DODO: Liquidity Provider and Distributor
By: Dodo Breeder
Tags: Cryptocurrency, Exchange, Defi, Liquidity, Dodo

To say that DeFi saw massive growth in the year 2020 would be an understatement. DeFi products and protocols, most notably decentralized exchanges (DEXs), have been and continue to be adopted and popularized at an incredible speed. According to Dune Analytics’ monthly DEX volume data, the total USD DEX volume year-to-date (as of December 21st) is now over $100 billion, with the total number of DEX traders most likely hitting 1 million before the end of year.

Monthly DEX volume grouped by year (Source: Dune Analytics)

12 months DEX volume and number of DEX traders (Source: Dune Analytics)

What are the underlying driving forces behind this remarkable DEX boom? The reasons are twofold, explained with a well-oiled machine analogy:

DEXs’ engines: DEXs are the new vehicles powering and driving token asset issuance, a field previously dominated by centralized exchanges (CEXs). Traders can now trade for whatever assets they want to with ease and anonymity on DEXs DEXs’ engine lubricant: DEX aggregators make the trading experience much smoother by connecting and agglomerating liquidity otherwise dispersed on various platforms. This means that DEXs as a whole can offer CEX-level liquidity

Trading activity is fundamental to the overall health of DeFi and the entire cryptocurrency space. Transaction fees collected from traders are used to sustain liquidity pools, which make trading possible in the first place. Leveraged trading keeps decentralized lending protocols afloat. And of course, trades are the essence of the price discovery process. In short, trading activity gives rise to all on-chain financial instruments.

Therefore, as a next-generation DEX, DODO strives to cater to traders’ needs and provide the best trading experience. For us, that means enhancing our platform by integrating value-add differentiated services along with our core DEX offering. What traders want in any trading platform is this: the ability to trade any assets at the best prices at any time. Taking full advantage of DeFi’s composability, aggregators aim to meet this demand by connecting DeFi primitives and protocols. The whole is greater than the sum of the parts, so there is no reason for a DEX not to at least consider offering some form of aggregation services.

Every AMM platform is enticing liquidity providers with mining incentives to boost its total value locked (TVL), but they all end up becoming contributors to DEX aggregators. So we thought, why don’t we just build an aggregator ourselves?

Introducing DODO v1.5 SmartTrade

DODO SmartTrade’s premise is simple: it enables traders to trade arbitrary token assets at the best price possible. To find the best rates and lowest slippages in DeFi, our team built our own custom routing algorithms, in addition to integrating the 0x and 1inch APIs. The end result is an easy-to-use platform that not only offers arbitrary swaps between over 100 mainstream token assets, but also supports custom token additions by traders. DODO is no longer a handful of token pools, but a powerful gateway to the vast ocean of DeFi liquidity.

DODO Exchange v1.5, available now at app.dodoex.io!

The release of DODO v1.5 SmartTrade will significantly strengthen our basic DEX infrastructure offering, but we are always looking to innovate and build more products and features. DEXs are like supermarkets. You have to be able to buy mineral water from supermarkets, but a supermarket that only sells mineral water will quickly go out of business. Likewise, a DEX that does not adapt and iterate will not fare too well to the constantly changing DeFi landscape. It is clear that DeFi products must focus on three key areas in order to be successful: more products/features, lower costs, and better services.

Since the very beginning of the DODO journey, we knew that having and listing unique assets is the key to attracting and retaining unique users. Whichever platform has the latest, hottest coins with market-leading liquidity is guaranteed to have high trading volume. First-mover advantage is the differentiating factor. Therefore, our next product offering will revolve around new token issuance.

That then brings us to DODO v2, which we will be launching next month.

DODO v2

DODO v2 will become the one-stop token issuance and primary trading platform. Thanks to PMM’s flexibility, DODO will be able to fully realize its potential in the long tail crypto market niche.

DODO v2 will be a permissionless product, offering:

Minimal capital requirements: Token issuers don’t need to provide liquidity on both sides of the trading pair when setting up liquidity pools; this low barrier-to-entry ensures that DODO has the best market depth

Token issuers don’t need to provide liquidity on both sides of the trading pair when setting up liquidity pools; this low barrier-to-entry ensures that DODO has the best market depth Crowdpooling: This will fully resolve the issue of frontrunning/sniping with bots and ensure a fair launch for all

This will fully resolve the issue of frontrunning/sniping with bots and ensure a fair launch for all Customized market making: Configurable and adjustable price, market depth, and spread parameters will make onboarding professional market makers much easier and less passive; token issuers can also apply their own market making strategies

We will be sharing more thoughts on token issuance in a systematic manner in our future articles.

The Synergy Between Liquidity Provider and Distributor

DODO v2 will be able to support an infinite number of liquidity pools. For the same token asset, there may be multiple liquidity pools with different price curves and parameters configured and designed by users to meet their specific market making needs. DODO SmartTrade will then tie these pools together and find the best price amongst them.

After DODO v2, the DODO platform will be equipped with two powerful features: the ability to trade any tokens and the ability to issue any tokens. SmartTrade is a liquidity distributor, whereas the PMM-based DODO v2 is a liquidity source. We envisage these two features will synergize well together.

As our team envisioned, all fee revenue coming from trading volume will fully belong to the DODO community, and platform operation and fee distribution will be governed by DODO token holders. DODO’s governance plan is in the works, and those interested are highly encouraged to share their thoughts and feedback on the new DODO forum, at https://community.dodoex.io/.

Thank you!

DODO is a young project and we are extremely proud of where we have started and how far we have come. We see a bright future ahead and we know we would not be where we are without the loyal support of you, our users; we appreciate all our CommanDODO community! We believe in relentless innovation and quality products. DODO will surely be a DeFi force to be reckoned with in 2021 and beyond!

Thank you for the continued support and…#JustDODOIt!