Crypto market making protocol Elixir has closed a seed fundraising spherical, elevating a complete of $2.1m from an assortment of institutional funds and buyers, with a objective of reimagining market making and bringing higher liquidity, equity, and transparency to the trade.
Market making is likely one of the most necessary industries throughout the cryptocurrency panorama, with companies comprising the overwhelming majority of the liquidity and quantity that allows the market to commerce effectively on a 24/7 foundation.
Market Making and Its Function within the Crypto Market
There exist two kinds of market making throughout the trade: liquidity-for-hire and high-frequency buying and selling (HFT). Whereas HFT companies generate yield by means of the usage of proprietary algorithms and superior methods, producing delta-neutral returns on micro-spread for liquid belongings, liquidity-for-hire market making fashions require token initiatives to pay giant percentages of their provide to companies in change for fundamental liquidity provisioning on their centralized change (CEX) pairs. That is the present trade normal for the way DApps and protocols entry liquidity on pairs.
In lots of instances, this mannequin outcomes out there maker receiving 2-5%+ of a challenge’s whole token provide in change for a 12 to 18 month contract. That is broadly considered by founders as a mandatory evil.
Moreover, nearly all centralized exchanges have stringent necessities for lively market making for initiatives to realize and preserve listings.
Elixir Raises $2.1m, Aiming to Repair a Predatory Market Making Panorama
At this time, Elixir introduced that it raised $2.1m in a seed spherical with participation from names resembling Commonwealth, FalconX, Arthur Hayes, Avalanche
By way of a trustless, decentralized protocol, Elixir transforms market making, enabling everybody to take part in lively market making on centralized and decentralized exchanges. The protocol aligns incentives for initiatives and brings full transparency to market making.
Through Elixir, token initiatives can now achieve market making for his or her change pairs superior to what centralized companies would offer, whereas saving 99%+ on their prices. Initiatives may see precisely how their liquidity is being provisioned, unlocking full transparency for all actors.
As well as, income historically captured by market making companies are paid out to the token’s group. Neighborhood members can take part individually and earn sponsored returns within the type of token rewards.
Elixir is a totally composable protocol, enabling it to additionally goal DeFi change pairs, actively provisioning focused liquidity on concentrated liquidity AMMs and central restrict orderbook DEXs. Elixir permits for venues and initiatives to incentivize lively market making, and offers retail DeFi customers with a single venue to simply make markets throughout DEXs and CEXs. Lastly, exchanges themselves can straight combine Elixir to allow retail participation in lively, algorithmic market making.
For the reason that protocol is decentralized and open supply, it additionally offers initiatives and token buyers with a lot higher transparency and insights into how liquidity is being deployed – a stark distinction to the historically “black field” nature of market making.
Whereas talking concerning the fundraise, Elixir founder Philip Forte expressed the potential for the protocol to combine as core infrastructure throughout the crypto ecosystem:
“Elixir is actively working with prime exchanges and initiatives to assist present extra environment friendly and clear liquidity to central restrict order books. Initiatives will now not be pressured into paying predatory charges for essential companies, with Elixir serving to construct everlasting and predictable liquidity bases for change pairs.”
Forte added that Elixir’s advantages don’t finish at centralized change pairs, however can even profit on-chain pairs.
“After getting a decentralized protocol enabling initiatives to incentivize algorithmic liquidity provisioning on CEXs, you’ll be able to apply the identical infrastructure to on-chain orderbooks and AMM bonding curves. We’ve introduced and are actively engaged on a number of integrations with notable decentralized exchanges.”
As talked about above, the challenge has additionally introduced some notable partnerships, together with a backend, native integration into Perpetual Protocol to supply lively, algorithmic market making on the platform’s a number of perpetual swap pairs – highlighting a DeFi use case for the service.
Different slated integrations listed on the protocol’s web site embody DyDx, Injective Labs, SudoSwap, Perennial, and Magpie.
Attributable to its trustless, off-chain infrastructure, Elixir helps each on-chain orderbooks, in addition to concentrated liquidity AMMs (that are extremely just like conventional central restrict order books) cross-chain.
With intentions of accelerating the efficacy of liquidity deployment on each centralized and decentralized exchanges, Elixir goals to disrupt crypto’s market making panorama.