DODO Project Review: A Cunning Edge On-Chain Liquidity Provider

Dodo has a created a next-generation algorithmic market maker, coined as a Proactive Market Maker (PMM).

By
Rich
on
February 4, 2021
Category:
Project Insight

DODO DEX

DODO has a created a next-generation algorithmic market maker, coined as a Proactive Market Maker (PMM). This model replaces the traditional Automated Market Maker (AMM) model by responding in real-time to liquidity constraints and changing markets. Born on the Ethereum Network, DODO has brought on-chain liquidity providing (LP) to the next level. Traditional AMM technology looks primitive when compared to PMM; this proposed "next-gen" technology helps create on-chain and contract-fillable liquidity for all users. There will always be sufficient liquidity for a trade, just like it would on a centralized exchange (CEX). This model creates low slippage and mechanisms that minimize impermanent loss (IL), displaying the incredible innovation that DODO AMM provides.


Key Features

  • Decentralized and Permissionless Swaps
  • Single Token Liquidity
  • Free Market Making
  • Proactive Market Making Formula


The Theory

The PMM mechanisms make use of price oracles to retrieve accurate information about the price of an asset. It then uses this oracle data to calculate an ideal market price, where it will then sell the liquidity tokens for the quote token based on the curve displayed below. This system rapidly decreases the amount of liquidity away from the market price, allowing for a more efficient system compared to that of a traditional AMM like UniSwap. Below represents the liquidity curve for each of the automated market makers.


The PMM encourages arbitrage trading to ensure the prices match that of the market price. What is unique, its that the PMM proactively shifts the price curve achieving the same efficient liquidity structure displayed above; this system has proven to be superior as it provides sufficient liquidity for limitless pairs while simultaneously benefitting liquidity providers (LPs). This effectively mitigates the risk for impermanent losses, making liquidity provision less risky on DODO.

This system capitalizes on traditional AMM and order book-based exchanges flaws, as they either cannot provide the liquidity or are expensive and dependent on human input. The PMM is an algorithmic market maker, but on steroids; it will provide on-chain contract-fillable liquidity to all assets.


How Is This Achieved

At the core of PMM is a bit of complicated math. It essentially calculates one integral and two quadratic equations to create an efficient market-making algorithm. To find out more about the math behind their PMM tech, you can click HERE for more information.


Core Features

For users on the Ethereum Chain, DODO has a lot of features. Next to pooling and staking, DODO also has:

DODO Vending Machine -- DVM Allows anyone with a wallet to create a liquidity market using PMM technology to create a bonding curve for your tokens, more info HERE.

DODO Private Pool --Similar to DVM but with more options for professional market makers, look HERE for more information.


DODO on The BSC

As we are mainly cover the Binance Smart Chain (BSC), let’s jump over to what it offers “our” users. On the BSC can trade using the DEX and "pool" KOGE/WBNB and WBNB/BUSD pairs. To do so,. simply connect your wallet to the DODOEx site and choose your desired chain. From there, the website will automatically refresh to the correct chain. Currently, DODO only offers a fraction of its features on the BSC; as they continue to add more price oracles and features I’m sure it will become a prominent DEX. For now, users can provide liquidity and transact in prominent pairs as the protocol continues to develop.


DODO Token

$DODO is the native governance token for the DODO protocol. There are currently 33,460,274 tokens in circulation out of a total supply of 1,000,000,000. Initially, 10.000.000 tokens were sold in an Initial DODO offering (IDO), similar to IFO systems held by other AMM's. There were also two rounds of sales, one private and one seed sale on top of the IDO; these sale consisted of 100.000.000 and 60.000.000 tokens, respectively. Seed investor tokens will be locked 1 year after token issuance, and then linearly vested over nest 2 years and private investor tokens will be locked 6 month after token issuance, and then linearly vested over next 1 year per Ethereum Block. 

These tokens are time-locked to prevent token dumping in the protocol's early stages. While it seems like a large portion of tokens were allocated to sales, it is essential to consider the sizeable total supply. As for community incentives, 600,000,000 tokens will be distributed for staking rewards and other liquidity incentives. The rest (230 million) of the tokens are reserved for operational costs, marketing, and future exchange listing fees. $DODO currently is only available as an ERC-20 token (Ethereum)

The DODO Smart Contracts have been Audited by PeckShield Inc. and by Trail Of Bits, both reports did not find anything critical, and they can be found HERE and HERE.


Concluding Thoughts

The DODO protocol has improved the trading experience for both market makers and takers. The use of their PMM technology guarantees efficient liquidity and stable prices. The offered services are unique as now everyone can hold an IDO for a token or use the DVM for creating a bonding curve on your asset. The fast interface is easy to use, and the DEX provides most if not all available tokens. The incentives for providing liquidity are solid, and they are distributed in the native $DODO token. DODO solves the issue of the lack of liquidity through the engineering of their AMM. 

For more information, or if you wish to stay up to date on the project, check out project and media pages:

Website

Twitter

Telegram

Medium


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Rich

Richard is a multilingual writer, located in the Netherlands, husband and father, cryptocurrency and tech enthousiast enjoys long walks and bicycle rides. Fervent Binance Smart Chain projects promotor.