Mangrove DAO has raised $7.4 million in Series A funding to develop its order book-based platform that enables digital asset traders to conduct smart contract-based offers of liquidity in advance. CMT and gumi Cryptos Capital were among the investors who took part in this funding round, which was jointly headed by Cumberland and Greenfield Capital. The development comes as Mangrove readies itself for launch on Polygon an expansion to EVM-compatible chains this year.
How Mangrove’s approach to DeFi makes it stand out
Paris-based Mangrove employs an “offer-is-code” strategy when it comes to providing liquidity on the platform. The opportunity cost on a DEX is reduced since liquidity providers can now only source liquidity when an offer is matched, and they can do so by posting smart contracts as offers.
One of the core ideas behind DeFi that Mangrove is challenging is the idea that you must lock your liquidity in a single protocol, reducing your capital efficiency. This approach to DeFi is a limiting factor, which makes the sector unattractive to many investors. With Mangrove, whenever an order in the order book is filled, the platform can then source the liquidity from a different pool or DeFi protocol. Also, until the offer is accepted, yield can be generated elsewhere.
The platform intends to use smart contracts to enable secure market trading with guaranteed DeFi. The primary advantage of these smart contracts is that once a transaction has been promised, players in the DeFi market can advertise agreed liquidity assets in their portfolio. On Mangrove, liquid assets are recorded on the distributed ledger until a suitable bidder is found.
Mangrove contributes to fixing the market by making trustless exchanges as efficient as centralised ones. The company’s approach to DeFi has won over some of the biggest names in the trade, such as Wintermute Ventures and QCP, who have invested in it.