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Tokemak intends to take on the position of head of decentralised exchange liquidity.
With Tokemak, a project the team refers to as a “decentralised liquidity reactor” for DeFi, Fractal, an emerging trading company, is moving to grow into the field of decentralised finance.
Framework Ventures, a well-known DeFi investment fund known for its bets on Synthetix and Chainlink, led a $4 million investment round in the firm on Tuesday. Other major investors included Electric Capital, Coinbase Ventures, North Island Ventures, Delphi Ventures, and ConsenSys.
The funding comes ahead of Tokemak’s announcement, which is scheduled for late second quarter 2021, which will see its liquidity network deployed on the Ethereum mainnet.
To put it succinctly, Tokemak is a generalised liquidity aggregator for decentralised exchanges. Carson Cook, the project’s founder, told Cointelegraph that Tokemak is a “network designed to generate sustainable liquidity for new and established DeFi protocols.”
Tokemak serves as a single-sided yield portal for liquidity providers, allowing them to deposit reserve assets such as Ether (ETH), USD Coin (USDC), and Dai, as well as tokens for Tokemak-enabled ventures. The liquidity would then be guided by the Tokemak network into automatic market maker pools and other market-making opportunities. TOKE holders play an important role in this concept, acting as “liquidity directors,” voicing their choice for where the liquidity should be sent.
Tokemak’s primary goal is to provide bootstrapping liquidity for new ventures. Much of the time, they must devote considerable capital and effort to increase liquidity in their token’s economy, including yield farming rewards. Tokemak allows them to devote liquidity in a single-sided bid, such as allocating a portion of their tokens to Token reactor pools. Tokemak’s liquidity pool will then be immediately directed to their token’s market, but this is subject to the wishes of the liquidity directors. Since the token gives fractional power over Tokemak stocks, TOKE holders may wish to incentivize those pools over others.
As Cook explained, one class of Tokemak users may lead the way in generating the highest profit for the protocol:
“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.”
Tokemak is supposed to be useful to “humble farmers” as well, provided that TOKE will be spread by liquidity mining, according to Cook. Exchanges can see the platform as a way to expand their business depth.
The protocol is developing a creative exchange liquidity aggregator, close to Yearn.finance and other yield farming protocols that are actively looking for the most lucrative solutions for users’ money. Given the significance of TOKE, the token’s dissemination is likely to be critical to its growth.