Elixir: A new era of liquidity on decentralised exchanges

1. Overview of Elixir

Elixir is a modular decentralized network designed to enhance liquidity in decentralized exchanges (DEXs) that utilize order book models. Unlike Automated Market Maker (AMM)-based DEXs, which rely on liquidity pools and mathematical formulas to facilitate trading, Elixir focuses on the order book model, enabling traders to interact directly with one another. This approach aims to provide deeper liquidity and reduce slippage, thereby improving the overall trading experience. The primary objective of the project is to serve as foundational infrastructure for Layer 1 and Layer 2 ecosystems, allowing exchanges and protocols to seamlessly scale liquidity. Elixir's cross-chain and composable nature enables native integration into the core infrastructure of leading DEXs, unlocking retail liquidity for various trading pairs and use cases. As of early 2024, Elixir has established over 30 native integrations with prominent DEXs, including Vertex, Bluefin, and RabbitX.

2. Technological Infrastructure

The technological foundation of Elixir is built on a decentralized, high-performance infrastructure utilizing Delegated Proof of Stake (DPoS) consensus for managing orders placed on integrated exchanges. This network architecture comprises several key components, each playing a critical role in ensuring the efficiency and security of the system.

Exchange feeds provide read-only credentials for each exchange and subscribe to a unified update stream, transmitting data to data aggregators. These aggregators compile information from multiple feeds into a deterministic data frame, which is then signed and broadcasted to validators and auditors. The validator network operates on a decentralized DPoS system, requiring a 66% consensus secured by relay nodes. End users delegate their stakes to validators, who safeguard the network and receive emission rewards based on the tokens delegated to them.

Relay nodes hold trading keys for specific exchanges and calculate order proposals from validators. Once an order proposal expires, it is forwarded to the auditor for verification. The dispute resolution layer, consisting of an auditor and a controller, ensures network integrity and resolves conflicts.

This modular architecture enables Elixir to offer a scalable and secure solution for providing liquidity across multiple decentralized exchanges (DEXs), enhancing the overall efficiency of decentralized trading platforms.

3. Economic Model and the ELX Token

In the Elixir ecosystem, the ELX token serves multiple pivotal roles. Primarily, it functions as a governance instrument, enabling holders to participate in decentralized decision-making processes concerning network updates, parameter configurations, and other critical aspects. Additionally, ELX is integral to staking mechanisms; validators and node operators stake their tokens to secure the network and, in return, receive emission rewards, thereby incentivizing active participation and maintaining system integrity. Furthermore, users can provide liquidity for various trading pairs on integrated decentralized exchanges (DEXs), earning rewards in ELX tokens, which enhances liquidity and improves trading conditions.

4. Synthetic Assets and deUSD

An essential component of the Elixir ecosystem is the issuance of synthetic assets, particularly deUSD—a decentralized synthetic dollar. deUSD is a fully collateralized stablecoin designed to ensure stability and liquidity across both decentralized and centralized exchanges.

Architecture of deUSD

deUSD is backed by a combination of wstETH (wrapped staked ETH) and sDAI. These assets are used to create a delta-neutral position by shorting an equivalent amount of ETH through perpetual futures contracts. This mechanism allows deUSD to maintain stability while minimizing exposure to market volatility.

Advantages of deUSD

Decentralization	Unlike centralized stablecoins, deUSD operates independently of centralized issuers, ensuring greater transparency and resistance to censorship.
Yield	Staked deUSD (sdeUSD) accrues yield from the underlying collateral, providing users with the opportunity for passive income.

In addition, deUSD is integrated into the Elixir ecosystem and supported by various deFi platforms such as Pendle, which expands its application and liquidity.

5. Funding and Valuation

Elixir has garnered significant investor attention, successfully completing multiple funding rounds:

Series A: In October 2023, Elixir raised $7.5 million at a $100 million valuation. The round was led by Hack VC, with participation from NGC Ventures, AngelList Ventures, and others. 

Series B: In March 2024, the company secured an additional $8 million, elevating its valuation to $800 million. This round was co-led by Mysten Labs and Maelstrom, with contributions from Manifold, Arthur Hayes, Amber Group, and others. 

These investments underscore confidence in Elixir's vision and its potential to transform liquidity on decentralized exchanges.

6. Future Prospects and Roadmap

Elixir is committed to expanding its ecosystem and enhancing its functionality through several strategic initiatives:

Expansion of Integrations

Elixir plans to increase the number of native integrations with decentralized exchanges (DEXs) to broaden its network's adoption and usage. By collaborating with a diverse range of DEXs, Elixir aims to provide users with access to deeper liquidity and more efficient trading experiences. This strategy not only enhances the platform's utility but also strengthens its position within the decentralized finance (DeFi) ecosystem.

Infrastructure Enhancements

Continuous improvement of the technological framework is a priority for Elixir. The project focuses on optimizing performance, scalability, and security to ensure a robust and reliable platform. By adopting advanced technologies and best practices, Elixir seeks to deliver a seamless user experience and maintain the integrity of its operations.

Diversification of Synthetic Assets

Beyond the issuance of deUSD, Elixir plans to introduce a variety of synthetic assets to meet the diverse needs of its users. These assets will enable users to gain exposure to different financial instruments within the DeFi space, offering more opportunities for investment and risk management. This diversification aligns with Elixir's goal of providing a comprehensive suite of financial products to its community.

By pursuing these initiatives, Elixir aims to solidify its role as a leading provider of liquidity solutions in the DeFi sector, offering users more efficient and decentralized trading platforms.

7. Conclusion

Elixir stands as an innovative solution aimed at enhancing liquidity on order book-based decentralized exchanges (DEXs). Its modular architecture facilitates seamless integration with various DEXs, providing deeper liquidity and reducing slippage for traders. The issuance of synthetic assets, such as deUSD, offers users stable and decentralized stablecoins applicable across diverse DeFi applications. Significant investor support, evidenced by successful funding rounds, underscores confidence in Elixir's vision and its potential to transform the DeFi ecosystem. With a focus on expanding integrations, improving infrastructure, and developing new synthetic assets, Elixir is poised to offer users more efficient and decentralized trading platforms, contributing to the continued evolution of decentralized finance.