Dexalot Awarded $3M Grant By Avalanche Foundation

The Avalanche Foundation has awarded $3M in AVAX tokens to Dexalot, a fully on-chain central limit order book (CLOB) DEX, running on its own Avalanche Subnet.

The foundation will disperse the funds over the next 12 months, beginning this fall, through Dexalot’s established incentive program. The funding remains contingent on Dexalot’s DEX reaching volume-based milestones.

Dexalot’s Subnet has processed over 12M transactions since it was deployed in February 2023.

The foundation's $290M Avalanche Multiverse initiative uses AVAX token grants to accelerate the growth of Avalanche Subnets – independent app-specific networks.

The AVAX token is down 9% over the last two weeks. Meanwhile, Dexalot’s native ALOT token is up 15% over the same period.

Challenges of Building a CLOB DEX

A Central Limit Order Book (CLOB) is a live list of buy and sell orders for an asset, organized based on price, time, and priority, and is the model used by centralized exchanges. This contrasts with the Automated Market Maker (AMM) model, which many DEXs use, where prices are determined by the ratio of assets in liquidity pools.

CLOBs offer a better trading experience than AMMs because they provide real-time price discovery through direct matching of buyers and sellers, leading to potentially tighter spreads and more efficient markets.

Other Layer 1 and Layer 2 networks proved insufficiently performant to build a CLOB DEX, according to Dexalot COO Tim Shan.

“Fully on-chain CLOB DEXs are very difficult to build on most L1s and even L2s given CLOBs require high speed, high throughput and low gas fees. Also, the majority of the few true CLOB DEXs today have critical functions off-chain and thus are not really ‘decentralized,’” Shan told The Defiant.

The Avalanche Subnet provides high throughput and milliseconds fast time-to-finality, as well as full transparency, and predictable gas fees. These features benefit market makers, who provide liquidity to order books with tens of thousands of daily orders, according to Shan.

“CLOB DEXs simply offer users better prices and without any intrinsic handicaps of AMMs, like impermanent loss and slippage,” said Shan.

Hands-on Approach

Avalanche Multiverse program members receive ongoing support from the foundation.

“It’s important to continue to follow up with teams through the duration of the program and help guide them to success within our ecosystem and the greater crypto landscape as a whole,” Luigi D’Onorio DeMeo, head of DeFi and DevRel at Ava Labs, told The Defiant.

According to DeMeo, instead of focusing on teams that “chase money or narratives” that may not value network loyalty or technological advancements, the foundation “focuses on giving grants to projects building on Avalanche with a solid track record and traction.”

Rather than disbursing grants upfront and risk teams losing motivation, the foundation structures grants around milestones that forestall the release of AVAX tokens until met.

“In this case, Dexalot unlocks more of the grant as volume-based milestones are met over a certain time period,” said DeMeo.

The foundation could base additional grant milestones on user levels, total value locked, transactions, or other verifiable metrics, according to DeMeo.