Polygon liquidity: 3 steps to tighter spreads and institutional access
On 28 October 2025, Polygon Labs announced a partnership with Manifold Trading to bring institutional-grade execution standards and boost Polygon liquidity across its DeFi ecosystem.
How will Polygon liquidity reshape DeFi?
What features are being deployed?
Manifold Trading will deploy quantitative market-making and on-chain arbitrage strategies across major Polygon DEXs to narrow spreads and reduce cross-venue dislocations. The initiative emphasises institutional market making techniques adapted for AMMs, continuous two-sided liquidity and data-backed liquidity management strategies.
Who is involved?
The partners named in the announcement are Polygon Labs and the quant family office Manifold Trading. Polygon cited engineering upgrades such as AggLayer and the gigagas update as complementary infrastructure that will support faster finality and cross-chain liquidity.
What impact will Polygon liquidity have on polygon dex liquidity and price efficiency?
According to the PR Newswire release, the collaboration aims to tighten spreads and improve price efficiency for large trades. The announcement uses a $1 million trade example where compressing spreads from 50 basis points to 5 basis points lowers execution cost from about $5,000 to $500, implying roughly $4,500 saved for that trade (PR Newswire).
In brief, these measures are intended to reduce slippage and make DeFi markets on Polygon more investable for institutional counterparties.
Operational changes and execution standards DeFi
Quantitative market making on-chain will adapt models for gas costs, AMM curves and smart‑contract settlement, with an emphasis on execution standards that mimic professional trading desks. This should lower execution risk and improve consistency for larger orders.
What should institutions expect?
Note: institutions should expect reduced execution costs and improved depth over time, not immediate elimination of all liquidity risk. The partnership is positioned as a structural improvement to support institutional adoption at scale rather than a single turnkey product.
Maria Adamjee of Polygon Labs said the collaboration would bring “transparency and performance to match or exceed traditional markets,” while Manifold’s Noah Hanover described the work as focused on “market stability and depth at scale.” For additional technical context see Polygon website.
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