Elixir is a decentralized proof-of-stake (DPoS) network designed to support liquidity provision for decentralized exchanges (DEXs) utilizing orderbook models. It aims to address liquidity challenges in both decentralized and centralized exchanges by allowing users to supply liquidity in a trustless manner. Its architecture enables the creation of deeper orderbooks and reduces dependence on centralized market makers.^{[1][3][12][14]}

Overview

The Elixir Network is a blockchain-based protocol that facilitates liquidity provision for decentralized exchanges by drawing liquidity directly from retail participants, reducing reliance on centralized liquidity providers. It integrates into the infrastructure of DEXs, providing liquidity for orderbooks and allowing users to earn returns through participation.

The modular network architecture of Elixir supports orderbook exchanges and enhances liquidity across various trading pairs while maintaining decentralization. The network operates across multiple blockchains, integrating seamlessly with other decentralized applications (dApps). ^{[1][3][6][12][13][14]}

Core Components

Liquidity Provision and Integration

Elixir enables exchanges to access retail liquidity for orderbook DEXs. By utilizing the Elixir Protocol, exchanges can build deeper orderbooks, improve bid-ask spreads, and generate liquidity without relying on centralized market makers. This allows for a more decentralized liquidity environment supported by diverse participants.

The Elixir Network powers various exchanges, including Vertex Fusion and Hyperliquid Aqua, where users can deploy liquidity and earn rewards. These integrations simplify access to Elixir’s liquidity pools for decentralized exchanges.

Cross-Chain Capabilities

Elixir operates across multiple blockchain ecosystems, offering liquidity management for different blockchains. Its cross-chain functionality supports integration into the core infrastructure of various exchanges, allowing for efficient liquidity provision.

deUSD

Elixir introduces deUSD, a collateralized synthetic stablecoin used as collateral within Elixir-powered exchanges. Backed by decentralized assets like stETH and sDAI, deUSD provides liquidity stability, particularly during volatile market conditions, playing a central role in Elixir’s liquidity strategy.^{[1][4][12][13]}

Network Architecture

Validator Network (DPoS)

Elixir’s network operates using a decentralized proof-of-stake (DPoS) consensus mechanism. Validators, chosen based on the amount of Elixir's native token, ELX, staked by themselves and delegated by others, are responsible for processing transactions and securing the network. Validators receive rewards based on their performance and stake, contributing to network security through cryptoeconomic incentives.

Data Aggregation

Elixir’s architecture includes a data aggregation mechanism that collects and processes orderbook data from various exchanges. The validator network ensures the accuracy of this data, which is used to inform liquidity provisioning and orderbook management.

Relay Nodes and Dispute Resolution

Relay nodes manage order proposals from validators and relay them across the network to maintain synchronized orderbooks. A dispute resolution layer, comprising auditors and controllers, addresses conflicts and upholds network integrity by resolving disputes and penalizing dishonest actors.

Governance and ELX Token

Elixir’s native token, ELX, functions as both a utility and governance token. Token holders participate in governance decisions that affect the network's development and fee distribution. ELX also plays a role in securing the network, as validators and relay nodes must stake tokens to participate in network operations, aligning their actions with network security.^{[1][4][13][14]}

Key Features

1. Decentralized Liquidity Provision: Elixir enables retail users to contribute liquidity directly to orderbooks, offering a decentralized alternative to centralized market-making practices.

2. Cross-Chain Compatibility: The network’s cross-chain capabilities allow liquidity to be utilized across multiple blockchain ecosystems and exchanges.

3. Synthetic Collateral (deUSD): deUSD acts as a fully-collateralized asset within the ecosystem, stabilizing liquidity and providing a robust collateral option for liquidity providers.

4. Governance and Security: ELX token holders participate in governance and network security, ensuring decentralized control and operational integrity through DPoS.^{[1][2][4][5][12][13]}

Smart Contracts and Security

Elixir utilizes a system of smart contracts deployed across multiple blockchains to manage liquidity provisioning in a decentralized manner. Over 30 exchanges are incorporating Elixir’s infrastructure, where all deposits are handled by smart contracts on their respective blockchains. These contracts oversee the secure management of funds, with deposits remaining on the chain of origin until a user initiates a withdrawal.

The Elixir Foundation has developed and audited versions of these smart contracts for both EVM (Ethereum Virtual Machine) and CosmWasm-based chains, with the audits conducted by Trail of Bits. Additionally, the community has contributed by building five other versions of the contract, enhancing the security and versatility of the system.

Validator Participation and Network Decentralization

The Elixir Network relies on a decentralized validator network to ensure security and consensus. Over 10,000 validators participated in the testnet v2 phase, contributing to the stability of the system. The upcoming testnet v3 will allow further public involvement.

The Validator Delegation Program incentivizes strong performance by allowing validators to receive governance token delegation from the Elixir Foundation. These tokens enable validators to participate in governance decisions and shape the future of the network.

Elixir Potions and User Engagement

Elixir employs "potions" as a system to track user contributions to the network. Potions are recorded within the Elixir Apothecary, and activities that generate potions include social contributions, depositing liquidity into native integrations, minting elxETH, and referring new users.

Additional potion-generating activities, such as running validators and trading on Elixir-integrated exchanges, are expected to be introduced. This system encourages user engagement and supports the decentralized liquidity provisioning model.^{[1][2][4][12][13]}

Partnerships

Injective Protocol

Elixir Protocol has established a partnership with Injective Protocol, aiming to provide liquidity to its on-chain orderbook module. This collaboration represents Elixir’s initial integration into an on-chain central limit orderbook (CLOB). The partnership allows liquidity provision on Injective’s decentralized exchange (DEX), functioning similarly to liquidity pools like those found in Uniswap v2. This setup enables participants to passively supply liquidity and receive market maker rewards, while supporting liquidity depth and reducing slippage within the Injective ecosystem.

The integration into Injective also facilitates a capital-efficient system, where liquidity is shared across multiple DEXs on the platform. This reduces the time required for developers to launch new DEXs and creates opportunities for liquidity providers to engage in delta-neutral yield strategies. Additionally, participants can supply assets in equal proportions, with Elixir’s infrastructure distributing liquidity algorithmically across Injective’s orderbooks. Furthermore, the integration connects with Injective’s Open Liquidity Program (OLP), offering liquidity providers a share of 60,000 INJ tokens per epoch as an incentive.^[7][8]

RabbitX

Elixir Protocol has partnered with RabbitX, a decentralized perpetual exchange built on Starknet, to enhance liquidity for its orderbooks. The integration allows liquidity providers to supply assets to pairs on RabbitX while earning rewards through RabbitX’s liquidity incentive program. The goal is to improve liquidity conditions, leading to reduced bid-ask spreads and deeper orderbooks.

RabbitX’s features include protection against front-running, high transaction speeds, zero gas fees, and leveraged trading up to 20x. With Elixir’s integration, RabbitX users can easily supply liquidity to orderbooks through a user-friendly interface. The risk and return structure is designed to mirror that of Uniswap v2’s x*y=k model. The collaboration aims to make liquidity provision more accessible to retail participants and optimize liquidity efficiency across the platform. RabbitX’s incentive program offers returns aimed at attracting market makers, with typical rates ranging from 300% to 600%.^[9]

Vertex

Vertex, a decentralized exchange (DEX), has integrated Elixir’s liquidity infrastructure to support its orderbook operations. Elixir contributes approximately 56% of Vertex’s orderbook liquidity. This partnership allows Vertex to leverage Elixir’s decentralized infrastructure for passive liquidity provisioning, enhancing overall market depth and reducing bid-ask spreads.

Since the implementation of Elixir into Vertex’s infrastructure, the exchange has observed growth in liquidity and user activity. This integration supports the long-term sustainability of decentralized orderbook models by providing tools for efficient order matching and a smoother trading experience.^[10]

Bluefin

Elixir Protocol has collaborated with Bluefin, providing 66% of its orderbook liquidity through Elixir’s decentralized infrastructure. Bluefin benefits from Elixir’s automated liquidity provision, allowing users to contribute liquidity seamlessly. This partnership has improved Bluefin’s liquidity and contributed to more efficient trade execution.

By employing Elixir’s decentralized market-making capabilities, Bluefin has enhanced its competitiveness within the decentralized finance (DeFi) ecosystem. This integration allows Bluefin to narrow the liquidity gap between decentralized and centralized platforms, fostering a more capital-efficient trading environment.^[11]

Funding

Elixir has completed multiple funding rounds, reflecting the growing interest in its decentralized liquidity framework for orderbook exchanges. In October 2023, the company raised $7.5 million in a Series A funding round, resulting in a valuation of $100 million. This round was led by Hack VC, with participation from investors such as NGC Ventures, AngelList Ventures, Bloccelerate, Ledger Prime, and Genesis Trading.

In mid-2024, Elixir raised $8 million in a Series B round. This round was co-led by Mysten Labs and Maelstrom, Arthur Hayes' family office, with additional investments from Manifold, Amber Group, GSR, and Flowdesk. The Series B funding increased Elixir’s valuation to $800 million, marking a significant growth from its Series A valuation.^[15][16]