DeFi Spaces Alpha -- Week #7
This week, we explore some rare alpha, brought to you by: KTX, Elixir, Mantis, Brickken, and Revest
#1: KTX – the first perps DEX live on Mantle
Intro to KTX
First perps DEX on Mantle, hybrid liquidity pool (KLP) – 50% USDT, 50% BTC/ETH – started after FTX collapse
Why did KTX choose to deploy on Mantle?
Chose to build on Mantle for a couple reasons – developer-readiness is great, meaning it’s easy to build on and has great support – also Mantle foundation has been really helpful with deployment, campaigns, marketing, etc. – also good tech, super fast, low latency, cheap fees, etc.
KTX first deployed on BNB Chain – what will be different on Mantle?
Launched on BNB chain ~3 months ago, but included upgraded upgraded smart contracts for Mantle deployment, specifically including a wrapper for limit orders
New feature: complex orders – can order trade open, stop loss, and take profit orders all in one click
Part of the Mantle Journey program – traders will earn “journey miles” by completing on-chain tasks
Miles can gauge participation/usage of Mantle users, gives protocols an idea of how DeFi-educated their users are, helps direct marketing/airdrops/quests/community building
Which other perps DEXs are planning to launch on Mantle?
Several in the next month or so – KTX, ApeX (CLOB-based perps), LockX(?), EasyX, FusionX – will be interesting to see the variety of assets offered
Will KTX target a certain area of the market?
Perps DEX space is huge, not winner-take-all market – lots of them compete on the same 3 factors – fees/yield, asset listings, UI/UX
KTX incorporates dynamic fees – scales open/close fees based on (open interest/AUM) also known as utilization rate – also, fees from traders is paid out in WETH
KTX will offer BTC and ETH to start, also will probably be the first to list MNT trading
UI/UX will be a step ahead of competition because of the complex orders function
What’s on the current roadmap for KTX?
Aiming to increase composability by partnering with other projects on Mantle – partnering with Solv and maybe Pendle – Solv has structured products like delta-neutral pools by using perps to hedge (they use GMX on Arbitrum for example) – can do delta neutral + OI-neutral pools using KTX – relationships like these can also result in strong community building
In the longer-term, want to develop automated trading vaults (grid and DCA vaults like on CEXs)
Campaigns – currently running a Mantle onboarding program, rewards MNT to new traders who bridge over to Mantle – also mini-game series, where users can qualify to win blind box prizes with things like 10-100 USDT – also offering zero-fee coupons, trade with no open/close fees for a specific period of time
Planning to launch several trading competitions on Mantle in the future as well
What’s lacking in Mantle’s current ecosystem?
Want to get more bridges to make liquidity easy to bring over to Mantle
Also interested in onboarding prediction markets and LSTs – onboarding Lido/stETH onto Mantle, which should bring on more LSTfi products
Also RWAs – seeing proliferation in treasuries/stablecoin collateral, high risk/high reward but bound to explode once regulations are clearer
SocialFi – huge for community building, will be easier to do on Mantle once API is available
What sort of timeline is there for Mantle ETH LST? And what sort of RWA products does Mantle want to integrate?
No set timeline for Mantle LST, but rough estimate would be Q1 next year
Wide variety of RWAs – need to make sure there’s an easy way to resolve on vs off chain – first will be things like treasury bills (to back stablecoins), but later on, volatile things like commodities and structured products – it’s a new segment of DeFi, excited to see what projects can come up with in the near future
#2: Monad x Elixir
Intro to Elixir
Market making service on CEXs and DEXs – launching within the next few weeks – aims to decentralize market making, using off-chain DPoS network of validators that come to consensus once per second
In centralized market making, market makers charge insane fees (several percent of token supply) to make markets for tokens, but on-chain is also inefficient because of huge token incentives (e.g. Injective paying out $0.70-$0.80 per dollar of liquidity from market makers) and capital inefficiency of AMMs – Elixir allows any user to supply liquidity with similar risk/return profile to UniV2, build up orderbooks for pairs on exchanges, and reap maker rewards
Perps are limited as to how they can scale, liquidity is almost nonexistent for exotic pairs, so Elixir wants to solve those problems
Overview of current market making
In traditional assets, market makers are the middleman – if you buy $100 of Apple stock, you’re buying from a market maker not another individual
High barriers of entry – no open source way to do it, mostly run by big centralized institutions, nothing permissionless about current market making landscape
Elixir wants to bring transparency to black box of market making – built a L1 chain that pulls orderbook data, runs it through validators, passes it to auditor node which compares it to an output that’s in a trusted execution environment (TEE) – if they match, consensus is reached, and it’s released onto an orderbook – takes under one second for all of that to happen
Top validators in terms of uptime, tokens staked, latency, etc. will contribute the most to consensus and therefore earn the most validator rewards
Users deposit to vault where they then own LP tokens, etc. – basically identical to Uniswap except it uses orderbooks instead of bonding curves
What’s the traction been like with regards to onboarding retail users?
Lots of people have moved their assets on-chain due to all the issues with centralized crypto entities – want to attract that on chain liquidity – Elixir basically plugs into existing orderbook DEXs so users will be able to use it through things they already use (e.g., Vertex orderbook)
That liquidity will likely stay on-chain, trust in institutions is super low – expect future institutions will be more transparent and on-chain – still lots of work to do as liquidity on on-chain orderbooks is very low outside of dYdX, but it’ll keep growing
Off-chain orderbooks are great for low-cost market making, which means lower costs for traders – top priorities are good liquidity and good infrastructure (also good UX – users have been impressed with how easy and cheap it is to run validators – $4-5/month)
What’s your stance on MEV?
MEV is naturally part of market efficiency, but reducing MEV is also part of market efficiency – an issue with CLMMs is that for things like PancakeSwap with deep liquidity on one chain (BNB Chain) and thin liquidity on another (Ethereum), a lot of volume on Ethereum is spent just trying to arb between the two chains, resulting in tons of toxic flow, causing PancakeSwap to overcompensate in CAKE incentives – Elixir can force parity between same pools on different chains and get rid of all the arbitrage flow – not a priority at the moment but it can be done, maybe someone will build it on top of Elixir
Elixir’s Roadmap
Currently in testnet, launching trusted mainnet in 2 weeks, users will be able to deposit into vaults on various exchanges (perps, spot, every pair on each exchange)
Will be natively integrated into each exchange – middleware infrastructure
Next 3 months, will gradually decentralize the network and launch a token
In general, an exciting development going on is permissionless perps – will be a big thing – anyone will be able to make a perps market for any coin, thanks to new market making iterations
#3: SynFutures x MantisSwap
Intro to Mantis
MantiSwap is a stableAMM, the first product from Mantis, part of the bigger plan to release a series of products to push DeFi forward
What sets MantisSwap apart from other DEXs?
Single-sided LP deposits – earn yield on individual assets, don’t need to worry about pairing tokens/IL
Improves liquidity fragmentation – lots of DEXs have tons of pools, and lots of the pools have the same assets (e.g., Uniswap has a ton of LPs with USDC), which fragments liquidity – Mantis has “open pools” where similar assets are put into larger pools – allows for more trading pairs and lower slippage, also allows small-caps to build deeper liquidity
Can you tell us about Mantis’ security?
Security is a huge focus – audits from PeckShield and Omnscia
One of the most relevant risks is stablecoin depegs – try to prevent any substantial pool imbalance (like what happened to 3crv pool when USDC depegged – it got filled with depegged USDC) – Mantis has circuit breakers in place to stop trading in case an asset or oracle has been compromised
What sort of community-building efforts do you have coming up?
Have campaigns/programs planned out – coming up the soonest is an incentive program that rewards LPs and traders, rewards people for using the protocol – will be announced in next few weeks
Also working on marketing campaigns and building partnerships
So far, happy with the organic growth in users that the project has seen so far
What networks are Mantis looking to build on?
Currently in public beta on Polygon PoS and Polygon zkEVM – really like the community and tech on zkEVM
How does Mantis plan to evolve/adapt within the DeFi space? What can users expect in upcoming months?
The stableswap is just the first product in the Mantis suite and will also act as the base layer for all upcoming products, already working on v2 which will be leverage trading on single-sided open pools model – v2 should be ready by the end of the year
#4: Decentralads x Brickken
Intro to Brickken
Aim to be the Shopify of web3 – provide decentralized/blockchain infrastructure for companies who don’t have web3 tech expertise but are experts in their industry – specialize in digital asset creation/distribution/management (token suite)
Creation – simply creating the digital asset and making sure it works
Distribution – creating payment gateways, make it easy to transfer the tokens
Management – more on the governance side, helping client distribute dividends if necessary – right now, corporate governance is tough to deal with on-chain but can provide a ton of value/convenience
Was this the original core mission of Brickken? What challenges have you found along the way?
Original goal was to focus on real estate tokenization, but it’s a very complex and expensive value chain – decided that it’s not for us, but we know about the tokenization process, if someone specializes in real estate, we can work with them instead
One of the things that was obvious in hindsight was to allow easy payments (credit card, etc.) – complex (tech-wise and regulation-wise) to handle the transfer of fiat to new digital asset for the clients
What other uses cases do you see beyond real estate for tokenization?
Tons of use cases, can help companies tokenize anything – gaming, restaurant franchises, loans, fish factory in Chile, etc., what’s tokenized is up to the client – Brickken isn’t dependent on these companies being successful, just on their own tech working
How long does it take to onboard clients and create tokens for them?
Once we have their data, takes 3 minutes to actually create the token and deploy it – client also creates a landing page – altogether takes less than an hour – the client does all the hard work, the tech is relatively easy to set up
What are the most exciting features/developments for the future?
Excited about the potential of helping companies bring governance on chain (management phase) – lots of companies don’t understand how complex and necessary it is, but big companies outsource this and pay lots of money to do it
How do you see securitization evolving in blockchain? Does it seem to scare a lot of people away from the industry?
Lots of cryptos are already securities and they were marketed as something else, securities have been around for thousand of years so this is nothing new – Brickken wants to be honest about this but also obviously stay regulatory-compliant
Lots of people in government are simply worried about their own campaigns, not the state of the crypto market – but also seeing lots of companies (Visa, MasterCard, etc.) are using the tech, despite the narrative that everyone is fighting crypto – even banks are interested in blockchain, overall it should be a win-win situation, blockchains are pure efficiency and can even the playing field between corporations and individuals
5 years from now, where do you see the crypto space being in terms of securitization/RWAs?
DeFi makes things way more simpler – for example, regular people can’t just take out loans against their stocks or other financial assets, and if they can it’s very hard – being able to own your own assets in a fully-public opens up huge potential that’s very different from today’s world, and many innovations will be developed as a result
#5: Revest x HiYield
Intro to HiYield
Lending market offering leveraged returns against real world assets
Intro to Revest/Resonate
Revest – NFT tokenization engine
Resonate – yield futures platform, uses Revest NFTs to facilitate yield swaps – allows any yield bearing asset to be locked up and splits the yield from principal – allows users to sell future yield for an up-front payment
First focus was on common YBAs like GLP, crvUSD, etc. – recently, there’s been more of a focus on RWAs
Revest/Resonate x HiYield Synergy
Example – user buys 1 year Treasury bond with 10% interest rate on HiYield, locks it up on Resonate, sell rights to future yield and instead get an upfront yield (probably a little less, maybe 7-8%) – overall value-add is convenience
Users could also take that 7-8% and try to outperform the 10% that they otherwise would have made over the next year
Does Resonate plan on integrating other debt assets within DeFi (e.g. Goldfinch, Maple, etc.)?
Will stick to less risky stuff at first like Treasuries, but down the road will branch into other things like that (private credit) – for riskier assets, there will be a higher spread (bigger difference between “normal” yield vs what you’d get up front)
Would Resonate be able to do this for perpetual products (e.g. OpenEden Treasury vault)?
Can do either but much prefer the duration-based known-return assets like what HiYield provides
What are you most excited for in the RWA space?
Focus will probably shift from Treasuries to corporate debt, but the best thing about RWAs is that it brings access to assets that isn’t nearly as available in TradFi
Also, institutions will have a much easier time bringing their current assets (Treasuries, etc.) into DeFi given the regulatory environment, than participating in DeFi in any other way
What’s the process of adding a new product to Resonate?
3 parties – tokenizer, receiver, payer – receiver owns the asset and brings it to Resonate – payer is the one who underwrites the cash flow (pays the upfront yield)
Really it’s up to users – gauge demand from users, and add the products that they want to use – targeting institutional clients with strong fixed income portfolio (e.g. insurance companies)
Wen HiYield launch?
Both products will be on Avalanche by the end of the year