Crypto Analyzer

Ellipsis Labs Raises $20 million in Series A Funding for Decentralized Exchange Phoenix

Ellipsis Labs, the DeFi developers behind the decentralized exchange Phoenix, recently secured $20 million in Series A funding. The funding round was led by Paradigm, with participation from Electric Capital, to support the growth and innovation of their financial ecosystem.

Phoenix, the company’s flagship product, officially launched in February 2023, with its user interface going live in August of the same year. This funding injection aims to expedite efforts to create a new financial ecosystem that offers competitive financial products on high-throughput blockchains. The company aims to merge the accessibility and transparency of DeFi with the efficiency of traditional markets.

A decentralized exchange like Phoenix operates as a peer-to-peer marketplace where crypto traders can conduct transactions directly without the need for intermediaries. While decentralized exchanges offer increased transparency and control over assets, they often lack the liquidity to compete with centralized exchanges like Coinbase, Binance, or Kraken.

Despite facing challenges in liquidity, Phoenix has emerged as the fifth largest decentralized exchange by trading volume in the past 24 hours, according to DefiLlama data. With its on-chain limit order book, Phoenix allows market makers to compete based on the quality of liquidity they provide.

The founders of Ellipsis Labs, Eugene Chen and Jarry Xiao, drew inspiration from their backgrounds in high-frequency trading when creating Phoenix. They identified a key issue in the DeFi space related to on-chain liquidity management and set out to address this gap by offering a more competitive alternative to centralized exchanges.

One distinguishing feature of Phoenix is its focus on attracting market makers without resorting to external incentives like extra tokens. By ensuring that opportunities on the exchange are inherently attractive to market makers, Phoenix aims to create a self-sustaining system without the need for constant external capital inflows.

With the Series A funding, Ellipsis Labs plans to expand its engineering team and further enhance the platform’s on-chain financial primitives. The decision to build Phoenix on the Solana blockchain was driven by the need for active liquidity and high transaction throughput with minimal fees. This strategic choice enables Phoenix to offer a seamless trading experience while mitigating the impact of blockchain gas fees on liquidity providers.

Matt Huang, co-founder and managing partner of Paradigm, expressed enthusiasm for the partnership with Ellipsis Labs, highlighting the team’s ambition and dedication to building innovative DeFi solutions. The collaboration aims to propel Phoenix towards establishing itself as a leading decentralized exchange in the rapidly evolving cryptocurrency landscape.