by Henry Krause and Gleb Dudka – July 29, 2024

We are excited to lead Liquorice‘s $1.2M pre-seed funding round with participation of L2IV and Polymorphic Capital. Liquorice developed a novel approach to connecting intent-based decentralized exchanges to a network of solvers and market makers through an API. With that, they are addressing some of the most pressing challenges in DeFi: enabling the optimal execution for traders by broadening the access for non-vertically integrated solvers to get offchain quotes.

Given how the current intent infrastructure stack is built, individual solvers lack direct access to offchain liquidity, necessitating complex bilateral integrations with numerous market makers (MMs). Each bespoke solver-MM connection requires unique setups, continuous monitoring and updates. Market makers also face uncertainty executing quotes due to solvers’ “last look” optionality, forcing the market maker to offer more conservative pricing.

Liquorice solves the solver-MM connectivity problem by acting as a single entry point. Solvers can send requests to an endpoint where market makers are connected, simplifying onboarding for both parties. Connecting to Liquorice is permissionless, allowing anyone to request or provide quotes as a solver or market maker.

The final piece of Liquorice’s offering is their revolutionary lending market which enables unprecedented capital efficiency via under-collateralized loans and a unique mechanism enforcing the repayment of funds. Unlike with Uni v2, Uniswap v3 has created much more complexity for LPs, where they need to take on price risk as well as rebalancing risk of their positions, which necessitates an active position management. The latter is the home turf for MMs, which a retail person is naturally not as good at. Liquorice’s lending market for MMs will allow LPs to provide single-sided liquidity, thus splitting the risk of double-sided AMM LPing and the need to rebalance with MMs, getting exposure only to the trading fees net of MM’s cut without the risk of IL or LVR. This will introduce new sources of yield for all kinds of long-tail assets, including memecoins, and also has the potential to eliminate toxic MEV like sandwiching by enabling long-tail orderflow to be filled via intents without the need for inventory risk.

Diverse team

Misha Alefirenko, the CEO, has been deeply involved in the crypto industry since 2017, previously founding Velvet Formula, a market-making firm for centralized crypto exchanges. Anatoly Mukhin, the CPO, brings over five years of fintech experience and is a self-taught Solidity developer. At B2Broker, he developed an institutional-grade crypto CFD liquidity offering, growing monthly trading volumes to $3B.

Missing piece of infrastructure for intent-based trading 

The DeFi landscape is ripe for further transformation, and we believe Liquorice’s platform represents a crucial step toward the next iteration of a more integrated, efficient, non-extractive, and user-prioritizing trading ecosystem. As part of our commitment to fostering innovation in the DeFi space, we are proud to support Liquorice in its journey to streamline DeFi intent-based trading. We invite financial institutions, traders, and market makers to explore the potential of Liquorice’s platform and join us in shaping the future of onchain trading.