Breaking Down Our Decision to Invest in Cetus Protocol: What You Need to Know
May 10th, 2023 | Jason Wong
Cetus is a pioneer DEX and concentrated liquidity protocol built on the Sui and Aptos blockchain. The mission of Cetus is building a powerful and flexible underlying liquidity network to make trading easier for any users and assets. It focuses on delivering the best trading experience and superior liquidity efficiency to DeFi users through the process of building its concentrated liquidity protocol and a series of affiliate interoperable functional modules.
Currently, Cetus has successfully completed its seed funding round, which was led by OKX Ventures and KuCoin Ventures. Other notable institutional participants included Leland Ventures, Comma3 Ventures, NGC Ventures, Animoca Ventures, IDG Capital, AC Capital, Adaverse, and Coin98 Ventures.
Background of the Sui Ecosystem
Sui and Aptos are Layer1 blockchains founded by former Meta employees who previously worked on the unsuccessful Facebook project, DIEM (formerly known as Libra). Both platforms use Move, a Rust-based programming language with an ultra-high TPS.
Sui is a new smart contract platform that takes a unique approach to the blockchain data model. Sui's object-centric data model and consensus architecture enable parallel protocols on cause-and-effect independent transactions, allowing for horizontal scalability without upper limits to meet the needs of latency-sensitive distributed applications. Sui's programming language, Sui Move, provides better security guarantees against common hacking/exploitation and a superior developer experience.
As the value of a network is directly tied to its number of users, it is especially important to attract users to the Sui ecosystem in the long run. We have observed that in addition to the existing traffic, Sui is becoming a popular choice for game developers, with over 40 games currently being developed on the chain. Moreover, Sui's unique data structure allows in-game assets to dynamically change at a faster rate than other platforms, making it very conducive to reaching and capturing vertical game-oriented user traffic.
With successful user acquisition, Cetus, as an indispensable infrastructure DEX member, is well-positioned to provide better liquidity to Sui's other eco-projects, as well as an excellent trading experience and greater capital efficiency for users.
DEX with CLMM
Cetus introduces a centralized liquidity market-making algorithm similar to Uniswap V3, which enables liquidity providers (LPs) to choose their own price bands when providing liquidity. With this new feature, LPs can add liquidity in a more active price band of the current market price, increasing the likelihood that their liquidity will be utilized by ongoing orders and maximizing their trading fee revenue. Additionally, LPs can create multiple liquidity positions in the same pool, and by setting different price bands, they can simulate different price curves to implement customized strategies.
Programmable Trading Strategies
Cetus offers users a highly customizable trading experience, thanks to the flexible combination of swaps, range orders, and limit orders available on the platform. This means that users can execute almost any type of complex trading strategy that can be implemented on centralized exchanges (CEXs). Furthermore, liquidity providers can utilize CLMM to execute a variety of Maker strategies and maximize liquidity efficiency.
Flexible Rate Settings
Currently, Cetus offers four levels (0.01%, 0.05%, 0.25%, and 1%) of trading fee settings, which enables clients to choose custom trading fee levels that better meet the needs of different types of trading pairs. For example, low-volatility assets such as stablecoins may converge to low-rate pools based on market demand, while high-volatility assets are more likely to charge higher commission rates, as LP holders need to hedge their risks. With flexible rate settings, both liquidity providers and traders can find the ideal liquidity allocation solution.
No Licensing and Composability
All major tools and features on Cetus are designed to be license-free, allowing users or other applications to use its protocols for their own use cases at any time. Whether it's creating a new pool of transactions or allocating incentives to rent liquidity to the public, Cetus provides a flexible and accessible platform. Furthermore, Cetus adheres to the "liquidity as a service" philosophy, emphasizing ease of integration. Developers and applications can easily access liquidity on Cetus and build their own liquidity vaults, derivatives, leveraged mining, and other products. New project teams can also quickly build exchange interfaces on their own front ends by integrating the Cetus SDK, gaining access to Cetus liquidity and the market as a whole in a fast and efficient manner.
Cetus has already built a complete and stable product suite, including Swap, Pool, Bridge, and Launchpad.
As of May 10th, according to DefiLlama data, Cetus has reached approximately $16 million in total value locked (TVL) and is currently the top-ranking TVL project in the Sui ecosystem. By expanding to the Launchpad application, Cetus can share and build liquidity and traffic with the high-quality early projects of the Sui ecosystem, further strengthening its position in the market.
Overall Network Effect:
By supporting different Sui ecosystem projects, Cetus helps to drive the early development of new use cases, technologies, and other innovative projects. This diversifies the Sui ecosystem and contributes to the sustainability of the overall network.
Cetus combines Launchpad and DEX functionality to create a seamless experience for users who want to participate in IDOs and token trading. This increases user engagement and provides more options for investors looking to diversify their portfolios.
User Growth and Building
Cetus can help build a strong and engaged community around new projects, driving long-term adoption and support. Conversely, new projects can increase Cetus’ overall trading activity and user base through unlicensed pool building and liquidity additions, promoting a win-win for platform revenue.
As of today, the Cetus team has established relationships with a diverse set of partners in the Sui ecosystem. With its sustainable narrative and strong operational BD capabilities, we are excited for the next new projects coming to Cetus Launchpad. The team's dedication to providing a customizable and accessible trading experience, combined with its commitment to building a strong and engaged community, positions Cetus for continued success in the evolving DeFi landscape.
About Leland Ventures
Leland Ventures Capital is a crypto asset investment firm that collaborates with our partners to offer diversified investment strategies that generate long-term income.
Our firm's focus ranges from the fundamental technical architecture of blockchain to the decision-making of macro top-level economic design. We prioritize emerging technologies and decentralized practices, empowering blockchain startups with worldwide resources and influential community connections.