Read Elixir in 5 minutes: Why did the modular DPoS network fall into the eyes of Arthur Hayes?

Recently, the modular DPoS network Elixir announced the completion of an $8 million Series B round of financing. Mysten Labs and Maelstrom Capital, run by Arthur Hayes’ family office, jointly led the investment. Manifold, Arthur Hayes, Amber Group, GSR, Flowdesk and others participated in the investment.

According to the RootData page, Elixir was founded in 2022 and is a modular DPoS liquidity network that allows anyone to provide liquidity directly to the order book, bringing liquidity to long-tail crypto assets and allowing Exchanges and protocols guide their ledger liquidity. Elixir completed US$2.1 million in seed round financing and US$7.5 million in Series A financing in January and October last year respectively, with investors including Hack VC, NGC Ventures, FalconX and other well-known institutions.

In addition to the news of repeated financing, Elixir has always been relatively low-key in the Chinese community and has not received much attention. One of the main reasons is that unlike order book DEXs such as dYdX and Vertex, Elixir is for these DEXs. The project provides a liquid network and infrastructure. The two versions of the test network previously launched did not have many direct interaction scenarios with users.

Recently, Elixir announced news of a new round of financing and announced the launch of a new product called Apothecary. Apothecary is a points tracking system where users can earn potions or revenue by depositing assets and promoting new users. This will assist users in tracking their contributions to the network ahead of the mainnet launch on August 15 this year.

What are the highlights of Elixir?

Traditional financial markets have long relied on centralized intermediaries to provide liquidity. These institutions and hedge funds optimize exchange liquidity through their advanced trading strategies and algorithms. However, there are certain risks associated with entrusting funds to centralized institutions. Therefore, the DeFi field has been exploring the decentralized order book model. The so-called order book model means that traders can trade directly with each other, relying on mathematical models and liquidity pools to facilitate the trading of token pairs.

The ideal state is that the order book can not only improve the current problems of low capital efficiency and large slippage of AMM, but also ensure the flexibility of transactions and the decentralization of assets. In fact, order book DEX is more suitable for markets with a large number of tokens such as Bitcoin and Ethereum. However, in some markets with insufficient liquidity and long-tail assets with insufficient depth of supply and demand, the price difference will be too high and transactions cannot be completed. .

According to the official website, Elixir’s goal is to allow anyone to provide liquidity directly to the order book and bring liquidity to long-tail crypto assets. How to realize this idea? The Elixir network opens trading pairs to retail investors (including institutions and market makers) and subsidizes APY. Higher returns will naturally attract more users to provide liquidity directly to the order book through the network. Elixir can be combined with other projects cross-chain, and order book DEXs can integrate Elixir into their core infrastructure.

On the one hand, the order book DEX can share the liquidity brought by Elixir as infrastructure and improve the trading experience; on the other hand, it is difficult for ordinary users to provide liquidity in the order book DEX and can only manually place orders for transactions. Through Elixir, users can automatically place buy and sell orders at high frequencies and earn liquidity fees. In this way, users can provide liquidity more conveniently when using the order book DEX, just like AMM.

From a network architecture perspective, the order book run by Elixir is almost equivalent to the x*y=k curve of Uniswap v2. This curve is used to establish liquidity and narrow the bid-ask spread on the order book, which is similar to the x*y=k curve of Uniswap v2. AMM LP has very similar risks and rewards. The network reaches DPoS consensus on orders placed by exchanges.

Additionally, its infrastructure is similar to Arbitrum’s security model, with evidence of fraud published on the Ethereum mainnet. It is worth mentioning that Elixir also integrates public data from various exchanges (including centralized exchanges) to ensure low-latency updates of transactions, positions and order books and consistency of order books across exchanges.

In terms of ecology, Elixir ecology has been integrated with more than 30 DEXs. Because the order book model requires cheap and high-frequency transactions, it has high requirements on the throughput of the blockchain. Most of these projects are exchanges in L1 and L2 network ecosystems with high throughput and low gas fees, such as Sui, Sei, Starknet, Arbitrum, Blast, Injective, etc., including Vertex, RabbitX, NFTPerp, Orderly Network, dYdX, etc.

Currently, the Elixir network has planned to issue the token ELX, but the token economic model has not yet been announced. According to reports, ELX has two main uses. One is for pledging nodes and validators to ensure network security, and the other is used as a community governance token.

What interactions can users do?

Elixir was founded in 2022. It has already launched two versions of the test network and is about to launch the v3 test network. This is also the last test network before the main network goes online in August. Currently, users can interact by running nodes, earning points, and providing liquidity for DEX integrated with Elixir.

1. Running nodes/validators

Currently, Elixir has 13,563 nodes around the world, and users can obtain rewards by running nodes. However, the official has suspended node applications for testnet v2 and is preparing for the release of v3. Users can apply for running nodes after v3 goes online.

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