Last month, we included coverage on Bluefin, a potential breakout dApp on Sui. Sui is one of the premier Move language-based blockchains, with it’s main competitor being Aptos. Aptos boasts a greater market capitalization than Sui (~$5.3B vs ~$2B) whilst Sui’s total valuation is higher (~$16.3B vs ~$14.6B). APT price is faring much better than SUI, though both coins are mostly underperforming the likes of majors e.g. BTC, ETH, SOL this past month. Aptos has previously been a favorite for some speculators, resulting in the ‘1 APT = 1 Apartment’ meme.
Today, we’ll be focusing on Econia. Econia is a high performance, onchain orderbook, built on Aptos. The protocol went live late last year, after receiving $6.5M in funding from the likes of Dragonfly Capital, Wintermute, and Flow Traders, among others. Econia is a bit unique in that it is not natively a DEX, but rather orderbook infrastructure to be used by DEXs on the Aptos blockchain.
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Appeal of Aptos
High throughput blockchains, including move-based chains like Aptos, represent a paradigm shift in finance, offering new possibilities for scalability and efficiency. Lower transaction costs coupled with higher throughput enable a broader range of applications. Increased throughput allows for more transactions in parallel, unlocking unique application possibilities. These benefits are not 100% unique to Aptos; of course there are many chains that accomplish the goal of scalability through various means.
Aptos differentiates itself by leveraging the move programming language. The move language was developed at Facebook/ Meta, specifically with the intention of being used in smart contracts; it was initially created to be used by the Diem blockchain, Facebook’s own attempt at creating a sort of private stablecoin cryptocurrency to primarily be used in payments. Unfortunately (or fortunately, depending on the way you look at it), this idea would be discontinued due to regulatory concerns.
The team behind this language eventually would break off and create their own blockchains, free from the regulatory scrutiny associated with a massive company like Facebook. While one creator of the move language would go on to found Sui, members who worked on the Diem project, Mo Shaikh and Avery Ching, would go on to found Aptos and raise $350M over 3 rounds of fundraising, just $14M more than Sui.
The estimated transaction volume on Aptos is conservatively placed between 300 million and three billion, emphasizing potential scalability. He emphasizes that more transactions are technologically superior to high volumes, highlighting the importance of efficient technology over sheer quantity.
Background on Econia
Econia brands itself as a hyper-parallelized onchain orderbook. It uses Pyth Oracles, to allow any asset to be traded, at any price. Econia Labs leverages high-performance features like the memory model, execution model, and optimistic concurrency of Aptos for enhanced functionality.
Econia utilizes the orderbook model, as opposed to an Automated Market Maker (AMM). AMMs which use constant product pools have high volume-to-TVL ratios compared to traditional order books. Order books can achieve similar slippage control as AMMs with significantly less liquidity, emphasizing the efficiency of order book systems. According to the Econia team, just having $100,000 on each side of the book could cover most retail trades efficiently, indicating a potential shift in data reporting toward order books.
According to DefiLlama, TVL is around $3.6M; cumulative volume is at ~$71M. $38M of this concentrated in just two markets. It’s estimated that over 50,000 unique wallets have interacted with the Aptos chain.
Econia’s data service stack is open source, and Econia encourages users to build on top of their protocol; more experienced individuals benefit from data and tooling for easier integrations.
When it comes to trading, Econia charges taker fees, which are then split between integrators and Econia. Integrators are the protocols with frontends that use Econia’s orderbook infrastructure; Econia doesn’t provide its own frontend for trading. This is somewhat similar to Symmio, which provides derivatives trading infrastructure, with frontends including Based Markets, IntentX, Pear Protocol, Cloverfield, and Thena. IntentX, Liquity, and THORChain, are some other protocols which third party front ends play a big part in.
In traditional markets, large institutions pay for spots to trade on platforms like NASDAQ. Individual traders do not directly trade on NASDAQ but rather against others within platforms like Charles Schwab. Orders are packaged and sold to entities like Citadel for better price discovery. Non-US dollar-backed stablecoins offer characteristics similar to the deliverability of contracts found when trading commodities due to promises from issuing entities like Circle or Tether. This is because these stablecoins provide a link back to the US government for enforcement, ensuring tradeability with more confidence. Native stablecoins' adoption on Econia can lead to increased activity on the protocol.
Onchain trading eliminates fragmentation present in traditional Forex markets. Decentralized onchain trading offers continuous availability compared to traditional market hours. This is the problem Econia is trying to solve, by providing a way to trade IRL assets including commodities, forex, equities, etc. in a decentralized manner with the benefits associated with onchain trading. Of course, use of Econia doesn’t need to be limited to these RWA-esque assets, but the protocol’s orderbook has the potential to facilitate this type of trading while other protocols are limited to just crypto assets.
Insights from Econia Co-Founder
Alex Kahn is one of the Co-Founders of Econia Labs, the team behind Econia.
Alex is the co-founder of Econia Labs and author of the Econia V4 protocol designed for Aptos blockchain. The journey to Econia’s inception involved attending hackathons, accelerator programs, and seed fundraising, leading to launching the Econia protocol on Aptos mainnet in November 2023.
The team is exploring challenges in enhancing trading volume for Econia through strategies like attracting market makers, increasing user engagement, and optimizing order flow efficiency. There are positive trends observed include more daily active users and professional partnerships. With this comes challenges in explaining the significance of ecosystem beliefs over time. There is a trend towards optimistic currency with increasing interest.
For Econia specifically, the team expresses a desire for TPS in the thousands as a more satisfying metric than just high volume, focusing on technological advancements. There are software requirements for achieving over a thousand transactions per second, including benchmarking efforts with Aptos Labs.
According to DefiLlama, TVL is around $3.6M; cumulative volume is at ~$71M. $38M of this concentrated in just two markets. It’s estimated that over 50,000 unique wallets have interacted with the Aptos chain.
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