Monad: Early Ecosystem Review

Introduction

This week, Monad launched its public testnet, showcasing its work on a new Layer 1 blockchain that's compatible with Ethereum but aims to make it faster and more efficient. The project focuses on optimizing execution by running transactions in parallel, which could help reduce delays and increase how much the network can handle. While we previously explored Monad's technical foundations and early developments in our Q4 report, this analysis shifts focus to examine the evolving ecosystem, particularly the promising native applications emerging on the platform. The emphasis on Monad-native teams is especially relevant, as historical patterns across networks like Solana, Sui, and Base demonstrate that native protocols often achieve greater success on new chains. Moreover, Monad's enhanced EVM performance characteristics may enable novel protocol designs, presenting opportunities for early adopters through liquidity rewards, points programs, and potential future airdrops. Furthermore, a majority of the applications discussed have test versions available to try on the recently live Monad testnet.

DEXs

Kuru is an upcoming fully onchain CLOB DEX, and is hoping to achieve a blending of order book and AMM-like designs. Kuru hopes to take advantage of Monad’s speed and low fees to provide a venue for market makers to handle liquid assets, while also offering passive liquidity solutions to support long-tail assets as well as offering a native token launching service. The team has a further goal of becoming an onchain hub for all things trading-related by providing services across discovery, research, and trading. We look favorably upon the team’s background, as they have prior involvement working on Hyperledger, a Linux Foundation sponsored project to develop blockchains, and Tinydancer, a Solana light client implementation. Unsurprisingly, Kuru has already attracted some attention having raised $2M in their recent seed round. Currently, we view Kuru as the preeminent Monad-native DEX team. 

Nitro Finance is crafting an innovative approach to DEXs on Monad by unifying multiple core functionalities within a single, shared liquidity pool. The platform will integrate swapping, lending, and borrowing capabilities alongside a concentrated liquidity design utilizing price bins and a native token launchpad. This consolidated architecture marks a significant departure from traditional DeFi platforms, where users typically need to navigate multiple protocols and manage separate pools for different financial activities. By streamlining these operations into a unified system, Nitro Finance aims to enhance capital efficiency while simplifying the user experience. The platform's integrated design and strategic use of concentrated liquidity through price bins positions it as a potentially transformative player in Monad's emerging DeFi ecosystem.

Two DEX aggregators are positioning themselves for Monad's launch, with both securing day-one presence on the testnet. Monorail, leveraging its development experience from the Cosmos ecosystem, is pioneering a hybrid approach that uniquely combines automated market makers (AMMs) with on-chain orderbooks, capitalizing on Monad's infrastructure to potentially deliver superior pricing execution. Meanwhile, Azaar Exchange, which initially established itself on Base, is expanding its reach to Monad while drawing inspiration from successful aggregators like Jupiter. Azaar's roadmap encompasses advanced features including intent-based trading, limit orders, and MEV protection, demonstrating the platform's commitment to comprehensive trading solutions.