Automated market maker MonoX today announced an initial capital increase of $ 5 million from venture companies, including companies such as Axia8 Ventures, Animoca Brands, Divergence Ventures, and others.
MonoX will use the funds to support its ambitions to reduce capital and liquidity prerequisites for decentralized finance (DeFi) projects that offer exchange, lending, borrowing and derivatives capabilities on decentralized exchanges (DEX).
The protocol will accomplish this by introducing a one-sided liquidity model. Although it is not a revolutionary concept for liquidity pools, its objective will be to support the growth of the DeFi ecosystem.
On traditional DEXs like Uniswap, industry projects require two tokens to build a ‘liquidity pair’, increasing the capital barrier to entry. With the one-sided liquidity model, projects only need to provide their native token. As such, they can offer more liquidity to the market.
MonoX founder and CEO Ruyi Ren shared his views on the potential impact of funding:
“With a lot of innovation in the DeFi space, over-warranty has become a growing problem. We will use the funds to grow the team, further develop and build our community in flourishing new DeFi ecosystems like Solana. “
Once a DeFi project contributes its native token, the MonoX-backed stablecoin vCASH steps in as the second token to form the liquidity pair. Pegged 1: 1 to the US dollar, vCASH aims to reduce trading fees commonly experienced within traditional Automated Market Maker (AMM) transactions.
MonoX is scheduled to launch its mainnet version on the Ethereum and Polygon blockchains in Q3 2021.
Despite the vast potential of single token liquidity, this is by no means the first application of its kind within the DeFi space.
Around the same time, last year, AMM Bancor launched what it called “liquidity mining 2.0,” a unique token liquidity provision designed to overcome the insidious challenges of maintaining liquidity and volume in the DeFi markets.