “Add liquidity to receive LP tokens”
This page is all about liquidity provider tokens (LP tokens), which can be created by depositing assets into a pool. The number of LP tokens represent your share of the liquidity pool that the liquidity provider owns. Once created, LP tokens can be transferred, exchanged, and staked.
On this page you can:
- See your liquidity tokens.
- Create more liquidity tokens.
- See the active pools. Seeing which pools are active can inform what token pools are available and their current total liquidity.
The following LP pairs can be created on the Maiar Exchange:
One part EGLD combined with one part MEX. In my opinion the riskiest LP token option, as both EGLD and MEX fluctuate in price. This can lead to impermanent loss and you would have been better off keeping your funds in one token instead of splitting into two. The MEX token is brand new, and we don’t know how it will perform so this is pretty risky.
One part EGLD combined with one part BUSD. Far less risky since one part of the pair is a stable coin, whose value does not change. This means that when you are ready to swap back you will gain (or lose) half the price movement that occurred. It makes sense – with this LP token you are essentially halving the volatility when combined with a stable coin like BUSD. I find this is generally a good option when you are expecting the variable token (in this case EGLD) to lose in value over the time.
Once you’ve created your tokens it’s time to put them to work…
Farms – “Stake Liquidity Pool (LP) tokens or MEX to earn more MEX”
Perhaps the biggest reason why DEX’s are so popular are the crazy interest rates gains achievable.
It’s not uncommon to see high APR’s, that when compounded, result in APY numbers so high they are difficult to pronounce. Compare this to ever shrinking APR’s provided by fiat banks and it becomes easy to see why DeFi is such a threat to “TradFi”.
In addition, most AMM’s have stable coin pools (e.g. USDT-USDC) which may not yield crazy APY, but will still seem very attractive to the risk-averse saver who would usually turn to a bank for this kind of savings verhicle.
As you can see above, the rewards harvested on the Maiar Exchange come in the form of MEX tokens. A note of caution here – this is yet another variable in the profitability equation. We don’t know what the price of this token will do.
Therefore, my strategy on launch will be to stake the entirety of my MEX airdrop into the MEX only pool, to earn (you guessed it) more MEX. I’ll be leaving my EGLD staked as-is for now.
The Maiar Exchange is yet another example of Elrond’s capabilities in the blockchain space. It’s a solid build with some very innovative features.
With 700k+ users in the ecosystem, the Maiar app and campaigns such as the “battle of yields” I have no doubt this exchange will be pushed to its limits when launched. And once these users start making money the word will spread and encourage new users to join the Elrond family.
Total locked value (TLV) is a metric you will be hearing a lot of. At the time of writing SushiSwap has a TLV of over $4 Billion and UniSwap just over $2.5 Billion. By contrast the Maiar Exchange (devnet) is sitting on $38 Million USD. Of course, this is not real money but it serves as a reminder that all of these systems start at Zero. I am willing to bet we will see some dramatic jumps in TLV after the launch.
Elrond often tout the Maiar Exchange as the next step for the Romanian based company and I couldn’t agree more. It will be an uphill battle, and there are lots of competitors, but Elrond have a great setup here with perhaps the best wallet in the game, growing number of partners and a very skilled team. I’m Bullish.
P.S. I am an investor in EGLD and this is not financial advice. DYOR!