Decentralized exchange dTrade has raised $22.8 million for a market-making fund designed to provide the ecosystem with higher liquidity, potentially paving the way for wider adoption of DeFi on Polkadot once the DEX launches later this year.
The funds will allow dTrade to launch with “deep liquidity” backed by some of the biggest crypto market makers, the company announced on Tuesday. Specifically, the capital will be used to facilitate on-chain loans to market makers that provide order book liquidity on dTrade. Community members will also have the option to participate in the on-chain program once dTrade launches, which is expected shortly after Polkadot concludes its parachain auctions later this year.
The capital raise benefited from the participation of some of the biggest blockchain companies, including Alameda Research, CMS, Hypersphere, Polychain and DeFiance.
Market makers facilitate smooth opening and exiting positions for traders buying and selling assets in the open market. Market makers essentially place orders to buy and sell tradable assets in order to provide liquidity and ensure that trades are executed at prices as close to their fair value as possible.
Related: Automated market makers are dead
As Cointelegraph reported, dTrade closed a $6.4 million seed round in May this year to build DeFi capabilities on the Polkadot network. The capital raised in the past two rounds has coincided with a surge in derivatives trading, which accounts for the majority of cryptocurrency exchanges, by some estimates.
Crypto’s volatile price swings this year have largely been linked to derivatives. During the Bitcoin (BTC) flash crash in May, crypto liquidations topped $2.4 billion in a 24-hour period, according to to ByBit data. Over-leveraged traders were purged from the market during the extreme downtrend, although recent data suggests open interest in Bitcoin options is on the rise again.
Related: Delta Exchange launches options trading for Solana and Cardano
The crypto derivatives market started to take shape in the second quarter of 2020 but is still in its very early stages. Goldman Sachs has become the latest high-profile multinational to enter the market after expanding the addition of Ether (ETH) options and futures to its trading operations.
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