1.Overview

The Defx Liquidity Engine (DLE) is the foundational market-making system powering liquidity on the Defx perp DEX. Structured as a vault, DLE allows users to deposit capital into a fully on-chain pool that the protocol uses to provide liquidity across all perpetual markets. Unlike traditional AMMs or peer-to-pool models where users passively sit on one side of risk, DLE runs delta-neutral, liquidity provisioning strategies that aim to generate real, sustainable yield without exposing depositors to directional losses. The DLE is a core infrastructure layer for Defx, designed for performance, transparency, and long-term capital efficiency.

2.Vault Strategy

When users deposit into the DLE vault, their assets are used to run actively managed LPing strategies on the Defx orderbook. These strategies are fully neutral, aiming to balance long and short exposure in real-time to avoid market directionality risk. This allows DLE to act as a liquidity layer for traders while offering depositors consistent yield not tied to price speculation. Unlike other onchain perp vaults that suffer from trader PnL drain or LP-side losses, DLE does not bet against traders. This protects depositors from directional losses and avoids the common pitfall of vaults getting drained by profitable traders.

3.Yield Sources

The DLE generates yield from three primary sources:

• Funding Fees: Traders on Defx pay or receive funding based on the perp market's open interest skew. The DLE captures the positive funding side when providing liquidity across both sides of the book.

• Trading Fees :The DLE earns a 50% share of fees when its liquidity is matched on the Defx CLOB.

• Liquidation Profits :In cases where traders become undercollateralized, the engine participates in liquidations. Profits from these executions accrue back to the vault. All yield is automatically distributed to depositors, proportional to their share of the vault.

4. Transparency Module

To build trust and align with the ethos of onchain finance, a full transparency module is under development. This will allow users to:

• View active vault positions and orders

• Track historical trades and funding rate exposure

• Monitor live APY metrics

• Understand how each component contributes to total yield

• Give complete visibility of the assets held across all contracts

The goal is to give depositors full visibility into how their funds are being deployed and how the yield is being earned, with no need to parse raw onchain data.

5. Deposit and Withdrawal Mechanics

• Deposit Process Users can deposit USDC into the vault directly on Defx. Funds start accruing yield once accepted into the active pool.

• Cool-Off Period All withdrawals are subject to a 3-day cool-off period, ensuring liquidity stability for open positions and hedges.

• Redemptions After the cool-off period, users can withdraw their principal plus any accumulated yield based on their vault share.

A future upgrade will introduce continuous deposits and withdrawals via liquid staking tokens.

6. Risk Management

The DLE is designed for capital protection, not speculation.

• Delta-neutral strategy eliminates directional price risk

• All strategies are managed onchain with protocol-enforced limits

• Yield is diversified across sources to avoid reliance on a single revenue stream

DLE does not chase high APY through risky behavior. It is built to be sustainable, composable, and predictable.

7. LST Architecture (Upcoming)

The next evolution of DLE introduces Liquid Staking Tokens (LSTs). This system will issue yield-bearing tokens like dstETH, dUSDC, or dSOL on supported chains. These tokens represent your position in the DLE vault and accrue rewards continuously.Key features:

• Native LST issuance on Ethereum, Solana, and others

• Mint and redeem at any time

• Composability with other DeFi protocols

• Live APY tracking and proof-of-performance

This transforms vault positions into transferable assets, opening new doors for composable DeFi integrations and layered yield strategies.

8. Roadmap and Future Features

• Full Transparency Dashboard: Go live with position tracking and yield attribution

• Cross-chain Vault Deployments: Expand vault access to other chains via unified mint/redeem

• Public Vault Audits: Formal audits to be completed for maximum trust

• LST Collateral in Perp Trading: Use dTokens directly as margin collateral

The DLE is the liquidity engine behind the Defx perp layer and will continue evolving to support more chains, more tokens, and more advanced liquidity flows.

The Syndicate program represents our commitment to building a vibrant, active trading community while rewarding those who contribute to our ecosystem's liquidity and growth.

The Syndicate Program: Overview

The Syndicate is DEFX's trade-to-earn competition that rewards active traders based on their trading volume. The program uses a straightforward approach: participants earn rewards proportional to their contribution to the platform's taker volume.

Participants compete for a share of the 50,000 USDC prize pool while trading on DEFX's infrastructure, which features sub-millisecond execution, multi-chain settlement, and yield-generating vaults. The competition runs for 60 days with rewards distributed based on each trader's percentage of the total taker volume. How The Competition Works

Competition Period

The Syndicate competition will run for 60 days starting on 18 June, 11:00 AM UTC and ends 17 August 2025, 11:00 AM UTC.
Giving traders ample time to accumulate volume, stack points and climb the ranks.

Taker Volume Only

Importantly, only taker order volume counts toward your competition metrics. Let's clarify what this means:

• Taker orders are those that immediately match with existing orders in the order book, effectively "taking" liquidity from the market. These include market orders and limit orders that immediately match with existing orders.

• Maker orders are limit orders that don't immediately match and instead sit in the order book, providing or "making" liquidity for others. These orders will not count toward your competition volume.

This focus on taker volume ensures a fair competition that rewards active trading rather than passive order placement.

Eligibility

All DEFX users are eligible to participate.

Reward Structure

The competition features a total prize pool of 50,000 USDC, allocated based on participants' taker trading volume during the 60-day period. DEFX implements a tiered reward structure that increases the available prize pool as collective trading volume reaches predetermined thresholds:

• 0-75 million in total taker volume: 10,000 USDC prize pool

• 75-125 million in total taker volume: 20,000 USDC prize pool

• 125-150 million in total taker volume: 30,000 USDC prize pool

• 150-175 million in total taker volume: 40,000 USDC prize pool

• 175+ million in total taker volume: 50,000 USDC prize pool

This means that as our community trades more collectively, the reward pool grows for everyone. Rewards are distributed pro rata based on each participant's contribution to the total taker trading volume.

Reward Distribution

Rewards will be calculated based on your percentage contribution to the total taker trading volume. For example, if you contribute 5% of the total taker trading volume and the community reaches the 120-150 million tier (30,000 USDC prize pool), you would receive approximately 1,500 USDC in rewards.

All rewards will be distributed within 14 days after the competition ends, directly to the wallet address used for trading on DEFX.

Contest page and leaderboard- app.defx.com/contests

Defx Points are live, and they’re more than just numbers on a screen or a typical points program. This is a long-term, performance-driven system that tracks your contribution to the Defx ecosystem and rewards you accordingly. Whether you’re trading, providing liquidity, or referring new users, every action you take builds your reputation and unlocks new benefits over time.

Earn As You Contribute

Defx Points runs on a simple principle — if you contribute to the ecosystem, you earn points. These points aren’t arbitrary. They reflect your cumulative participation and determine your standing in the system.

You can earn points in three ways:

• Trading on Defx

• Providing passive liquidity to the Liquidity pools

• Referring users who start trading or deposit capital

Points are distributed weekly, with each user receiving a share based on their relative activity during the period. This ensures rewards scale with effort and engagement.

Role-Based Progression

As you earn more points, you move up the Defx Rewards Ladder. Each level unlocks new access, benefits, and community perks. From early community roles and educational tools to signal channels, fee discounts, premium tooling, and exclusive event access, the structure is designed to grow with you.

The deeper your involvement, the more you unlock. Every milestone reflects tangible commitment to the protocol, and with that comes more utility.

What Comes Next

This is just the beginning. Defx Points will eventually serve as the basis for a much larger rewards program. Your standing will matter, and those who consistently engage will be best positioned to capture what’s coming. While the full scope of future rewards will be revealed later, what’s clear now is this, your points have long-term value.

Start Climbing

You don’t need to do anything extra. Just trade, refer, or provide liquidity like you normally would. The system does the rest. You’ll be able to track your weekly earnings, total points, and current rank directly in the Defx dashboard.

This isn’t a one-off campaign. It’s a reputation engine built into the heart of the protocol.

Happy stacking 😉

https://app.defx.com

The round includes participation from Pantera Capital, CMT Digital, Gumi Cryptos, CoinShares, Robot Ventures, Cadenza Ventures, Baboon VC, and angel investors Sandeep Nailwal (Polygon) and Mahin Gupta (Liminal).

The funding will support the development and expansion of Defx’s Layer 1 blockchain for real-time, on-chain trading infrastructure of perpetual contracts across cryptocurrencies, commodities, currencies, indices, and more.

A New Paradigm for Onchain Trading

In traditional DeFi, every trade is fully transparent. Order sizes, leverage levels, liquidation thresholds, and position direction are all visible onchain, creating front-running risk, copy trading, and strategic exposure that deters serious traders.

Defx introduces a new model. Using a custom zero-knowledge-based trading engine, all trade intents—including size, leverage, direction, and liquidation thresholds—are encrypted. The protocol ensures:

• Encrypted trade inputs (order size, leverage, direction)

• Hidden PnL and liquidation points

• No public exposure of active positions

• Verifiable fairness of execution, funding, and liquidations onchain

While trading activity remains private, the system maintains full onchain integrity. Every transaction, fill, and state change is provable without revealing sensitive trader data.

Purpose-Built Chain Architecture

Defx is a sovereign Layer 1 built specifically for perpetual futures. It features:

• Sub-millisecond matching via a native central limit order book (CLOB)

• Direct onboarding of assets from Ethereum, Solana, Arbitrum, Base, Berachain, and more—no bridges or wrapped tokens

• Unified margin engine with multi-collateral, cross-margin accounts

• Liquidity infrastructure composed of vaults, LPs, and market makers

• Native support for both EVM and Solana contracts

This vertical integration enables high performance, secure custody, and composable onchain markets across asset classes.

Why Build a L1?

• Scalability and Throughput: This allows us to put our orderbook fully on-chain and ensure it scales to the levels of the largest CeFi companies in terms of operations per second and latency.

• Customizability: Customized and novel fee models tied to trading activity can be native, permissionless, and on-chain. Additionally, customers choose which assets they pay fees in.

• Prioritization: With a custom L1, the DAO will have control to ensure upgrades, chain optimizations, and UX improvements can be built into the infrastructure layer.

• Dark Pool Primitives: Privacy-preserving bids and asks are built into the chain so that large positions are not broadcasted until executed.

• Consensus Layer and Virtual Machine Stack: These can be chosen based on application needs, while ensuring that the best dApps can effortlessly migrate to Defx.

Vault-Based Liquidity and Passive Yield

Defx introduces vault-based liquidity infrastructure that allows any user to provide capital and earn protocol fees and rewards. Users can stake BTC, ETH, stablecoins, or LSTs to earn passive yield through:

• Trading fees

• Protocol revenue share

• Points and ecosystem incentives

This system is designed to balance deep liquidity for active traders with yield-generating opportunities for passive participants.

Broad Asset and Collateral Support

Defx will support a wide range of underlying markets including:

• Cryptocurrencies

• Foreign exchange (FX)

• Commodities

• Traditional financial indices

• Interest rate perps and other synthetic products

Trades can be funded using multiple forms of collateral, including stablecoins, crypto assets, and yield-bearing tokens—without losing exposure to the original asset.

Founding Team

Defx Labs was founded by Darshan Bathija, Sanju Sony Kurian, and Soumyadeep Das, the team behind Vauld, previously Asia’s largest crypto lending platform with nearly 1 million users.

Having navigated the collapse of centralized custodial platforms in 2022, the team brings a deep understanding of risk management and the need for sovereign, self-custodied infrastructure. Those lessons now inform the architecture and values behind Defx.

Roadmap

The capital raised will support protocol development, network security, liquidity expansion, and onboarding of key trading and LP communities.

Defx is entering its next phase with a focused rollout plan that includes:

• Incentivised trading and points programs

• Competitive trading events and reward campaigns

• Additional vault integrations

• Spot markets

• Embedded self-custody wallets

• Native fiat on/off ramps

• Expansion of governance and permissionless listings

Defx brings dark pool mechanics onchain, privacy-first DEX with high performance trading, real yield through vaults, and no counterparty risk.

About Defx

Defx is a purpose-built Layer 1 blockchain designed for trading perpetual futures across crypto, FX, commodities, and synthetic markets. By combining a high-performance CLOB engine with zero-knowledge proofs and a vault-based liquidity system, Defx offers private, composable, and verifiably fair onchain trading. The protocol enables encrypted order flow, multi-collateral margining, and native cross-chain onboarding without bridges or wrapped assets.

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