1. Introduction to Elixir (ELX)

Elixir was founded in 2022 and is a modular DPoS (Delegated Proof of Stake) liquidity network. Its core function is to allow anyone to provide liquidity directly to the order book, bringing liquidity to long-tail crypto assets, while enabling exchanges and protocols to bootstrap their ledger liquidity. In traditional financial markets, liquidity is mainly provided by centralized intermediaries, however, entrusting funds to these institutions carries certain risks. Elixir is committed to improving this situation in a decentralized manner, providing a solution to the liquidity dilemma in the DeFi sector.

Since its establishment, Elixir has achieved significant results in financing. In January 2023, it completed a $2.1 million seed round of financing, with participation from FalconX, Commonwealth, OP Crypto, ChapterOne, and BitMEX founder Arthur Hayes; In October 2023, it completed a $7.5 million Series A financing at a valuation of $100 million, led by Hack VC with participation from NGC Ventures, AngelList Ventures, Bloccelerate, etc.; In March 2024, it announced the completion of an $8 million Series B financing, jointly led by Mysten Labs and Maelstrom Capital, with participation from Manifold, Arthur Hayes, Amber Group, GSR, Flowdesk, etc. These financings not only provide ample financial support for the development of Elixir, but also demonstrate the market’s high recognition of its project prospects.

2. Elixir (ELX) Technical Analysis

2.1 Core Technical Principles

2.1.1 Modular DPoS Mechanism

DPoS (Delegated Proof of Stake) mechanism is a key technology for Elixir to achieve efficient consensus and node collaboration. Its core principle is to allow users holding stake (usually tokens) to vote for representative nodes (delegates), who are responsible for validating transactions and generating new blocks. In the Elixir network, users vote based on the amount of ELX tokens they hold, and the nodes with higher votes become validators. This mechanism is similar to representative democracy in real life, improving decision-making efficiency through the election of representatives.

In the actual operation of Elixir, the DPoS mechanism ensures effective collaboration between nodes. Validator nodes take turns generating blocks in a predetermined order. Each validator is responsible for collecting transaction information, verifying the legality of transactions when it is their turn, and packaging legitimate transactions into blocks added to the blockchain. If a validator node malfunctions or behaves maliciously, other nodes can vote to remove it from the validator list and elect a new node to replace it. This dynamic adjustment of validator nodes ensures network stability and security.

2.1.2 Liquidity Management Algorithm

Elixir adopts advanced liquidity management algorithms to optimize the liquidity of trading pairs and reduce trading costs. The core idea is to integrate the liquidity of multiple DeFi protocols to form a liquidity aggregation pool, providing users with a richer trading selection and a better trading experience.

Elixir’s liquidity management algorithm is mainly based on a variant of the infinite Avellaneda-Stoikov algorithm. The algorithm determines the quoting time in a random walk manner, creating an experience for traders that is almost similar to that of centralized exchanges (CEX), and also provides the best experience for liquidity providers (LP). Specifically, the algorithm dynamically adjusts the buy and sell quotes of the trading pair according to the real-time market conditions to attract more liquidity providers. At the same time, in order to prevent market manipulation and gamification, Elixir introduces random elements in its algorithm and uses SGX secure enclaves to generate random numbers. These random numbers are synchronized between validators through verifiable random functions, ensuring the fairness and randomness of the quotes.

In practical applications, Elixir’s liquidity management algorithm has shown good results. Users can provide liquidity to the order book DEX trading pairs through the Elixir platform, and the platform will automatically match buy and sell orders according to the algorithm, achieving efficient trade matching. Due to the optimization of liquidity, users can enjoy lower slippage and transaction fees during the trading process, improving the efficiency of capital utilization. Elixir also expands the source of liquidity through cooperation with other DeFi protocols, providing users with more trading opportunities. The cooperation with Curve Finance enables Elixir to access Curve’s liquidity pool, providing users with more liquidity for stablecoin trading pairs.

2.2 Network Architecture Analysis

2.2.1 Off-chain System

The off-chain system of Elixir is primarily responsible for retrieving market data and executing order matching to enhance trading efficiency and reduce transaction costs. The core components of this off-chain system include exchange data sources, data aggregators, validator networks, and relay infrastructure..

The exchange data source is responsible for obtaining market data from various exchanges, including the prices, depth, trading volume, and other information of trading pairs. These data sources hold read-only credentials for the exchanges and subscribe to an update stream to obtain market data from the exchanges in real time. By connecting to multiple exchanges, Elixir can collect more comprehensive market information to provide users with more accurate price references.

The data aggregator collects information from multiple exchange data sources and consolidates it into a deterministic data framework. It cryptographically signs the data to ensure integrity and immutability. The signed data is then broadcast to validators and audit nodes for further verification and processing.

The validator network operates through the Delegated Proof of Stake (DPoS) mechanism, responsible for verifying the correctness of the data. Validators need to achieve 66% consensus to confirm the validity of the data. End users delegate their state to validators, and the validator with the most stake will receive the largest share of rewards and participate in the consensus. The validator network ensures the decentralization and security of the system, preventing malicious nodes from tampering with data.

The relay infrastructure uses secure enclave technology (long-term use of multi-party computation (MPC) infrastructure) to handle keys with exchanges. The relay node checks whether the encrypted order proposal has obtained 2/3 consensus, then signs these orders with keys and sends the signed orders to the exchange. The relay infrastructure is a bridge between off-chain and on-chain systems, ensuring that all transactions are verified and signed, thus ensuring the security and reliability of transactions.

2.2.2 On-chain system

The on-chain system is a core part of the Elixir network, mainly responsible for ensuring the execution of transactions and the storage of data, ensuring the security and immutability of transactions. The main components of the on-chain system include auditing nodes and controllers.

Auditors receive data frameworks and order proposals from data aggregators and relay nodes, execute strategies to verify the correctness of the order proposals. If malicious order proposals are detected, auditors will invoke on-chain functions in the controller for corresponding actions. By verifying transaction data, auditors ensure the correctness of data and transactions, preventing malicious transactions.

The controller is a smart contract responsible for managing equity staking, rewards, and penalties. In case of disputes, the controller checks the 2/3 consensus of the active validator set and penalizes malicious validators. The controller executes on-chain operations through smart contracts to ensure the fairness and security of the system. When a validator node is found to engage in malicious behavior, the controller will impose penalties according to preset rules, such as deducting staked equity or suspending its validation qualification.

Elixir’s on-chain system has a close connection with the Ethereum mainnet. Elixir utilizes the security and decentralization features of the Ethereum mainnet to record some key data and operations on the Ethereum mainnet, such as the final confirmation of transactions, staking of assets, and reward records. This not only ensures the security of the Elixir network but also leverages the vast ecosystem of Ethereum to achieve better interoperability. The final results of transactions conducted on the Elixir network will be recorded on the Ethereum mainnet, ensuring the immutability and traceability of transactions.

2.3 Advantages Compared to Other Technologies

Compared to other similar decentralized order book models or liquidity networks, Elixir has significant advantages in performance, security, scalability, and more.

In performance, Elixir’s modular DPoS mechanism enables it to achieve efficient consensus, fast transaction confirmation speed, and high throughput. In contrast, some projects based on PoW or PoS mechanisms have longer transaction confirmation times, lower throughput, and cannot meet the needs of large-scale transactions. Bitcoin’s PoW mechanism has an average block time of 10 minutes, with a limited number of transactions processed per second, making it difficult to cope with high-concurrency transaction scenarios. Elixir, on the other hand, achieves consensus in a short time through the DPoS mechanism, realizing second-level transaction confirmation and greatly improving transaction efficiency.

In security, Elixir’s multi-layer security architecture and strict verification mechanism ensure the integrity of data and the security of transactions. The validator network in the off-chain system achieves decentralization and consensus through the DPoS mechanism, while the relay infrastructure ensures the integrity and immutability of data and transactions. The audit nodes and controllers in the on-chain system provide additional security guarantees and ensure fair execution. Compared to some projects lacking complete security mechanisms, Elixir can effectively prevent malicious attacks and data tampering, protecting the security of users’ assets.

In scalability, Elixir’s design allows it to easily cope with the growing user and transaction demands. By integrating the liquidity of multiple Decentralized Finance (DeFi) protocols, Elixir has formed a vast liquidity network, providing users with a wider range of trading options. Elixir’s network architecture has good scalability, making it easy to add new nodes and features to meet future development needs. Some traditional decentralized order book models face significant challenges in scaling liquidity and functionality due to limitations in their architecture, while Elixir can achieve rapid expansion and upgrades through its flexible architectural design.

The technical advantages of Elixir make it highly competitive in the field of decentralized finance, and it is expected to provide users with more efficient, secure, and scalable trading services.

3. Elixir (ELX) Application Ecosystem

3.1 Application in the Decentralized Finance (DeFi) Sector

3.1.1 Providing Liquidity for Order Book DEX

In the field of Decentralized Finance (DeFi), the liquidity of decentralized exchange (DEX) order books plays a key role in their trading efficiency and user experience. Elixir has become an important force in improving the liquidity of order book DEX with its unique technical architecture and liquidity management algorithms.

Using Vertex and RabbitX as examples of order book DEX, Elixir provides innovative ways to provide liquidity for them. Elixir, as a modular DPoS network, allows users to directly provide liquidity to the trading pairs of Vertex and RabbitX order books. Through the Elixir platform, users can easily deposit assets such as USDC into the order book with just one click, thereby increasing liquidity for the trading pairs. This direct liquidity provision method breaks the traditional reliance on professional market makers for liquidity in order book DEX, allowing ordinary users to participate in liquidity provision and expanding the sources of liquidity.

From a practical perspective, Elixir has brought significant improvements to Vertex and RabbitX. In terms of liquidity, Elixir provides Vertex with nearly 50% of the funding capacity of its order book liquidity, and also provides considerable liquidity support for RabbitX. This enables Vertex and RabbitX to offer narrower bid-ask spreads during trading, reducing users’ trading costs. With enhanced liquidity, trading slippage is also significantly reduced, allowing users to complete trades at prices closer to their expectations, enhancing trading efficiency and experience.

Elixir also provides users with diversified staking rewards through cooperation with these order book DEXs. As liquidity providers, users can not only receive a share of trading fees, but also obtain additional token rewards through Elixir LP incentives or LP incentive programs provided by cooperation agreements. These incentive mechanisms attract more users to participate in providing liquidity, further enhancing the liquidity of order book DEXs.

3.1.2 Integration with other DeFi protocols

The integration of Elixir with DeFi protocols such as lending, derivatives, etc., demonstrates rich potential use cases and immense value.

In terms of lending protocols, after integrating with lending protocols such as Aave and Compound, Elixir users can deposit the profit assets obtained from providing liquidity on the Elixir platform as collateral into the lending protocols to obtain more funds for other investments or trades. By providing liquidity for a certain order book DEX on Elixir, users receive a certain amount of token rewards, which can be staked in the Aave protocol to borrow stablecoins for other Decentralized Finance (DeFi) projects. This integration not only improves the efficiency of asset utilization for users but also provides them with more operational space for funds.

In terms of derivative protocols, Elixir integrates with derivatives protocols such as dYdX and Synthetix, providing more abundant liquidity for derivative trading. In dYdX’s perpetual contract trading, the liquidity provided by Elixir increases the depth of contract trading, allowing users to operate more smoothly when opening and closing positions, reducing the problems caused by insufficient liquidity and excessive slippage. Elixir’s liquidity management algorithm can also provide a more reasonable price discovery mechanism for derivative protocols, making the prices of derivatives more reflective of the real market supply and demand relationship.

The integration of Elixir with other DeFi protocols has enabled synergies between different protocols, providing users with more comprehensive and efficient DeFi services. This integration also promotes the development of the entire DeFi ecosystem, allowing each protocol to fully leverage its strengths and collectively drive the prosperity of the DeFi market.

4. Elixir (ELX) Market Performance

4.1 Financing History Review

Since its establishment, Elixir has achieved remarkable results in financing, attracting the attention and support of many well-known investment institutions. In January 2023, Elixir successfully completed a $2.1 million seed round of financing, with investors including FalconX, Commonwealth, OP Crypto, ChapterOne, and BitMEX founder Arthur Hayes. This financing round provided important financial support for Elixir’s project initiation and early-stage technical research and development, enabling it to make a name for itself in the market.

In October 2023, Elixir completed a Series A financing of $7.5 million at a valuation of $100 million. This round of financing was led by Hack VC, with participation from NGC Ventures, AngelList Ventures, Bloccelerate, and others. The successful completion of the Series A financing further enriched Elixir’s capital reserves and accelerated its technological development and market expansion process. The funds were used to optimize the technical architecture, expand the team, and strengthen collaboration with partners, laying a solid foundation for Elixir’s development in the decentralized finance field.

In March 2024, Elixir announced the completion of an $8 million Series B financing round, led by Mysten Labs and Maelstrom Capital, with participation from Manifold, Arthur Hayes, Amber Group, GSR, Flowdesk, among others. The injection of Series B financing has brought new vitality to the development of Elixir. The funds will mainly be used to advance product iteration and upgrades, expand market share, and deepen cooperation with major exchanges and Decentralized Finance (DeFi) protocols. This financing round also reflects the market’s high recognition and confidence in the future prospects of the Elixir project.

From the financing process of Elixir, each round of financing has had a profound impact on its project development. The seed round of financing provided necessary funds for the project’s start, enabling it to carry out technological research and market research; the A round of financing helped Elixir to expand its scale, enhance its technical strength, and attract more users and partners; the B round of financing further enhanced Elixir’s market competitiveness, providing a broader space for its future development. With the continuous injection of funds, Elixir has made significant progress in technological innovation, market expansion, and ecological construction.

4.2 Market Attention and User Participation

On platforms such as social media and cryptocurrency forums, Elixir has attracted wide attention and discussion. For example, the official Elixir account on X (formerly Twitter) has thousands of followers. The content they post about project progress, technological innovations, partnership updates, etc., often sparks likes, comments, and shares from users. In some well-known cryptocurrency forums, such as the DeFi section on Reddit, there are also many discussion threads about Elixir, where users delve deep into its technological principles, use cases, and future prospects.

In terms of user engagement, Elixir has also performed well. As of now, the Elixir network has 13,563 nodes globally, and users participate in the maintenance and governance of the network by running nodes and receiving corresponding rewards. In terms of liquidity provision, users actively participate in providing liquidity for the order book DEX integrated with Elixir. According to statistics, nearly $200 million has been deposited into the Elixir protocol. By providing liquidity for the order book DEX trading pairs, users can not only receive a share of trading fees but also diversify their staking rewards through Elixir LP incentives or LP incentive plans provided through partnership agreements.

Elixir has also launched a new product, Apothecary, which is a new point tracking system that supports users in earning points (potions)/returns by depositing assets and attracting new users. The launch of this product further stimulates user enthusiasm, as users participate in various activities to obtain points and enhance their rights and returns in the network. This incentive mechanism effectively increases user stickiness and participation, promoting the prosperity of the Elixir ecosystem.

4.3 Token ELX Analysis

4.3.1 Token Basic Information

ELX is the future native utility and governance token of the Elixir ecosystem, with significant status and functions.

In the distribution of ELX:

• 41% of the supply is reserved for the community, of which 8% is used for the first season airdrop, aiming to attract early users to participate and stimulate community vitality; 21% is used for future airdrops / LP rewards, incentivizing liquidity providers to encourage users to provide ongoing liquidity support for the ecosystem; 12% is allocated for public network security rewards, incentivizing users to participate in network security maintenance to ensure the stable operation of the network.

• 22% of ELX is allocated to the DAO Foundation to support the long-term development and governance of the ecosystem. The foundation can use these tokens for strategic investments, project development, and community building, driving the growth of the Elixir ecosystem.

• 3% of ELX is used for Liquidity, ensuring sufficient token circulation in the market to maintain good trading activity and price stability. 15% is allocated to investors as a reward for their early investment, reflecting the importance and incentive to investors.

• Core contributors receive 19% of ELX, which is recognition and reward for their contributions in project development, technical innovation, and marketing. This allocation mechanism helps motivate core team members to continue contributing to the project’s development.

4.3.2 Potential Value and Application Scenarios

ELX has significant potential value and a wide range of applications in the Elixir ecosystem. In terms of node staking, ELX holders can run their own validators or delegate tokens to help secure the network and receive network security rewards. By staking ELX, users can not only contribute to the security and stability of the network but also receive corresponding economic rewards, making ELX an important link between users and network security.

In terms of community governance, ELX empowers holders with significant decision-making power. With the final launch of the mainnet, Elixir will be fully decentralized, governed by the community managed by ELX holders. Holders can express their opinions and suggestions on major issues such as the direction of ecosystem development, rule-making, fund allocation, etc., through voting and other means, truly achieving community self-governance.

In terms of liquidity incentives, ELX plays a key role in providing liquidity for the order book DEX. Users earn rewards by providing liquidity, some of which are distributed in the form of ELX tokens, increasing not only users’ sources of income but also the demand and circulation of ELX in the market.

ELX may also play a crucial role in interacting with other Decentralized Finance protocols in the future. As the Elixir ecosystem continues to expand, ELX is poised to become a bridge connecting different DeFi protocols, enabling cross-protocol value exchange and Liquidity sharing, providing users with a richer and more convenient DeFi service.

The ELX token will be listed on the Gate.io trading platform at 18:00:00 on 2025/03/07, click to trade:https://www.gate.io/en/trade/ELX_USDT

5. Development Trends of Elixir (ELX)

5.1 Mainnet Development Plan

The development plan of Elixir’s mainnet shows a clear phase and is forward-looking. On October 31, 2024, Elixir successfully launched the first phase of the mainnet, which is an important transition before the full launch of the mainnet. In this phase, Elixir launched the Genesis Validator Program, started the countdown to the public mainnet release, and conducted a brief network stability test.

This phase is of great significance, marking the beginning of Elixir’s transition to complete decentralization. Through the Genesis Institution Validator Program, Elixir is able to leverage the power of institutional validators in the initial stages to ensure the stability and security of the network. These institutional validators, with their wealth of experience and professional expertise, provide strong support for the smooth operation of the network. In network stability tests, Elixir simulates and deals with various possible scenarios, making sufficient preparations for the subsequent launch of the public mainnet.

In the future, with the comprehensive launch of the public mainnet, Elixir will enter a new stage of development. At that time, control will be fully transferred to the community, and eligible users can apply for ELX, run validators, or delegate ELX to existing validators. As a key component of the Elixir ecosystem, ELX will play an important role in the public mainnet phase, ensuring the integrity and functionality of the Elixir consensus, and endowing holders with governance rights of the protocol.

After the mainnet is launched, Elixir is expected to achieve a higher level of decentralization. Community members will play a leading role in the operation and governance of the network. They can participate in the maintenance of the network by running validators to ensure the smooth verification of transactions and block generation. They can also delegate ELX to validators to support the secure operation of the network and receive corresponding rewards. Community members can also participate in protocol governance by holding ELX, expressing opinions on the development direction of the network, rule-making, and other major issues, truly achieving community autonomy.

The development of the mainnet has far-reaching implications for the future of the Elixir project. It will further enhance the security and stability of Elixir, attracting more users and developers to participate in the ecosystem. With the continuous improvement of the mainnet, Elixir’s functionality will become more diverse, its application scenarios will become more extensive, and it is expected to play a greater role in the field of decentralized finance, becoming an important force driving the industry’s development.

5.2 Ecological Expansion Plan

In terms of ecosystem expansion, Elixir has developed grand plans to integrate with more DeFi protocols and exchanges to further expand its ecosystem. Currently, Elixir has partnered and integrated with over 30 leading DEXs such as Vertex, RabbitX, Bluefin, Apex, Orderly, etc.

Through these partnerships, users can provide liquidity to order book DEX trading pairs through Elixir, and through Elixir LP incentives or LP incentive programs provided through cooperation agreements, they can obtain diversified staking rewards. In the collaboration with Vertex, Elixir has provided nearly 50% of the liquidity capacity close to the order book, effectively enhancing Vertex’s trading experience and liquidity level.

In the future, Elixir also plans to integrate with a series of well-known DeFi protocols such as Pancakeswap, Paradex, and Synfutures. The integration with Pancakeswap will further expand Elixir’s influence in the decentralized trading field, providing users with more trading pairs and richer liquidity options; while the integration with Synfutures is expected to bring users better services in the derivatives trading field, such as more efficient contract trading, a more reasonable price discovery mechanism, etc.

These integration plans are of great significance to the expansion of the Elixir ecosystem. Integrating with more DeFi protocols can achieve synergistic effects between different protocols, providing users with more comprehensive and efficient DeFi services. Users can perform various DeFi operations on one platform, such as trading, borrowing, and staking, without the need to switch between multiple platforms, greatly improving the convenience of operations and the efficiency of fund utilization.

Integrating with more exchanges will increase the user base and liquidity sources of Elixir. More exchanges connecting to Elixir means more users can access Elixir’s services, attracting more users to participate in the Elixir ecosystem. The liquidity of exchanges will also complement Elixir’s liquidity, forming a larger liquidity pool and improving market depth and trading efficiency.

The Elixir ecosystem expansion plan will help build a more prosperous, open decentralized financial ecosystem, create more value for users, and drive the development of the entire Decentralized Finance industry.

5.3 Opportunities in the Industry Trends

Currently, the cryptocurrency market and the Decentralized Finance industry are showing a series of significant development trends, bringing Elixir many opportunities and potential development directions.

With the change in attitude of traditional financial institutions towards cryptographic technology, the integration of DeFi with Real World Assets (RWA) is gradually becoming an undeniable trend. BlackRock, the world’s largest asset management company, has actively deployed in the cryptocurrency field, with its main investment, the on-chain money market fund BUIDL Fund, surpassing $530 million in size, while expanding its business footprint to multiple networks.

Elixir keenly captured this trend and reached a three-way partnership with BlackRock and Securitize to launch the deUSD RWA institutional program, building a bridge to the DeFi ecosystem for institutional-grade RWA assets exceeding 1 billion US dollars. Through this collaboration, Elixir is able to connect the permissioned environment of traditional finance with the permissionless ecosystem of DeFi, providing on-chain liquidity for institutional-grade assets while ensuring the security of the assets.

In the cryptocurrency market, users’ demands for trading experience and liquidity are increasing. The position of decentralized order book exchanges in the market is becoming more important, however, liquidity is fragmented in the market, with each DeFi project fighting independently, making it difficult to meet users’ demands for large and low slippage smooth transactions.

Elixir, with its unique technical architecture and liquidity management algorithm, can effectively integrate fragmented liquidity, provide sufficient liquidity support for order book DEX, reduce trading slippage, improve trading efficiency, and provide users with a better trading experience. This enables Elixir to stand out in the competitive crypto market, attracting more users and partners.

With the continuous development of blockchain technology, cross-chain interoperability is becoming increasingly important. Interconnection between different blockchains can achieve a wider range of value exchange and application expansion.

Elixir is currently available on the ETH mainnet, Arbitrum, Avalanche, Sei, and other mainstream networks, with the potential to integrate with ecosystems such as Movement, Optimism, Polygon, and others in the future, achieving liquidity interoperability through a unified cross-chain bridging interface. This will enable Elixir to connect to more blockchains, expand its range of applications, and provide users with a wider range of services.

The development trends of the cryptocurrency market and the DeFi industry provide Elixir with broad development space. Elixir should seize these opportunities, innovate and optimize continuously, further enhance its competitiveness, and achieve greater achievements in the field of decentralized finance.

Conclusion

Looking ahead, Elixir has broad prospects in the field of Decentralized Finance (DeFi). With the continuous improvement of the mainnet and the continuous expansion of the ecosystem, Elixir is expected to attract more users and developers, further enhancing its influence in the DeFi field. However, for investors, Elixir has certain investment value, but it is also necessary to fully consider the risks it faces. Investors should closely follow the project progress, market dynamics, and regulatory policy changes of Elixir, and make wise investment decisions.