Tokemak plans to become the director for decentralized exchange (DEX) liquidity.
It has been reported that the company announced a $4 million investment round led by Framework Ventures, a well-known DeFi investment fund known for its bets on Synthetix and Chainlink. Other major funds such as Electric Capital, Coinbase Ventures, North Island Ventures, Delphi Ventures, and ConsenSys also joined the round.
However, the funding comes in preparation for Tokemak’s release, slated for late second quarter 2021, which will see its liquidity network deployed on the Ethereum mainnet.
The report said that Tokemak provides a generalized liquidity aggregator for decentralized exchanges.
Carson Cook, the founder of Tokemak, explained that the project is a “network designed to generate sustainable liquidity for new and established DeFi protocols.”
A new liquidity provider is about to make a splash in DeFi. If the upcoming Tokemak system can deliver on its promises, it might become the most profitable pooling protocol. https://t.co/cr21IesPKc — Cointelegraph (@Cointelegraph) April 21, 2021
The Tokemak platform will direct the liquidity into automated market maker pools and other market-making opportunities. Key to this concept is TOKE holders, who act as “liquidity directors,” expressing their preference on where the liquidity should be sent. The primary need that Tokemak aims to solve is bootstrapping liquidity for new projects. In most cases, they must commit a significant amount of resources and effort to bolster liquidity for their token’s market, including yield farming incentives.
“Market-makers are able to access Tokemak to increase trading capital and generate trading returns. Market makers will likely act in the following roles: Pricers, providing pricing for assets in professional markets such as order-book markets, RFQ systems, etc. and Liquidity Directors, who use TOKE to direct liquidity to markets where they can be most efficient with trading capital.”
Likewise, Tokemak is expected to be useful to “humble farmers” as well, Cook said, given that TOKE will be distributed through liquidity mining. Exchanges may also see the platform as a way to increase their market depth.
The protocol is building an innovative aggregator for exchange liquidity, with a somewhat similar role to Yearn.finance and other yield farming protocols that constantly search for the most profitable strategies for users’ assets.
Thus, given the importance of TOKE, a sensible distribution of the token is likely to be key to its success.