Unified lending-trading DeFi protocol Ammalgam launches strategy Vaults

After about a year of development and testing, the next-gen DeFi protocol Ammalgam is soon expected to launch its mainnet. The so-called Decentralized Lending Exchange (DLEX) merges lending, borrowing, and market-making into a single onchain system to help bolster liquidity and efficiency. 

In short, Ammalgam’s unified lending and trading execution architecture is meant to enable capital reuse rather than fragmentation across separate DeFi verticals. “Your funds are optimized, reducing structural risk and improving potential yield,” a spokesperson explained, particularly passive Liquidity Providers.

Ammalgam first came to public light in 2024 during its $2.5 million seed round, which was co-led by Lightspeed Faction and Framework Ventures. Other notable backers included Robot Ventures, Bodhi Ventures, NGC Ventures, DeWhales, Blockchain Founders Fund, and angels including Kain Warwick, Anton Bukov, Spencer Noon, and Jordi Alexander.

At the time, investors like Santiago Santos noted the relatively simple idea of combining lending and trading in one protocol surprisingly represented “something new” for the world of automated market makers.

In particular, the unified liquidity system provides a platform for creating unlimited trading strategies while also improving capital efficiency for LPs.

Additionally, unlike many AMMs, Ammalgam is designed to operate without external price oracles, a bid to not only keep pricing and risk management onchain, but also reduce the risks from a common attack vector and vulnerability.  

“We’ve watched too many fully audited protocols fail because a price feed lagged, stalled, or was manipulated,” said Will Fey, founder of Ammalgam. “When pricing infrastructure determines who gets liquidated and when, resilience comes from reducing dependency on any single signal and grounding risk in what can actually execute onchain.”

Instead of using oracles — systems that bring offchain data onchain — Ammalgam derives its pricing and risk decisions directly from onchain executable liquidity. This means that liquidations, borrowing limits, and other mechanics stay grounded in what can actually be executed onchain.

“At Ammalgam, we focused on reducing how much the system depends on signals it can’t control and grounding risk in what can actually execute onchain. ” Fey said.

Onchain Vaults and strategies

On Friday ahead of the mainnet now expected in April, the Ammalgam team rolled out Vaults, a series of managed, onchain strategy products for users who want passive exposure to advanced DeFi plays, without manually handling leverage, rebalancing, or multi-protocol coordination.

The protocol’s Vaults are built using Lagoon Finance's infrastructure, with Ammalgam providing the actual strategies and execution.

Users will be able to deposit assets like USDC, ETH or BTC into a Vault, if approved by a Vault curator, in exchange for an ERC-7540-compliant share token representing their proportional ownership in the strategy. 

According to the announcement, there are a few caveats regarding capital deployment and redemptions. Some vault strategies, for instance, may initially allocate capital to existing third-party vaults before transitioning to Ammalgam-native pools “as liquidity and strategies mature.”

Moreover, “because Vaults hold active positions, redemptions are not always instantaneous.” That said, expected settlement windows will be disclosed, along with management and performance fees.

With the official rollout of the Ammalgam protocol, the team is now looking to focus more on these managed, onchain strategies. “Additional Vault configurations will be released as liquidity and usage grow,” the announcement reads.

OxMacro, ChainSecurity, Spearbit, and Cantina provided security reviews for Ammalgam's mainnet release expected next month.

Editor's note (March 14): Updates to reflect delayed mainnet launch.