Decentralized cryptocurrency exchanges offer a host of benefits, chief among them anonymity and peer-to-peer transactions. But many are complex to use and hampered by low trading volumes. As a result, customers in search of liquidity and simplicity are often forced to turn to centralized platforms, which lack true permissionlessness and suffer from cumbersome registration processes.
Until DODO, that is.
DODO, a next-generation decentralized exchange operating on the Ethereum and Binance blockchains, is designed to deliver all the advantages of a distributed platform, plus a user-friendly interface and liquidity that’s comparable to centralized systems.
In its quest to become the decentralized exchange of choice for the distributed finance space, DODO has built a suite of features that offer something for every type of user.
Traders benefit from capital-efficient liquidity pools, which help minimize impermanent loss and slippage between the actual and requested prices. Arbitrageurs can monitor price discrepancies between DODO and other exchanges. And with no minimum deposit and the ability to use single tokens, liquidity providers can create a market with tokens they already own, without taking on pricing risk.
DODO’s ground-breaking Proactive Market Maker (PMM) algorithm uses oracles to determine the actual price of an asset. The system is then designed to provide sufficient liquidity at or near this market price, and to reduce availability further out, making it more efficient than traditional Automated Market Makers.
The PMM algorithm underpins a set of unique tools that combine the best aspects of centralized exchanges -- without the well-known downsides.
In January of this year, DODO launched a new approach to liquidity: Crowdpooling.
In initial offerings of tokenized assets, liquidity is inherently limited in that bidders can only buy tokens and not sell them. Decentralized exchanges have tried a range of ways to solve this puzzle, all of which have their own drawbacks:
- Bonding curves, where a token’s price rises along a pre-set arc, allow for frontrunning by profit-seeking speculators, to the detriment of genuine investors who care about the project they are seeking to support.
- Automated Market Maker platforms generate liquidity by requiring issuers to put up the other side of a trade themselves – but this is a cost many start-ups cannot afford.
- Then there is yield farming, where liquidity providers stake cryptocurrency to maintain the bid side of trades in exchange for tokens. This can be a temporary and costly solution and yield farmers, with little interest in the projects themselves, can dump the base coins afterward and drive down prices on secondary markets.
We were determined to solve this riddle. That’s why DODO developed Crowdpooling: a liquidity paradigm designed to work for everyone. With Crowdpooling – the name is a blend of “crowdfunding” and “liquidity pool” – issuers are able to offer assets at low cost and to provide highly liquid capital pools for investors. Inspired by the call auction mechanism common in securities markets, Crowdpooling is protected from both frontrunning and bot interference, and offers a guaranteed liquidity protection period so investors can support projects they believe in with peace of mind.
The process is straightforward: at its start, each token issuer sets an initial offering price, a time limit on the campaign and a soft cap on the number of tokens in the issue. Part of this amount is earmarked for crowdfunding and part for providing ask-side liquidity in the pool.
When the campaign ends, participants claim tokens based on how much they have staked at the pre-set offering price. If funds raised in the campaign exceed the soft cap, participants are awarded extra tokens proportionate to their shares of the pool at the initial price. The ask-side liquidity remains in the pool for a pre-set period: the liquidity guarantee.
DODO’s toolbox offers many other customizable technical solutions. Users can interact with the platform via various integrated wallet applications. As an aggregator as well as a decentralized exchange, the platform supports efficient on-chain professional market making. And project owners as well as market makers can control and execute their market-making strategies by adjusting parameters such as market mid-price, liquidity depth, and spread.
The SmartTrade trading and aggregation system finds and compares various liquidity sources to find the best prices for traders between any two tokens. Users can also participate in trading mining to earn DODO reward tokens. A duo of innovative features, DODO Vending Machine and DODO Private Pool, allows liquidity providers to create and manage their own market making strategies and to build liquidity markets with the pricing that suits their needs.
Along with trading and mining, users can also take part in Combiner Harvesting, a program aimed at giving platform users exposure to promising projects willing to collaborate with DODO. Under this system, approved projects can create liquidity pools on DODO and those who provide liquidity for these pools will earn DODO reward tokens. And DODO membership pays. Proof-of-membership tokens – vDODO – entitle holders a share of trading fees as well as other membership rewards and holder benefits.
Feature-rich and efficient, DODO is designed as the on-chain liquidity provider that works for everyone.