Access to liquidity is a perennial problem for any market, but especially for decentralized finance (DeFi). Although the aim in crypto is to have fully interoperable networks and tools, users and assets currently are spread across different platforms – stretching capital thin.
Cell Protocol is a so-called smart automated market maker that uses bots to try to better provision liquidity. Its founder would say “more fairly,” too.
This article is part of Road to Consensus.
“We want to democratize liquidity for end users on CLOBs DEXs,” Cell Protocol strategy lead and co-founder Felix Xu said, referring to “central limit order book decentralized exchanges.” These are a type of open crypto exchanges that apply a similar order book as you might find in traditional asset markets.
It’s a tool to “provide liquidity just like professional market makers,” Xu explained.
Xu, along with his pseudonymous co-founder @0x5_7, believe CLOBs are the future for decentralized exchanges. Today, many DEXs use what’s called an “automated market maker” to power trades – like the popular Ethereum-based Uniswap. But Solana-based CLOBs like Mango Markets and Serum are on the rise.
You likely “have to be a programmer” to make sense of the current CLOBs, @0x5_7 said. “You have to know how to code to provide liquidity. That is blocking a lot of the DeFi users,” he said.
Although small for the world of DeFi – Cell only has $250,000 in total value locked (TVL) – it has big ambitions. It looks to essentially rule the feast on liquidity provisioning. It launched in August 2021, and was the “first to market” within the world of Solana.
So it’s not surprising Cell is a finalist for Web 3 Pitch Fest, a hackathon hosted by Extreme Tech Challenge with winners to be announced at CoinDesk’s Consensus Festival.
0x5_7, a Stanford graduate who is now based in China and requested anonymity, previously worked as an engineer at Coinbase doing blockchain integration and indexing services. Wu is a self-declared “serial blockchain entrepreneur” who co-founded the privacy-preserving ARPA network and Bella Protocol. (To preserve the anonymity of some of its founding members, Cell Protocol is using non-fungible token cartoon characters.)
Cell Protocol plans to expand “horizontally and vertically” and become a unified liquidity layer across DeFi. The next step is integrating with other DEXs on Solana including Serum, Drift and Zeta Markets as well as expanding onto other blockchains.
“We are expanding to multiple networks and protocols,” 0x5_7 said. “We are like building a unified liquidity layer on top of DEXs … then we can pour liquidity and users into our DEXs.”
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