Mangrove is an order book-based DEX that allows LPs to issue quotations in the form of smart contracts, aiming to release liquidity and unlock more opportunities for DeFi Multi-value and become the most liquid DEX.
Different from traditional DEXs based on liquidity pools, in Mangrove LP does not have to lock liquidity, but can Elsewhere on the chain continue to earn yield on these assets. Liquidity can be shared, borrowed, lent and appear in Mangrove's order book as a commitment, with actual settlement only occurring when an offer is accepted.
Mangrove will be launched on Polygon first, and its most important innovation is programmable smart offers (Smart offers).
The order book market is generally composed of Maker and Taker. The quotation order created by the order maker will enter the order book to provide liquidity to the market and reduce the difficulty of buying and selling this asset. The taker is the trader of the order created by the order maker.
In Mangrove, the taker is not much different from the traditional order book, they all complete the order by accepting the quotation issued by the maker . The order maker on Mangrove can issue real-time quotes like traditional order books, or issue smart quotes through smart contracts called Maker contracts.
When the smart quotation matches the taker during the transaction execution, the Maker contract will be called and have the opportunity to execute its designed quotation logic. During trade execution, the Mangrove protocol invokes the maker contract's quote logic twice - when the smart quote is accepted and after the smart quote is accepted.
When quotes are accepted When single matching, Mangrove will call the quotation logic of Maker contract for the first time. This call is made immediately before the transaction is settled, allowing the maker to bring in liquidity from elsewhere and use it immediately for the transaction. By adding defensive codes to the Maker contract, this pre-settlement logic call can also allow the order maker to reject the transaction under certain special circumstances that will have adverse effects.
This means that quotes posted to the Mangrove order book do not need to be locked in there, but can appear as commitments. For the order maker, its liquidity can be shared, borrowed, and lent while it is in the Mangrove order book, and only when the offer is accepted will it actually enter Mangrove.
After the quote is accepted, during the trade settlement process, Mangrove will The quotation logic of the Maker contract is called for the second time, so that the order maker can publish another quotation in a way similar to AMM, and immediately refresh its liquidity.
Programmable smart quotation mechanism, so that Mangrove's order book does not need to really lock in value. As long as the offer published on Mangrove is not accepted, these assets can generate income elsewhere on the chain, thereby reducing the opportunity cost of LPs trading on DEX. Before the offer is accepted, the user does not even need to own the assets promised in the smart offer, but can buy or borrow instantly when the smart offer is accepted.
Since Mangrove's order book does not lock liquidity and does not even need to verify assets, perpetrators and those who cannot fulfill their promises can easily Sending a "blank check" to the Mangrove order book, that is, a quotation that will definitely violate the promise, will waste the gas fee and time cost of the order taker, and disrupt the normal operation of the DEX.
There must therefore be a mechanism that increases the cost of sending false quotes, and Mangrove refers to the protection mechanism it uses as quote prevention ( Offer Provisions).
For example, there is a quotation that promises to exchange 100DAI with 100WETH. If the order maker does deliver 100WETH at the time of settlement, then everything is normal and the gas fee will be paid by the order taker. If it is not delivered, the gas fee consumed by the taker must be compensated. The source of the compensation is the guaranteed bounty provided in the form of ETH when the order maker creates an offer.
The amount of the Mangrove Quote Prevention Guarantee Bounty depends on:
< p>Average Gas price, estimated by Mangrove;
Quotation for the Gas required by the function called;
Minimum Gas, determined by Mangrove.
When issuing a quotation, the order maker must set the "average Gas price * (Gas required by the function called by the quotation + minimum Gas)" The WEI is locked in Mangrove.
If the maker decides to withdraw the offer, then they can get back these guaranteed bounties; if the quote transaction is successfully settled, then the guaranteed bounty will continue to be locked in the maker In the total balance of guaranteed rewards; if the quotation is executed but the transaction fails, the taker can get part or all of the guaranteed reward as compensation, and the order maker can get back the rest. The amount of ETH obtained by the taker depends on the quotation execution Gas actually consumed during the period.
In addition to preventing "blank checks" from filling up the order book, the quotation prevention mechanism can also allow the order maker to actively withdraw the quotation when it regrets , so as to reduce the penalty for breaking his promise. In addition, if you find an offer that is bound to fail by means of local trial operation, etc., use the bot to execute the offer and pay the gas fee that is lower than the expected consumption of the offer, and you can earn profits from the guaranteed bounty.
Mangrove official confirmed Token will be issued. Mangrove DEX will first be released on Polygon and will be launched on an EVM compatible chain in 2023.
On February 28, 2023, Mangrove announced the completion of a US$7.4 million Series A financing, led by Cumberland and Greenfield Capital, CMT and Gumi Crypto Capital (gCC) participated in the investment.
Mangrove previously raised $2.7 million in a 2021 seed round with backing including Wintermute Ventures and QCP Backed by cryptocurrency trading giants.
Mangrove aims to end the era when DeFi capital is dispersed in various liquidity pools, but its programmable smart quotes not only unlock liquidity for LPs, but also increase the chances of becoming LPs to a certain extent. threshold.
Currently there is no service available in Mangrove, and its complex logic still needs to be tested in practice, but no matter the specific Regardless of the product form and user experience, Mangrove's innovation and narrative are worth looking forward to.