Dexalot Raises $7 million in funding to build the trading infrastructure on Avalanche

Dexalot receives $7 million to build trading infrastructure

Dexalot has received $7 million in funding to build the Avalanche network. The funding round was led by Avalanche’s Blizzard Fund with involvement from various Avalanche ecosystem actors and decentralized finance investors. The protocol aims to create a decentralized order book exchange based on Avalanche that allows users to trade any asset with cheap costs, no slippage, and quick price discovery.

Avalanche ecosystem contributors comprised of Colony, AVentures, Avalaunch, Avascan, Benqi, and Blizzard. Further, Maven Capital, GSR, Muhabbit Capital, Republic Capital, Woodstock Capital, and IPC are among the new investors.

CEO of Dexalot, Nihat Gurman, said:

Dexalot wants to create a truly transparent, community-owned crypto exchange where users can trade assets at the capital efficiency of central exchanges with the same or better user experience.

The protocol is an EVM-compatible Central Limit Order Book (CLOB) exchange that runs on the Avalanche C-Chain. It tries to fill in the gaps in Avalanche DEXs, which are currently exclusively AMM-based.

Which of the two Decentralized Exchange is Better: Order Book or AMM?

As the name implies, an order book records all buy/sell orders for a specific cryptocurrency. A bid is a name for a buy order, whereas an ask is a name for a sell order. The order book keeps track of how many tokens are being solicited or bid at a given price point.

The order book organizes the traders’ orders under the price associated with them when they place them. Thus, any DEX dealer may trade the asset as long as supply and demand exist. Depending on the order book, a CEX has generated automatically when a Binance clone script is used to create an exchange.

The order book is replaced by a liquidity pool in an AMM or Automated Market Maker-based DEX. The liquidity pool is essentially pre-funded by participants known as liquidity providers or LPs. Each AMM-based DEX has a different manner of rewarding LPs. The LPs essentially take on the role of market makers. Uniswap pioneered the idea of AMM, in which the current liquidity of the trading pair is properly considered using an algorithm. This makes it possible to supply traders with a real-time quote.

Automated Market Maker-based decentralized exchanges address one of the industry’s most pressing challenges. Similarly, order book-based DEXs are putting in a lot of effort to increase liquidity.

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Image credits: Krzysztof Kowalik and Austin Distel.