Decentralized market maker Arrakis Finance raises $4 million: Exclusive

Arrakis Finance, a decentralized market-making protocol, raised $4 million in a seed funding round.

Investors included Uniswap Labs Ventures, Accel, Polygon Ventures and Robot Ventures. There was no lead investor in the round, and it was secured via a simple agreement for future tokens (SAFT), Ari Rodriquez, co-founder of Arrakis Finance, told The Block. The round started in May and closed in September, Rodriquez added.

Arrakis Finance was established last year by Rodriquez and Hilmar Orth, both formerly of Gelato Network, a popular tool for developers to automate smart contract execution on Ethereum. Orth was a co-founder of Gelato, and Rodriquez was a senior smart contract engineer. The duo launched the first version (V1) of the Arrakis Finance protocol in April last year, which allows running algorithmic strategies on Uniswap V3.

Arrakis Finance plans to grow its current team of eight people and continue building its protocol with the fresh capital, Rodriquez said.

The funding for Arrakis Finance comes amid recent demises of centralized market makers such as Alameda Research and Three Arrows Capital. Arrakis is not the only market maker that has raised funds recently. Last month, crypto market maker Keyrock raised $72 million in a Series B funding round. In June, Flowdesk raised $30 million to expand its crypto market-making services.

“Arrakis V1 quickly became the go-to venue for deploying liquidity on Uniswap V3, with over $1.8 billion total value locked or TVL accounting for 25% of all liquidity on the protocol at its peak,” Rodriquez said. “The most common use case for V1 vaults were managing tightly pegged pairs, for example, stablecoins like DAI-USDC.”

Last week, Arrakis Finance launched V2 of its protocol, which can be “thought of as an abstraction layer on top of concentrated liquidity automated market makers (AMMs) like Uniswap V3,” Rodriquez said. “It enables central limit order book (CLOB) like interactions.”

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