Elixir Network is a blockchain-based system that boosts liquidity on decentralized exchanges (DEX). It enables consumers to engage in market-making while earning returns. The Elixir Network is a new primitive designed to support high-throughput liquidity cases. Elixir powers exchanges and the deUSD, DeFi’s native yield-bearing dollar. deUSD is the first rail for institutional asset holders to use DeFi while maintaining their original asset exposure.

What is Elixir Network?

The Elixir Network is a blockchain-based technology that allows decentralized exchanges to obtain liquidity directly from retail players, decreasing dependency on centralized liquidity providers. It integrates into the infrastructure of DEXs, providing liquidity for order books and allowing users to profit from participation. Elixir’s modular network architecture facilitates order-book exchanges and improves liquidity across several trading pairs while remaining decentralized. The network connects different blockchains and integrates smoothly with other decentralized apps (dApps). The Elixir Network is a new primitive designed from the ground up to support high-throughput cross-chain liquidity use cases. Elixir powers exchanges and deUSD (“decentralized US Dollar”), a fully collateralized, yield-bearing synthetic currency. DeUSD serves as the rails for institutional RWA asset holders to gain access to DeFi for the first time while maintaining their original asset exposure.

Elixir is cross-chain and composable, with an off-chain DPoS network. DeFi’s single dollar, deUSD, is the rail for institutional RWA assets to enter the platform natively. Securitize uses deUSD as its default currency, allowing asset holders to use DeFi while keeping separate backing. Elixir also enables order-book DEXs to connect the network to its core infrastructure, allowing retail customers to provide liquidity to pairings, among other fascinating use cases. The decentralized network provides critical underlying infrastructure, allowing exchanges and protocols to quickly add liquidity to their books. Elixir provides over 30 native connectors into the basic infrastructures of the biggest DEXs.

Background of Elixir Network

Elixir Network was launched in 2022 by Christopher Gilbert and Philip Forte. Elixir Network was formed to create a more scalable and decentralized blockchain infrastructure headquartered in New York. Christopher Gilbert is an accomplished entrepreneur specializing in blockchain technology and decentralized systems. Gilbert worked on several technology startups before creating Elixir Network, where he established a reputation for leadership and competence in the blockchain area. Philip Forte is also an entrepreneur with expertise in technology and blockchain development. Forte’s competence is in developing decentralized platforms, and he can tackle technical challenges.

Elixir has completed several investment rounds, indicating a rising interest in its decentralized liquidity system for order book exchanges. In October 2023, the company raised $7.5 million in a Series A funding round, giving it a valuation of $100 million. Hack VC led the round, which included investors such as NGC Ventures, AngelList Ventures, Bloccelerate, Ledger Prime, and Genesis Trading. In mid-2024, Elixir raised $8 million in a Series B investment. Mysten Labs and Maelstrom, Arthur Hayes’ family office, co-led the round, including investments from Manifold, Amber Group, GSR, and Flowdesk. Elixir’s Series B fundraising lifted its valuation to $800 million, a considerable rise over its Series A valuation.

Features of Elixir Network

• Decentralized Liquidity Provision: Elixir allows retail customers to add liquidity directly to order books, providing a decentralized alternative to traditional market-making techniques.
• Cross-Chain Compatibility: The network’s cross-chain features enable liquidity to be distributed across numerous blockchain ecosystems and exchanges.
• Synthetic Collateral (deUSD): deUSD serves as an utterly collateralized asset in the ecosystem, stabilizing liquidity and providing a reliable collateral option for liquidity providers.
• Governance and Security: ELX token holders participate in governance and network security, ensuring decentralized control and operational integrity through DPoS. Trail of Bits performed Elixir’s thorough protocol audit. Quantstamp performed an audit on Elixir’s deUSD token and related staking contracts. The network also runs an ongoing Immunifi bug bounty program that covers technical protocol vulnerabilities and deUSD.

How Does Elixir Network Work?

Elixir’s modular network infrastructure is decentralized and high-performance. The network reaches DPoS consensus for deUSD’s mint/redeem mechanisms and orders placed on exchanges. Fraud proofs are posted to the Ethereum mainnet, where staking and delegating flows live. Exchange feeds maintain read-only credentials for each exchange and separately subscribe to a single update stream, broadcasting that data to the data aggregators.

The data aggregator receives data from numerous exchange feeds, merges it into a deterministic data frame, signs it, and sends it to validators and auditors. This portion of the Elixir tech stack enables validators to act upon accurate data related to the exchange feeds. Elixir’s validator network is based on a decentralized proof-of-stake system that requires 66% consensus, which is enforced at each relay node. End users delegate their stake to validators, and the top-staked validators, based on stake weight, will receive the most significant portion of validator emissions, depending on a curve, for protecting the network.

Relay nodes store trading keys for individual exchanges and count order proposal frames from individual validators. After the order proposal has expired, it is submitted to an auditor for verification. Long-term API keys will be protected via SGX + Shamir’s Secret Sharing within these nodes. The dispute resolution layer (composed of the Auditor and Controller) attempts to guarantee that the network operates honestly and settles any emerging issues. This layer, in particular, ensures that the validators perform the market-making process with the appropriate parameters based on the initial instruction. Furthermore, auditors work to incentivize honest behavior from validators through a bounty while penalizing dishonesty.

Elixir Network Architecture

Validator Network

Validators are essential to the Elixir stack, as they execute the underlying consensus and reach consensus across the network. Validators will be granted Elixir Foundation governance stakes through the Elixir Foundation Delegation Program. Top-performing validators will participate in governance with their delegated tokens and earn validator emission rewards from their delegated stake.

The parties responsible for this infrastructure are economically aligned with the network. The validator network is based on a decentralized proof of stake system, which means that 66% consensus is required to pass data to the relay nodes, which enforce the consensus. Users can delegate ELX tokens to individual validators, with the top delegated validators participating in consensus (and getting most of the network rewards).

Fraud Proofs

Security is at the foundation of Elixir’s network. Elixir’s technical architecture ensures the protocol’s deUSD operations and orderbook order activities run smoothly and safely. On the technical process flow, the auditor and controller infrastructure ensure that the data sent to exchanges is true and correct. The auditor infrastructure checks inputs and outputs inside the network, whereas the controller infrastructure resolves conflicts that may develop due to inconsistent outputs. This ensures network accuracy and prevents possible malicious acts by validators who seek to output data damaging to the strategies and users.

Auditors

Auditors try to keep the rest of the network honest. The auditor checks the inputs and outputs of the network’s various actors, and if a mismatch is discovered (either reported or observed), the auditor provides proof of malicious activity to the ETH-slashing smart contract in the controller in exchange for a bounty. The bounty will be deducted from the validator’s share and credited to the auditor. Finally, auditors are accountable for assuring validator uptime for staking payouts.

Controller (Smart Contract)

The controller smart contract manages staking, delegation, rewards, jailing, and slashing. In a disagreement, the controller checks for 2/3rds consensus among the active validator set and may slash the rogue validator. In significant downtime, the controller can imprison the offending validator.

Exchange Orderbook Connections

Elixir Network connects to exchange order books to increase liquidity.

Exchanges use WebSockets to deliver real-time information on transactions, positions, and order books. The Elixir network accepts these real-time data streams. It periodically converts the order book to a data frame in time slices equal to the network’s tick size. The data frame data is normalized to accurately depict order books across individual exchanges. Dataframes are cryptographically signed and broadcast to the entire network. Network participants can validate the data frame’s origin by confirming the signature, which can be done both on and off-chain.

What is deUSD?

deUSD is an essential component of the Elixir ecosystem that aims to introduce the future of DeFi money. The deUSD (“decentralized US Dollar”) is a fully collateralized, yield-bearing synthetic currency powered by the Elixir Network. deUSD is backed by treasuries via MakerDAO’s USDS t-bill protocol and stETH, which the network uses to short ETH perpetuals (creating a delta-neutral position). The Elixir network allows the creation of a synthetic dollar tailored to capture favorable funding rates by using the Ethereum funding rate basis trade. Even in a negative financing rate situation, deUSD is designed to be resilient.

DeFi’s single dollar, deUSD, is the railroad for institutional assets to enter DeFi natively. Securitise is the only one that uses this as the default currency, enabling onchain composability for BlackRock, Hamilton Lane, and others. deUSD is naturally yield-bearing, earning from a combination of treasury and funding yields. deUSD is a critical component of the Elixir ecosystem and will be used as preferred collateral for order-book exchanges. deUSD will also be the preferred collateral in Elixir’s ecosystem, with most Elixir-powered exchanges accepting it as yield-bearing collateral. It is vital to highlight that deUSD is not tied to USD via a 1:1 reserve of US dollars for each deUSD issued, nor is there any centralized issuer holding any amount of US dollars or other real-world assets to support the deUSD’s value.

deUSD Architecture

DeUSD’s RWA Institutional Program

Elixir has developed the “deUSD RWA Institutional Program” with Securitise. Institutional holders of RWAs issued by Securitise and other firms can mint and use deUSD within DeFi while still earning yields on their underlying investments. This connection enables protocols, foundations, and clients to benefit from deUSD’s composability and unified liquidity while minimizing exposure to deUSD holders. It converts RWA holdings’ innate utility into usable Total Value Locked (TVL), allowing holders to employ their hitherto underutilized RWA assets in DeFi contexts.

Severe legal and technical difficulties have impeded RWAs’ widespread use, such as regulatory transferability limits and limited DeFi integration. Elixir uses sToken technology to help tackle RWA concerns while keeping the integrity of deUSD’s backing. The Elixir network will be an isolated backing for sBUIDL tokens, which have 1:1 access to atomic redemption liquidity on the USDC blockchain. The Elixir Network and deUSD users benefit from stable TVL growth from different Securitise customers, increased deUSD distribution and utility across several chains, and minimal exposure to new backing assets.

Overcollateralization Fund (OCF)

The Over Collateralization Fund (deUSD) is a resilient system’s heart. As funding rates fall, deUSD’s backing programmatically changes to MakerDao’s T-Bill protocol (for example, USDS). It accomplishes this by monitoring the health of the OCF. The OCF is primarily designed to pay any execution costs connected with moving deUSD’s backing into USDS rather than acting as an “insurance fund” to defend against protracted negative funding rates. It is crucial to note that the OCF does not guarantee any losses that a deUSD holder or Elixir ecosystem user may incur.

The introduction of the OCF distinguishes deUSD from alternatives and improves the protocol’s risk/return profile. This approach enables the protocol to generate yield while remaining stable even in negative funding circumstances. This is accomplished through a protocol-driven adjustment of the basis transaction into USDS, resulting in a combined yield from Maker fees and US Treasury holdings. This implies that deUSD investors can continue to benefit from income possibilities while having backing in various market circumstances.

What is The ELX token?

Elixir’s native token, ELX, is a utility and governance token. Token holders are involved in governance choices that affect the network’s development and fee distribution. ELX is the Elixir ecosystem’s future native utility and governance token, enabling consensus and empowering holders to shape the network’s future. With the eventual launch of the mainnet, Elixir will be completely decentralized. While this comprises an entirely decentralized network, it also contains community-driven governance led by ELX holders.

The ultimate goal will be to: 1. develop efficient governance mechanisms; 2. use ELX as a cryptoeconomic security incentive; and 3. maintain the network’s decentralized and permissionless condition. The Elixir ecosystem relies on ELX for security, making it an essential part of the platform’s architecture. ELX tokens will primarily power the network’s node and validator infrastructure. All validators and nodes must stake a specific number of ELX tokens to keep their infrastructure operational and stable. The ELX token also serves as the ecosystem’s single governance token, allowing holders and network members to propose and vote on proposals that shape the network’s future growth.

Conclusion

Elixir is a decentralized proof-of-stake (DPoS) network intended to provide liquidity for decentralized exchanges (DEXs) that use order book models. The Elixir architecture facilitates the establishment of more profound order books while reducing reliance on centralized market makers. The Elixir Network is a new primitive that drives liquidity across order book exchanges, allowing users to deploy liquidity while earning rewards.