Ellipsis Labs Raises $20 Million for DeFi Expansion

Ellipsis Labs, a decentralized finance startup on Solana, secured a $20 million Series A funding led by Paradigm, with Electric Capital also involved.

A $20 million Series A financing was completed by Ellipsis Labs, a decentralized finance startup built on Solana. The investment was led by Paradigm, and Electric Capital also participated. Electric led the announcement of Ellipsis Labs’ $3.3 million seed round in August 2023.

With the new funding, Ellipsis plans to increase the size of its technical staff and move faster in its pursuit of building “a new financial ecosystem that offers competitive financial products on top of high-throughput blockchains.”

Phoenix made its debut in February of last year and went public in August of the same year. Its platform, according to Ellipsis, is “the fastest on-chain orderbook in DeFi,” thanks to its small protocol and network expenses.

Without the need for a third-party custodian, users of decentralized exchange platforms can transact directly with one another. Phoenix solves the liquidity problem by enabling market makers to compete based on liquidity quality, according to the company’s statement.

“Our goal is to create DeFi products that can compete with, and even surpass, what is available at centralized venues,” co-founder Eugene Chen stated.

According to the release, Phoenix will not provide market makers with additional tokens as an incentive, but instead will provide them with opportunities on the exchange platform.

The vast majority of the time, investing in an automated market maker (AMM) will result in a loss. According to what Chen told Fortune, AMMs are often able to draw liquidity by offering incentives to make them lucrative.

Chen argues that we cannot sustain rewarding automated market makers (AMMs) with financial incentives given the ongoing need for funding.

According to Chen, “the most important thing” is for his team to demonstrate that the system exchange can function independently.

Additionally, Chen mentioned that the need for active liquidity played a role in the selection of Solana. “A very low fee structure and extremely high throughput are necessities for a lightning-fast blockchain.”

Speaking on Paradigm’s prominent role in the financing, Paradigm’s co-founder and managing partner, Matt Huang, stated: “We’ve known and respected Eugene and Jarry for several years, and we’re excited to formally partner with some of the most ambitious and principled builders in DeFi.”