The decentralized exchange dTrade has raised $ 22.8 million for a market-making fund designed to provide the ecosystem with greater liquidity, potentially laying the groundwork for further DeFi adoption at Polkadot once the DEX launches later this year.
The funds will allow dTrade to launch with a “deep liquidity” backed by some of the biggest cryptocurrency market makers, the company announced Tuesday. Specifically, the capital will be used to facilitate on-chain loans to market makers that provide liquidity in the dTrade order book. Community members will also have the opportunity to participate in the on-chain program once dTrade launches, which is expected soon after Polkadot concludes its parachain auctions later this year.
The capital raising featured the participation of some of the largest blockchain companies, such as Alameda Research, CMS, Hypersphere, Polychain and DeFiance.
Market makers make it easy to open and exit positions for traders who buy and sell assets on the open market. Market makers basically place buy and sell orders for tradable assets to provide liquidity and ensure that transactions are executed at prices that are as close to fair as possible.
As Cointelegraph reported, dTrade concluded a USD 6.4 million funding round in May this year to strengthen DeFi’s capabilities on the Polkadot network. The capital raised in the last two rounds coincided with a sharp increase in derivatives trading, which, by some estimates, represents most of the operations with cryptocurrencies.
The volatile swings in cryptocurrency prices this year have been largely related to derivatives. During the sudden crash of Bitcoin (BTC) in May, crypto liquidations surpassed $ 2.4 billion in a 24-hour period, according to data from ByBit. Overly leveraged traders were pushed out of the market during the extreme downtrend, although recent data suggests that the Open interest in Bitcoin options is on the rise again.
The crypto derivatives market began to take shape in the second quarter of 2020, but is still in its early stages. Goldman Sachs became the latest high-profile multinational to enter the market after expanding the addition of Ether (ETH) futures and options to its trading operations.