dTrade, a decentralized exchange, has funded $22.8 million for a market-making fund aimed at providing more liquidity to the ecosystem, which might pave the way for larger DeFi adoption on Polkadot.
According to the business, the funding would allow dTrade to debut with “deep liquidity” supported by some of crypto’s largest market makers.
The funds will be utilized to help market makers supply order book liquidity on dTrade by facilitating on-chain loans. Members of the community will be able to participate in the on-chain program once dTrade begins, which is scheduled to happen soon after Polkadot’s parachain auctions end later this year.
Some of the largest names in blockchain, such as Alameda Research, CMS, Hypersphere, Polychain, and DeFiance, took part in the fund raise.
Market makers help traders who are buying and selling assets on the open market open and close positions smoothly. Market makers essentially put buy and sell orders for tradeable assets in order to create liquidity and ensure that transactions are carried out at prices as close to fair as possible.
dTrade closed a $6.4 million seed round in May to expand DeFi capabilities on the Polkadot network. According to some estimates, the cash acquired in the last two rounds corresponded with a strong surge in derivatives trading, which accounts for the majority of cryptocurrency trades.
The wild price swings in cryptocurrency this year have been mostly attributed to derivatives. According to ByBit data, crypto liquidations reached $2.4 billion in a 24-hour period during Bitcoin’s (BTC) flash drop in May.
During the strong bearish trend, over-leveraged traders were expelled from the market, but new data suggests open interest in Bitcoin options is increasing again.
The crypto derivatives market began to take shape in the second quarter of 2020, although it is still in its infancy. After expanding its trading activities to include Ether (ETH) options and futures, Goldman Sachs became the latest high-profile multinational to enter the market.