M - AYA - Decentralized Lending Protocol Whitepaper V0.1 Q3 2020 Decentralized Lending & Collateralization Platform ____________________________________________________________ 1 “ Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver. ” – Ayn Rand ______________________________________________________________________________________________ M A Y A Protocol WhitePaper v0.1 Decentralized Lending & Collateralization Platform ____________________________________________________________ 2 ~~~ Introduction ~~~ Economic History From simple trade to the highly complex crediting systems, financial services have been a fundamental cornerstone of human interactions for as long as history shows. Throughout human existence, financial services have taken on radically new meanings as to what finances are and what role they play in society. The overarching purpose of financial services has always been straight forward, to empower individuals with the capabilities to sustain healthy living and ultimately lead a life of freedom. However, as capitalism began to swallow the economy and globalization of financial technologies permeated human life, questions of morality came to light. The year is 2008, the world economy has just experienced one of the most catastrophic systemic failures in history. Unable to sustain the complex and delicate inefficiencies of traditional economic/financial models, the once accommodating financial services sector imploded. Not only have traditional financial services been proven to be inadequate in terms of sustainability, they have also been found to be exclusionary. Participation in quality financial environments has become a matter of luck. Political issues have forced the establishment of siloed ecosystems that deny individuals the right to participate. Crypto & DEFI Circa late 2008, early 2009, a solution to the woes of traditional finance arrives seemingly out of nowhere. That solution arrives in the form of cryptocurrency, namely Bitcoin. With the introduction of Cryptocurrency into the world economy people began to rehypothecate value and finance as a whole. Cryptocurrency returned control over money back to the public. As crypto began to capture and restructure the world economic policies, people began to realize that in order for this nascent digital experiment to work the proper infrastructure must be built; decentralized financial infrastructure. This was the birth of DEFI. Decentralized Finance became the sector responsible for reproducing traditional service solutions ranging from savings products (like bank accounts) to liquidity aggregators (platforms for trading) to payment systems (recurrent payments & processing). Broadening what is possible in the crypto industry quickly attracted billions of dollars to the space. Of all the solutions nothing brought about as much an impact as did the concept of lending. Decentralized Lending protocols leveraged the markets illiquidity and repurposed the allocation of assets. ______________________________________________________________________________________________ M A Y A Protocol WhitePaper v0.1 Decentralized Lending & Collateralization Platform ____________________________________________________________ 3 ~~~ Overview ~~~ At a high level, MAYA is a cross platform lending protocol that originated as a countermeasure to the risks and shortcomings of existing DEFI & crypto fin-service projects. After intimately studying the landscape of Decentralized Finances, critical systemic issues were identified. Based on the understanding of sovereign finance and open market dynamics, the function of financial services was being inadequately addressed; that area is lending and at its core lies liquidity. DEFI lending solutions have been coming to market presenting complex peer-to-peer models that inherit uncertainties. While they have certainly propelled the industry forward, the models applied are not sustainable. Lending is typically seen as a high risk, high nuance service model that is subject to centralized biases. The systems that underpin lending involve redistribution structures for the assets being lent. The MAYA protocol operates under a pooled asset model , rather than forcing (p2p) entity-to-entity contracts, MAYA introduces contracts between entities and the protocol. By opting for such a model, higher levels of certainty regarding capital flow are achieved. MAYA goes on to address an issue in the current crypto lending landscape, that is the issue of collateralization. In order for lending to be feasible in the cryptocurrency & digital asset industry (from the standpoint of risk) loans must be collateralized. What does cryptocurrency get collateralized with? More cryptocurrency. Certainly the benefits of added exposure make sense, however those benefits keep out an enormous portion of the market that does not have enough crypto to participate. MAYA proposes the implementation of alternative collateral methods; for crypto this means Non-fungible Tokens. Through means of NFT collateralization, both industries stand to benefit; Crypto-lending becomes more robust and available while the NFT markets extend their capabilities beyond the closed applications they are currently bound to. ______________________________________________________________________________________________ M A Y A Protocol WhitePaper v0.1 Decentralized Lending & Collateralization Platform ____________________________________________________________ 4 Figure 1 - Decentralized Lending Models The theory of Liquidty - Liquidity begets liquidity Liquidity is a cornerstone of global finance. Liquidity, at its most bare, is the availability to enter and exit out of a position. The ease with which one can sell their holding while incurring no slippage in price. However, creating and maintaining liquidity is no simple endeavor. Whenever trades take place, there are more than one party involved, a selling side and a buying side. So whenever a transaction occurs both sides are included. Liquidity is a reflexive element; where there is liquidity then more liquidity will be attracted to it, where there is no liquidity then it will likely never arrive. If assets are illiquid, that means that there are very few stakeholders involved and those which are involved, offer price points with large discrepancies (huge premiums); this premium is known as a liquidity premium. This creates an environment in which people are disincentivized from participating in that market; due to fear of capital loss or permanence. On the other hand, if a market is liquid then it will attract more participants due to the feelings of certainty in exiting. ______________________________________________________________________________________________ M A Y A Protocol WhitePaper v0.1 Decentralized Lending & Collateralization Platform ____________________________________________________________ 5 The MAYA protocol has based its lending protocol in order to accommodate liquidity in the crypto markets. Typically liquidity protocols operate under a simple lending-borrowing schema; this schema is net positive for the industry. However, it does not address the entirety of the liquidity problem. Whenever assets are locked up in contracts between two parties they become illiquid and that illiquidity translates to open market illiquidity which then drives away the masses with instability. This is where the theory in longevity and market positioning of the MAYA protocol is derived from; by providing a more fluid ecosystem the economic bandwidth of the industry increases, in turn allowing it to sustain a greater audience as well as increase market opportunities for new entrants. Progressive Decentralization The governance model of progressive decentralization has been implemented in order to manage the counterparty risks involved with malicious takeover & breaking of the system at an early stage. Should a project be decentralized too early, malicious actors (competitive projects, hackers, nation states, bounty hunters, etc) would attempt a takeover and defeat the long term vision of the project. Initially the MAYA protocol will operate under a semi-centralized model; whereby assets that enter the protocol as well as the rates will be set and handled by the developing team. However, as the project matures and certain milestones are achieved, the MAYA platform will undergo a 4 phase process of progressive decentralization. Phase 0 (launch) Phase 1 (Platform Interoperability & Custody) All asset allocation and rates are defined by the MAYA team. As MAYA integrates with existing DEFI solutions protocol rates now become subject to influence from adjacent platforms and community proposals. Asset allocation remains solely defined by the MAYA team. Phase 2 (Chain Agnostic) Phase 3 (MAYA Chain) Deployment of the MAYAVM, the protocol becomes chain & asset agnostic Rates are set by the industry & stakeholders. A degree of rights over asset allocation is delegated to stakeholders. Once the protocol fully transitions to its own chain, all governance parameters will be forfeited to the MAYA stakeholders. ______________________________________________________________________________________________ M A Y A Protocol WhitePaper v0.1 Decentralized Lending & Collateralization Platform ____________________________________________________________ 6 ~ Key Values ~ 1. Liquidity As mentioned above (in the section on liquidity), liquidity plays an inseparable role from a global monetary ecosystem. Providing more liquidity directly translates to healthier and more sustainable market conditions. MAYA addresses the needs not only of user but of the industry as a whole by increasing the metaphoric bandwidth of the crypto economy. 2. Borderlessness & Global Inclusion Traditional financial systems operate under a geolocational lottery premise, people are either born into good financial environments or they are excluded from them. DEFI ( and the greater crypto industry as a whole) is the catalyst which removes the borders that keep people out and provides equal opportunity to all. MAYA works to circumvent traditional systems and promote an interoperable world. 3. Non-Custodial As the old crypto adage goes to claim “Not your Keys, Not your Coins”. MAYA abides under the same premise; The protocol will never have 3rd party involvement in the custodying of assets; users retain ownership over their assets before, during, and after contracts expire. ~ Applications~ The MAYA protocols lending service is applicable across a wide range of use cases and audiences. Below we identified the four most exciting and impactful areas: Exchanges Wallets PMT (Portfolio Management Tools) Gaming Exchanges are the most immediate beneficiary of the increased liquidity provided by lending pools. Extra means to incentivize users to join and stay loyal to their platforms become possible. New products in the form of savings can be provided. Wallets already hold assets in them, why not provide the same service with an option for passive income. Benefits to wallet providers include user appeal, retention, loyalty, and establishing new income streams. Portfolio management tools (PMT) are widespread and tend to offer their userbases very necessary, but very limited functions. By introducing income generating services into their user dashboards, PMT’s maximize their audience loyalty and become appealing options for new users. The most nascent form of applying a lending protocol, but a pressing one nonetheless. Gamers will be able to lend their in-game items (NFT’s) while accruing some financial benefit from the work they put in to obtain those items. ______________________________________________________________________________________________ M A Y A Protocol WhitePaper v0.1 Decentralized Lending & Collateralization Platform ____________________________________________________________ 7 Figure 2 - Simplified MAYA Protocol interaction Operation Flow ______________________________________________________________________________________________ M A Y A Protocol WhitePaper v0.1 Decentralized Lending & Collateralization Platform ____________________________________________________________ 8 ~~~ System Architecture ~~~ The MAYA protocol is composed of 4 core elements that are implemented as a series of intertwined smart contracts: MAYA Gov MAYA Governance TFE Trade Functions Engine The Governance contract The TFE contract(s) MAYA-W MAYA Token & Wrap RMSM Risk Mitigation & System Management The MAYA-Wtoken contract The RSM contract MAYA-Gov (Governance) The key to DEFI systems is fair governance. The MAYA protocol is governed, upgraded, and maintained by stakeholders of the project's native token the MAYA token. Governance is implemented through 3 distinct components: 1) MAYA Token Ownership In order to participate in the governance process a user must have no less than 0.00001% (10 tokens) amount of the total supply of MAYA tokens. Upon committing to a governance act (ex. vote) tokens must be bonded until the act is concluded. 2) Governance Hubs The MAYA protocol will have its community memorandums hosted at digital hubs called Bytes (Forums similar to Decred’s Politeia). 3) Reputation Addresses that express consistency in their involvement will have a weight parameter attributed to them which gives greater influence and flexibility to stakeholders. These 3 components influence aspects of the project including voting, proposal submittance, proposal acceptance, rate model adjustments, asset listing, Data point inclusion for the RMSM, among other technical nuances. ______________________________________________________________________________________________ M A Y A Protocol WhitePaper v0.1 Decentralized Lending & Collateralization Platform ____________________________________________________________ 9 TFE - Trade Functions Engine The Trade Functions Engine is a compilation of single purpose contracts that define any interaction within the MAYA protocol. The engine is composed of 8 constituent functions: Figure 3 - MAYA Trade Function Engine Contract Stack ______________________________________________________________________________________________ M A Y A Protocol WhitePaper v0.1 Decentralized Lending & Collateralization Platform ____________________________________________________________ 10 - open lend Whenever a user decides to participate in the MAYA protocol lending, they must instantiate a workflow of opening a contract. Making the “openlend” call will prompt parameter specifications followed by a prompting call of the Collateralize function. - close lend Whenever a user that is already in a lending contract with the MAYA protocol decides to close their contract, they must instantiate a workflow of closing the contract. Making the “closelend” call will terminate existing agreements and call the redeem function. Immediately after the “collateralize” contract is called. - open borrow Whenever assets that are located in the pool are requested, a smart contract call must be made to “openborrow”. Once called, the requestor will be prompted to specify parameters; then a call to “collateralize” is made. - close borrow The “closeborrow” function is utilized whenever assets that have been borrowed are contractually closed. Following the close borrow call a series of inputs are prompted from the “collateralize” & “redeem” and a termination of the contract begins. - redeem Lent assets accrue residual income (for the incurred risk & provision of assets). The accrued funds are stored separately from the involved assets; and for the premium earned to be distributed it must be prompted through a “redeem” contract call. - liquidate In events of contract violation or maturation, the “liquidate” call must be made in order to convert assets from MAYA-Wtokens into the underlying asset. (for depiction of liquidation activity refer to figure X.x below) ______________________________________________________________________________________________ M A Y A Protocol WhitePaper v0.1 Decentralized Lending & Collateralization Platform ____________________________________________________________ 11 Figure 4 - MAYA Liquidate Function Flow - collateralize Whenever a call to instantiate an “openlend”, “closelend”, openborrow” or “closeborrow ” is requested, they require input from the “collateralize” contract; collateralize is responsible for capturing and releasing all collateral. - allocate The function responsible for all activity related to distribution. Any time assets must be allocated the “allocate call must be made. From lender side (asset expansion) to borrower side (liquidity contraction) to contract closure and interest appropriation. The Allocate function interactions with all other (7) contracts. ______________________________________________________________________________________________ M A Y A Protocol WhitePaper v0.1 Decentralized Lending & Collateralization Platform ____________________________________________________________ 12 MAYA-WToken The MAYA Token environment is based on the interactions of 2 separate token functions; The native digital assets and the token wrapping function MAYAW-tokens, which we discuss here. Whenever assets are deposited into the MAYA protocol they are deposited into smart contract holdings and wrapped. By wrapping assets, the system is able to operate with the throughput of second-layer technologies, allowing for near-instant processing and settlement times. Underlying assets have varied block & settlement times that do not always coincide with one another. Moving them around will leave them susceptible to slippage risk and inadequate processing times (waiting 10 minutes for a BTC block). Wrapped tokens are captured and represented as counter-asset (reflecting and mimicking the underlying asset); in the wrapped environment assets operate within channels. The purpose for this design implementation is to uphold an experimental economic concept known as Superfluidity; the ability to utilize assets to their maximum liquid capacity. Figure 5 - MAYA-Wtoken Wrap concept flow ______________________________________________________________________________________________ M A Y A Protocol WhitePaper v0.1 Decentralized Lending & Collateralization Platform ____________________________________________________________ 13 RMSM - Risk Mitigation & System Management Arguably the most crucial point of the system is the Risk Mitigation and System management contract. Even Though code execution is orders of magnitude more reliable than human execution, there are aspects that code alone cannot cope with; those are the economic uncertainties that may take place at any time (network failure, catastrophic asset depreciation, etc). The RMSM is responsible for smooth system operation and introducing a link between blockchain and real world data; Its functions are covered in three generalizations: Oracles & Data Points Blockchains do not communicate with technology outside of itself; they are state machines that are not aware of external factors. In order to accurately price rates, define contract terms and provide competitive competence the system requires data feeds from outside of the blockchain must be provided. As a means to further the degree of MAYA's decentralization, multiple oracle solutions are implemented to fetch data: 1) An internal smart contract 2) ChainLink (future) 3)Band/NEST. The data points which provide pricing will initially be sourced from Coinbase, Kraken, CoinMarketCap & CoinGecko; as the project develops and integrates across other DEFI platforms; the data feeds on those platforms will be used as reference points as well. LTV Ratio The LTV (Loan-to-Value) ratio is the measure of collateral required to take a loan. Whenever borrowers collateralize their positions they are allotted a certain amount in return based on factors including, but not limited to: the amount of collateral, the type of collateral, their reputation, the state of the market, and so on. Why this plays a vital role in the system is thus: in the event of a positions LTV ratio thinning out the risks of the collateral value dropping below the value of the loan increases. The LTV must always be monitored as it plays a role in the liquidation function of the TFE. At launch the MAYA protocol will support LTV ratio level range between 3%-33%. ______________________________________________________________________________________________ M A Y A Protocol WhitePaper v0.1 Decentralized Lending & Collateralization Platform ____________________________________________________________ 14 Insolvency In the events of premature contract closure or inability to repay the loan, collateral will be deducted & put into a warning escrow account. The escrow account will hold assets for an X period of time before liquidating them on the open market. The account will drain collateral for a period of ~ x Days or until the system balance is stabilized. Should a repayment be made during insolvency (before the system auto-stabilizes) the warning escrow contract will immediately halt and initiate a reversal of funds back to the contract originator. ______________________________________________________________________________________________ M A Y A Protocol WhitePaper v0.1 Decentralized Lending & Collateralization Platform ____________________________________________________________ 15 ~~~ Tokenomics ~~~ As briefly mentioned in the MAYA W-Token section, the MAYA token cryptosystem is built on a dual-token incentives structure; 1) The MAYA governance Token & 2) MC Tokens. The MAYA dual token structure is built leveraging an “activity-mining” incentive scheme. All activity on the network is regarded as mining, this includes, lending, borrowing, collateralizing, keeping positions open, MAYAW-token swapping/ (position adjustments) & staking. For each interaction with the system, users are rewarded a certain amount of MC tokens. The MC tokens can be used for network activity settlements as well as used for conversion into MAYA tokens. (exact conversion rates will depend on protocol demand & the state of the market at the time of conversion). Mining on the MAYA network is capped and once the entire token supply is in circulation the mining will halt and the network will progress through a fee structure paid by users. Figure 6 - MAYA Governance token Distribution ______________________________________________________________________________________________ M A Y A Protocol WhitePaper v0.1 Decentralized Lending & Collateralization Platform ____________________________________________________________ 16 MAYA Governance Token Token Name MAYA Token Token Symbol MAYA Token Supply 100,000,000 Decimals 9 Token Standard ERC-20 Token Class Utility - Governance Platform Ethereum First and foremost comes the MAYA governance tokens. Implemented on the Ethereum blockchain as an ERC-20 token (with plans to transition into its own native chain standard) the token plays four (4) critical roles within the ecosystem. 1) Governance rights 3) Collateral 2) Staking 4) A unit of account == Governance Rights == Introduced on page 8, Governance over a crypto network is the defining aspect of a decentralized project. Without a governance parameter present, a network cannot be a public good & MAYA is a protocol built for the public. Every unit of a MAYA token represents ownership of the MAYA protocol; however governance is segmented according to individual exposure to the MAYA tokens. Bounds are placed around the absolute minimum and absolute maximum influence that a single address exudes on the network in order to create as fair an environment as possible. By introducing an absolute minimum added scarcity incentives whole asset ______________________________________________________________________________________________ M A Y A Protocol WhitePaper v0.1 Decentralized Lending & Collateralization Platform ____________________________________________________________ 17 ownership as well as deters dust accounts from flooding the network. Moreover, with a minimal bound in place, greater levels of certainty regarding demand are achieved; whereas holding below the threshold brings purely economic benefits, holding above it attracts actors with greater levels of commitment and involvement. As for the maximum bounds implementation; without a limitation to influence, single entities can launch long ranged attacks to control the network. Maximum bounds help in deterring saturation from few central powers & level the playing field for protocol entrants. Token accounts that supersede the maximum bound will only be weighted according to the bound, excess tokens simply act as a means for speculation. 10 MAYA 100 MAYA 1,000 MAYA 10,000 MAYA 100,000 MAYA - Proposal Voting - Proposal Voting - Proposal Submittance - Proposal Voting - Proposal Submittance - Asset Listing Recommendation - Data Point suggestion for RMSM - Proposal Voting - Proposal Submittance - Asset Listing Recommendation - Asset Delisting Recommendation - Data Point suggestion for RMSM - Rate Model Adjustment - Proposal Voting - Proposal Submittance - Asset Listing Recommendation - Asset Delisting Recommendation - Data Point suggestion for RMSM - Rate Model Adjustment - Fee Adjustments - Platform Integrations ** Participation is Governance demands Staking Tokens ** ______________________________________________________________________________________________ M A Y A Protocol WhitePaper v0.1 Decentralized Lending & Collateralization Platform ____________________________________________________________ 18 == Staking == Staking on the MAYA protocol is a multi-purpose module; it reflects on the reputation, economic & governance of the MAYA protocol. First, MAYA token holders that want to participate in Governance must stake their tokens on the network. Staking depicts commitment & by staking in order to participate malicious intent is deterred. Should an actor propose or participate in network adjustments that harm the overall wellbeing of MAYA, their stakes will be slashed and proportionately distributed among honest staking nodes. Second, MAYA token holders that stake on the network help secure it. For this, they are compensated in the form of a percentage of transaction fee paid out in MC tokens. Users which stake their tokens remove MAYA from circulation thus making it more scarce, which feeds into open market price discovery and provides a minimum viable bound to the MAYA tokens price. Staking on the MAYA protocol network includes a minimum commitment of 10 tokens. Whenever tokens are being staked they require a 24 hour inclusion period; meaning that once assets are committed to being stakes they are captured by the protocol and cannot be utilized until the 24 hour period has passed. Whenever tokens are being removed from staking, there is a 72 hour un-bonding period that takes place. With time sensitive borders included into both ends of the staking process, token holders risk of capitulation in price is minimized. Finally, staking within the MAYA ecosystem is a direct means by which individual addresses accrue reputation. Staking happens in epochs; every 336 hours the state of the MAYA protocol is updated. During an update all related activity is attributed to addresses. Where reputation is influenced as follows: Staking for 1 epoch - minimal increase in reputation (weight = 3/100) Staking for 3 epochs - minimal increase in reputation (weight = 9/100) Staking for 7 epochs - minimal increase in reputation (weight = 18/100) Staking for 15 epochs - moderate increase in reputation (weight = 33/100) Staking for 26 epochs - maximal increase in reputation (weight = 41/100) ______________________________________________________________________________________________ M A Y A Protocol WhitePaper v0.1 Decentralized Lending & Collateralization Platform ____________________________________________________________ 19 == Collateral == MAYA tokens are treated as any other form of collateral that is processed through the protocol; thus making it a reserve asset. Reserve assets can be used to collateralize loans on the platform and due to the systems interpretation of accountancy in MAYA tokens, whenever assets are lent or borrowed as MAYA they receive a benefit in the form of reduced fees and better rates. Exact benefits will be dependant on the market state at the time of interactions but a high level overview would be as follows: Asset Lending Rate Borrowing Rate ETH 8% 11% BTC 6.2% 9.1% BCH 4% 23% XLM 7% 13% USDT 10% 12% MAYA 14.7% 15.3% == Unit of Account == All activity within the MAYA protocol is denominated in the MAYA token. Regardless of what asset is being utilized through the protocol, the processing is accounted for in MAYA. In the event of a deposit of ETH the protocol will capture the ETH, convert denominations to MAYA at the current market price, and proceed with activity. Upon exiting, the deposited assets undergo the reverse process, Converting through MAYA at the current market prices. This entry & exist mechanism increases network activity and token demand. ______________________________________________________________________________________________ M A Y A Protocol WhitePaper v0.1