Automated market maker MonoX has today appear a debut capital raise of $5 one thousand thousand from venture firms including the likes of Axia8 Ventures, Animoca Brands, Divergence Ventures, amidst others.

MonoX will use the funds to back up its ambitions in reducing the capital letter and liquidity prerequisites for decentralized finance (DeFi) projects offer swap, lending, borrowing and derivative capabilities on decentralized exchanges (DEXes).

The protocol will reach this through the introduction of a single-sided liquidity model. Though not a revolutionary concept for liquidity pools, it will aim to support the DeFi ecosystem's growth.

In traditional DEXes such as Uniswap, industry projects require two tokens to build a "liquidity pair," increasing the capital barrier for entry. With the single-sided liquidity model, projects are merely required to provide their native token. As such, they tin can offering more liquidity to the market.

Founder and CEO of MonoX, Ruyi Ren, shared his views on the potential impact of the funding:

"With a lot of innovation in the DeFi space, over-collateralization has become an increasingly big trouble. We volition employ the funding to grow the team, further develop and build our community in new flourishing DeFi ecosystems like Solana."

Related: Derivatives exchange dTrade raises $22.8M for market makers

Once a DeFi project contributes its native token, the MonoX-backed stablecoin vCASH steps in as the second token to form the liquidity pair. Pegged 1:1 to the U.S. dollar, vCASH aims to reduce trading fees ordinarily experienced within the transactions of traditional automatic market place makers (AMM).

MonoX is set to launch its mainnet version on the Ethereum and Polygon blockchains in Q3 2022.

Despite the vast potential of single token liquidity, this is by no ways the first application of this kind within in the DeFi infinite.

This time last yr, beau AMM Bancor launched what information technology chosen "liquidity mining 2.0" — a single token liquidity provision designed to overcome the insidious challenges of sustaining liquidity and volume in the DeFi markets.