Denver, CO, February 28, 2023 – Mangrove, the order book-based Decentralized Exchange, announced its Series A fundraising of $7.4 million.
Led by Cumberland and Greenfield Capital and followed by CMT and gumi Cryptos Capital (gCC), this round succeeds the company’s seed funding round of $2.7 million in July 2021, which was backed by prominent VCs including Wintermute Ventures, QCP Soteria Node, Monday Capital, Noia Capital, Zeeprime, Atka Capital and Stake Capital.
“We have amazing support from world-class crypto-native VCs and can’t wait to launch our new market technology to enhance capital efficiency in decentralized finance (DeFi),” says Vincent Danos, Co-Founder and Researcher at Mangrove.
Mangrove introduces a novel approach to Decentralized Exchanges (DEX) with its “Offer-is-Code” approach. On Mangrove, liquidity providers can post “smart offers” of liquidity, i.e., smart contracts as offers. This innovation means that DeFi users are able to list promises instead of locked commitments. Promised liquidity can be shared, borrowed, lent, and at the same time, be displayed in Mangrove’s order book, ready to be sourced when, and only when, an offer is matched.
With over $50 billion locked into various protocols, inefficiencies in capital utilization are widespread. Given the programmable nature of DeFi, there is arguably no need for locking capital in one place, which is however currently to a large extent the case. It is also commonplace to lock capital across multiple unconnected liquidity pools. As a result, the potential for earning yields is not fully utilized, while on the flip side the cost of capital increases.
“Mangrove solves these inefficiencies as the liquidity/collateral does not have to be on the CEX/DEX itself but can be sourced from another pool or DeFi protocol once the order in the order book is hit. And yield can be generated elsewhere until the offer is taken. That way Mangrove is disrupting one of the core notions of DeFi – having to lock your liquidity in one protocol compromising on capital efficiency. The disruption is very needed,” Gleb Dudka, Principal at Greenfield Capital says. “Mangrove opens up a large design space for novel DeFi strategies, applications and even protocols.”
“DeFi is already more transparent, innovative and inclusive than TradFi,” said Miko Matsumura, Managing Partner at gumi Cryptos Capital (gCC). “But in order to upgrade the world’s financial system, world-class DeFi builders need to improve on capital efficiency. This is why gumi Cryptos Capital is proud to have invested in Mangrove.”
Mangrove was founded by a group of researchers in 2021, as the team noticed that traditional exchange market makers did not use their own capital, but instead borrowed it from the market. They wondered why this concept wasn’t replicated in decentralized finance and decided to build a DEX where market makers could operate without locked capital. The key was to use the taker’s funds to collateralize a loan that would be used to pay the taker.
The collapse of FTX showed that users appreciate the capital efficiency of an order-book exchange, but should not be required to trust a centralized provider. By replicating the capital efficiency of a centralized exchange in a trustless exchange, Mangrove helps address fundamental problems in the market.
Today, Mangrove’s programmable order book offers its users the possibility to use existing strategies to achieve higher returns or to develop their own strategies to obtain more flexibility. The founders created the platform as a one-stop-shop where developers and DeFi protocols can build sophisticated trading strategies and integrate features including partial liquidations and carbon markets among others.
Furthermore, Liquidity providers have the flexibility to cancel the promised liquidity at any time if they feel that the orders are not executed under favorable market conditions. Users can also maximize liquidity potential with consistency, as the executed code allows a quote to be automatically added back to the order book.
In addition, with an intuitive user interface arriving soon, Mangrove’s users will be able to easily swap, place limit-orders, and run automated market-making strategies on Polygon Mainnet.
“Cumberland believes Mangrove’s foundational on-chain limit order book technology has the potential to establish itself as a new DeFi ecosystem primitive, ” John Napier and Nate George, VC co-leads at Cumberland comment. “Not only can Mangrove’s design immediately generalize applications like constant-product AMMs, its architecture is also flexible enough to unlock new on-chain trading strategies, enabling just-in-time liquidity and maximizing capital efficiency. We are excited to see Mangrove continue to build towards their ultimate vision of ‘Total Value Unlocked’.”
Mangrove will use the funding to deliver products and actively pursue research.
About Mangrove DAO
Mangrove DAO has created an innovative platform that allows liquidity providers to post offers in the form of smart contracts, unlocking the potential of DeFi liquidity. This new platform, known as Mangrove, is a 100% trustless and on-chain DEX that is based on an order book model. Unlike traditional pools-based DEXs, LPs do not have to lock in their liquidity and can utilize it elsewhere on the chain. This dual use of liquidity offers a competitive advantage that is expected to make Mangrove the most liquid DEX in the industry.
About Greenfield
Greenfield Capital is a European crypto-native investment firm, backing developer teams building toward an open, decentralized, and more robust architecture of tomorrow’s web. Founded by Sebastian Blum and Jascha Samadi in 2018, Greenfield provides funding and competent support in operations (e.g. running validators for networks and protocols in-house), tokenomics and governance. Having delivered superior capital returns with their I. and II. crypto fund, Greenfield initiated 2021 its III. crypto fund, the largest fund dedicated to crypto in Europe to date (€135m). Greenfield’s portfolio includes Nym, NEAR, Celo, Dapper Labs, Safe, Liquity, Arweave, 1inch and The Fabricant among others.
About gumi Cryptos Capital (gCC)
gumi Cryptos Capital (gCC) is an early-stage crypto-native venture capital firm. gCC deployed its $21M fund I into the “crypto winter” of 2018 to back founders at the earliest stages such as OpenSea, Yield Guild Gaming, 1inch Network, Qredo, Agoric, VEGA protocol and Astar. On the strength of fund I gCC raised a $110M fund II and continues to back world-class founders and entrepreneurs who are building the foundational layers of web3 or who use blockchain technology to gain significant competitive advantage.
About Cumberland
Launched in 2014 as the crypto arm of global trading firm DRW, Cumberland is one of the world’s leading crypto liquidity providers, serving institutional counterparties through OTC spot and derivatives. In addition to its core trading business, Cumberland’s global team partners with TradFi and DeFi native companies to advance their Web3 and DeFi strategies, serves as a resource to regulators and policy makers, and makes investments in promising new projects.