What is Elixir, which is invested by Arthur Hayes? How to interact?

Author: Nianqing, ChainCatcher Editor: Marco, ChainCatcher

Recently, the modular DPoS network Elixir announced the completion of an $8 million Series B financing round, led by Mysten Labs and Maelstrom Capital, operated by Arthur Hayes' family office, with participation from Manifold, Arthur Hayes, Amber Group, GSR, Flowdesk, and others.

According to the RootData page, Elixir was established in 2022 as a liquidity network for modular DPoS, allowing anyone to provide liquidity directly to the order book, bringing liquidity to long-tail crypto assets and enabling exchanges and protocols to guide their ledger liquidity. Elixir completed a $2.1 million seed round in January last year and a $7.5 million Series A round in October, with investors including well-known institutions such as Hack VC, NGC Ventures, and FalconX.

Aside from the frequent financing news, Elixir has been relatively low-key in the Chinese community, with limited attention. One main reason is that, unlike order book DEXs like dYdX and Vertex, Elixir is a network and infrastructure that provides liquidity for these DEX projects, and the previous two versions of the testnet had few scenarios for direct user interaction.

However, in addition to disclosing the new round of financing, Elixir recently announced the launch of a new product called Apothecary. Apothecary is a new points tracking system that allows users to earn points (potions) or rewards by depositing assets and bringing in new users, helping them track their contributions to the network before 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, with these institutions and hedge funds optimizing liquidity for exchanges through advanced trading strategies and algorithms. However, entrusting funds to centralized institutions carries certain risks. Therefore, DeFi has been exploring decentralized order book models, which enable traders to trade directly with each other, relying on mathematical models and liquidity pools to facilitate token pair trading.

The ideal scenario is that the order book can improve the current issues of low capital efficiency and high slippage in AMMs while ensuring trading flexibility and asset decentralization. In practice, order book DEXs are more suitable for markets with a large number of tokens, such as Bitcoin and Ethereum, but face issues of excessive price differences and inability to execute trades in some illiquid markets and long-tail assets with insufficient supply and demand depth.

According to the official website, Elixir aims to allow anyone to provide liquidity directly to the order book, bringing liquidity to long-tail crypto assets. How is this vision achieved? The Elixir network opens trading pairs to retail users (including institutions and market makers) and subsidizes APY, naturally attracting more users to provide liquidity directly to the order book through the network. Elixir can be cross-chain integrated with other projects, allowing order book DEXs to incorporate Elixir into their core infrastructure.

On one hand, order book DEXs can share the liquidity brought by Elixir as infrastructure, enhancing the trading experience; on the other hand, it is challenging for ordinary users to provide liquidity on order book DEXs, as they can only place orders manually. Users can automatically place high-frequency buy and sell orders through Elixir, earning liquidity fees. This way, using order book DEXs becomes as convenient for users as AMMs in providing liquidity.

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

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

In terms of ecosystem, the Elixir ecosystem has integrated with over 30 DEXs. Since the order book model requires cheap and high-frequency trading, it has high throughput demands on the blockchain. These projects are mostly exchanges within high-throughput and low gas fee L1 and L2 networks such as Sui, Sei, Starknet, Arbitrum, Blast, and Injective, including Vertex, RabbitX, NFTPerp, Orderly Network, and dYdX.

Currently, the Elixir network plans to issue the ELX token, but the token economic model has not yet been disclosed. It is reported that ELX has two main uses: one is for staking by nodes and validators to ensure network security, and the other is to serve as a community governance token.

What interactions can users engage in?

Elixir was established in 2022 and has launched two versions of the testnet, with the v3 testnet about to start, which is the last testnet before the mainnet launch in August. Currently, users can interact by running nodes, earning points, and providing liquidity to DEXs integrated with Elixir.

1. Running Nodes/Validators

Currently, Elixir has 13,563 nodes globally, and users can earn rewards by running nodes. However, the official application for nodes on testnet v2 has been suspended in preparation for the release of v3. Users can apply to run nodes after v3 goes live.

Related link: https://docs.elixir.xyz/running-an-elixir-validator

2. Apothecary: Earn Points

Elixir launched the new product Apothecary on March 12, which is actually a relatively systematic points tracking tool that can track users' contributions to the network, integrations, minting elxETH, and bringing in new users. Additionally, running nodes and trading on exchanges integrated with Elixir can also earn points (potions).

As shown in the figure, users can deposit at least $100 worth of ETH to mint elxETH to unlock a mystery box. elxETH is a native yield token supported at a 1:1 ratio with ETH, which will become the full-chain LP token after the mainnet launch, powering the liquidity of the exchange's order book. The deposited assets will be locked by the protocol and provide liquidity for products and DEXs supported by Elixir. After the mainnet launch on August 15, users will be able to withdraw and unlock the box to obtain rewards. If they choose not to withdraw, the assets will automatically earn rewards from the exchange.

The amount of assets determines the number of points, and inviting new users to deposit assets can also earn points.

Related link: https://www.elixir.xyz/apothecary

3. Providing Liquidity for DEX Products Integrated with Elixir

Users can also earn points by depositing assets worth over $100 on exchanges within the Elixir ecosystem. However, compared to this, minting elxETH on the mainnet can earn an additional 50% in points.

Elixir currently supports over 50% of the order book liquidity on Bluefin, over 20% on Vertex, and over 40% on RabbitX. Additionally, more than 30 other native integrations are set to launch, including dYdX, Hyperliquid, and Orderly.

Related link: https://agg.elixir.xyz/