As cryptocurrency enters the mainstream, more crypto decentralized protocols are cropping up. In fact, due to the peculiarity of its operations, decentralized finance boasts several exchanges and protocols.
Users’ transactions on decentralized exchanges (DEXs) are not subject to third-party approval or control. They provide global coverage of services that minimize network downtimes. The DEXs do not divulge any personal information about their users. This means you can open an account and begin trading right away.
Uniswap is a decentralized exchange protocol that relies on automated market makers to operate. However, some challenges remain.
Then there is the DODO protocol. This new DEX proves a more competitive alternative to Uniswap by providing proactive market makers (PMM). With real-time market prices, the PMM offers enough liquidity for digital assets.
With this DODO review, we’ll explain everything you need to know about the exchange and its governing token, DODO. In addition, we will discuss the features of the protocol and its benefits as a decentralized exchange.
What is DODO?
DODO is a DeFi protocol that provides on-chain liquidity at a stable price through a proactive market maker (PMM) algorithm.
Unlike automated market makers (AMM), the PMM algorithm offers better liquidity pools at stable prices. This is because the mechanism of PMM pricing imitates human pricing and operates through oracles – the link between real-time data and blockchains.
Running on the Ethereum network, DODO protocol proves to be the solution for continuous on-chain liquidity providers. The DEX contract-fillable liquidity is comparable and similar to centralized exchanges (CEXs). Also, the price stability of the DEX is linked to the real-time market prices for the assets.
DODO exchange offers a better solution to shortcomings prevalent with AMM functions. The DEX uses the real market prices for assets to give enough liquidity to maintain the liquidity providers’ portfolios. Furthermore, DODO reduces price slippage and eliminates impermanent loss through rewards of arbitrage trading.
DODO Launch – Founder and Team Members
The DODO exchange was launched in August 2020. The founders of the DEX are three professionals in blockchain technology – Mingda Lei, Diane Dai, and Qi Wang.
Mingda Lei is a co-founder and CEO of DODO. He drew the PMM model used for the protocol. Previously, he was a core developer at a margin trading platform, the DDEX.
Diane Dai is a co-founder and the Chief Marketing Officer at DODO. She actively runs several channels on WeChat, such as the ‘DeFi Labs’ channel.
Qi Wang is the next co-founder and COO at DODO. As a software developer, he is the founder of DOS Network. This’s a layer 2 oracle service in China. Also, he worked in Oracle and Pure Storage before moving over to the crypto industry.
Zero Impermanent Loss On DODO Proactive Market Maker (PMM) Algorithm
DODO utilizes its PMM algorithm to reduce price slippage and provides very low transaction fees. Users on the platform get their order execution comparably to centralized exchanges. Just like other DEXs, the DODO ecosystem still maintains liquidity providers and arbitrageurs as key players. However, the protocol completely removes impermanent loss risk factors.
DODO replaces the functionality of AMM seen in other DEXs with its unique PMM. The use of the PMM algorithm help to flatten the price curve in the liquidity market.
In its functionality, the PMM offers enough liquidity by gathering funds near market prices.
The new equation of DODO PMM algorithm works is ( To indicate the market price of a digital asset, R is the risk factor, and P is the market price on DODO)
From the set algorithm, the protocol is built with a direct relationship between market price and that on the platform. Once there’s a drop in the market price, the protocol automatically makes its adjustments. This helps the DEX to attract arbitrage for maintaining the stability of the portfolios of the liquidity providers.
DODO can ensure the following through its PPM algorithm:
- Favorable pricing.
- Reduced price slippage.
- Higher funds utilization.
- Single risk exposure.
- Eliminates impermanent loss.
Through its partnership with Chainlink in August 2020, DODO utilizes the price feeds from Chainlink’s oracles. The real-time market prices enable the algorithm to prevent huge differences in its price and that of the assets in the actual market.
You must bear in mind that as liquidity increases, the associated risk decreases. So the accumulation of a liquidity pool will invariably change the ‘R’ factor downward.
Since the Chainlink price data is the baseline for DODO’s exchange prices, there could be a weakness with such relational trust.
This implies that a potential failure or compromise in Chainkink’s nodes will translate incorrect information to the DODO platform. Consequently, the market prices based on incorrect data could result in significant losses in the DODO ecosystem for liquidity providers.
DODO Core Features
Besides the basic features of staking, trading, and pooling, DODO has 3 other unique features, as given below.
The Vending Machine
With the protocol’s vending machine, anyone with a wallet can create a liquidity market. Through the use of PMM technology, it’s easy for users to develop a bonding curve for their provisioned tokens. When you define your desired pricing curve, the DODO Vending Machine follows the curve to develop a suitable liquidity market for the token. While making it accessible to the public, the protocol still maintains the decentralized and non-custodial characteristics of the assets.
The uniqueness of this feature is that there’s no restriction on who can use it. The feature is open to every user with a wallet, and there is no censorship or platform interference.
Though similar to the Vending Machine, this feature has options for advanced investors. In addition, the Private Pool offers more satisfaction for professional market makers that need more even with the Vending Machine.
The Private Pool offers the following to users:
- Unlimited alteration to the pricing curve.
- One-sided deposits or withdrawals.
- Uninterrupted availability of liquidity with a price range of zero to infinity.
- Discovery of active price.
- Consistent price market.
- Downward risk avoidance.
- Reversing of traditional AMM model.
The Private Pool helps users to become personal market makers as they use the configuration options. You have several possibilities for strategizing your trading patterns using the available parameters. The protocol provides its users the freedom to create and manage their self-made liquidity pools on-chain.
The DODO NFT Vault is a price invented and liquidity project for non-standard cryptocurrencies. Users can either create new or use their existing NFTs to pledge in the NFT Vault. Also, there are the options of either keeping the NFTs unique or fractionalizing them. Selecting the latter option divides the NFTs into several bits. As such, fungible tokens can be issued to represent them.
Using the Vault requires a corresponding liquidity pool for the NFT. This will help to set up the required flexibility and efficiency in the market for trading the NFTs bits. The whole operation is powered by the protocol’s PMM algorithm.
Advantages of DODO Protocol
The birth of the DODO protocol brought solutions to the challenges in decentralized finance that the exchanges based on AMM can’t offer. Both users, investors, and other Defi apps have got their quota of benefits from the impact of the DODO exchange.
Here are some of the benefits of DODO exchange
- For Traders – The protocol enough liquidity that is similar to those of centralized exchanges for their on-chain transactions like auctions and liquidations. The liquidity pool is based on smart contracts, which eliminate external controls and influences. Also, arbitrageurs leverage the price difference that DODO offers that is lower than those from other platforms.
- For Liquidity Providers – DODO does not restrict the digital assets they can provide in the liquidity pool. Also, they have no minimum deposit requirement in their contributions. So, using the protocol enables them to develop their trading pair and deposit their assets to reduce price risks. Furthermore, the DEX incentivizes them with a portion of its transaction fees.
- For Other DeFi Projects – They receive a free listing through its Initial DODO Offering (IDO). The process involved in the IDO setup is quite simple. There’s no requirement for quote tokens, unlike what is obtainable with AMM protocols. Instead, by depositing their tokens in the liquidity pool, they can set a constant oracle price.
Tokenomics Of ERC-20 DODO Token
The DODO has its native token, the DODO coins, which is the protocol’s governing token. It’s an ERC-20 token as the protocol runs on the Ethereum blockchain.
The token has a total maximum supply limit of 1 billion DODO. The current circulating number of tokens is over 100 million.
The DODO has a market cap of over $130 million. The price of the coin at the time of writing is $1.44 per token.
The DODO seed round had a sale of 40 million tokens at $0.01 per token. A prior private sale of 100 million tokens occurred at $0.05 per token.
The seed-invested tokens get locked for a year after the token issuance and will be linearly vested for two years. The privately invested tokens get locked for six months after the issuance and linearly vested for one year afterwards.
Here is the distribution strategy for DODO’s total supply:
- Core team/advisors/future hires – 15%
- Investors – 16%
- Initial liquidity provision – 1%
- Operations/marketing/partnerships – 8%
- Community incentives – 60%
There’s a recent migration of DODO to the Binance Smart Chain, which now gives it a dual chain functionality. Thus, it was listed in the farming round in Binance Launchpad 2021. In the farming round, the staking of BNB tokens farmed a pool of 641,710.80 DODO.
Subsequently, BETH and BUSD pools and yielded 320,855.4 DODO and 106,951.8 DODO rewards, respectively. However, these tokens undergo time-locking to prevent excessive discarding on the protocol’s beginning stage.
By participating in the cryptocurrency rally in 2021, DODO hit $8.51 as its all-time high on February 2021. Since then, the price has made a decline to reach $4.15 by ending of March 2021. The token has been on the swing as the price fluctuates continuously due to the volatile nature of digital assets. The price of DODO at the time of writing is $1.44 per token.
The launching of DODO v2 added more functions to the DODO tokens besides its governance power. For example, the token is now used for discounts on trading fees, IDO allocations, and crowd pooling.
Additionally, there’s a new creation of non-transferable vDODO tokens. The new tokens determine the membership of a user to the DODO loyalty program.
The conversion between the vDODO and DODO is at 1vDODO = 100 DODO
Here are the benefits for vDODO token holders:
- IDO allocations and crowd pooling.
- Governance rights – Ability to develop and vote on proposals (1 vDODO = 100 votes).
- Discounts on trading fee.
- Rewards from the trading fee. (Part of the accrued trading fees are distributed as rewards to vDODO holders).
- Rewards for vDODO membership. (vDODO holders get rewards every block).
There are often permanent losses on Uniswap’s liquidity pools from the impermanent loss on the platform. Traders and investors completely avoid other exchanges that use AMM due to the huge slippage on larger orders.
But DODO handles these two major problems, standing as an innovation on the decentralized ecosystem. The latest DODO v2 in February 2021 brings the protocol to another phase of its technological possibilities.
Using its innovation, the protocol establishes market prices through liquidity stability that discards a constant formula.
This is what creates satisfying experiences for both the liquidity providers and traders. Hence, the liquidity providers can deposit a single asset instead of a pair which removes impermanent losses. On the part, traders can evade slippage in their transactions.
However, a downplay for the platform is the loss for liquidity providers when there are insufficient trading volumes. Such situations will result in very low total fees for the liquidity pool. So getting more profits for the liquidity providers is dependent on the consistent increase in trading volumes.
In the bids to fine-tune the issues in DODO v2, the DODO team uses a token incentive approach. It introduced some incentives for pool creators, liquidity providers, and traders.
Where to Buy DODO tokens
When you’re planning to buy DODO tokens, ensure you use a trusted and regulated platform. This will help you to reduce the risk of losing your funds.
DODO is traded on centralized platforms such as L Bank, BiKi, and MXC.com. Also, you can buy DODO tokens on any crypto exchange or the brokerage where the coin is listed. Some of the platforms include Gate.io, Uniswap V2, Mooniswap, etc.
How to Buy DODO
To buy DODO tokens, select a trusted and reputable brokerage or exchange that supports the tDODO transactions. You can buy DODO coins from the comfort of your home using the following steps:
- Open an online account – Visit the website of the exchange of brokerage you choose to sign up for an online account. Most of the platforms will require the use of your email address. Fill the on-screen form using your name, date of birth, phone number, and others. Then, create a strong password for more protection to your account.
- Verify your account – The account verification process is mandatory for any regulated crypto trading platform. It serves as a process of completing your KYC documentation. You will upload any of your government-issued IDs like a passport or driver’s license. Also, an upload of a copy of your recent utility bill or bank statement is mandatory.
- Deposit your funds – When the exchange confirms your account verification, you can deposit some money into the account. Select any payment method that is convenient for you. Most platforms support deposits through direct bank transfers, credit/debit cards, e-wallets, and others.
- Buy DODO – After you’ve deposited your funds, you can buy your DODO tokens. First, search for DODO from the search box select the token. Then, input the amount you want to buy and confirm the order. Then click the BUY button. You now have DODO tokens. You can then move the coins to your private wallet for more security.
DODO Review – Worth Your Investment In 2022?
It’s an indisputable fact that the DODO protocol has made tremendous contributions to decentralized finance. The introduction of the proactive market makers (PMM) algorithm has created a difference from the usual feel of the AMM. The new technology offers more satisfaction to traders and investors during their transactions on decentralized exchanges.
Through its functionality, DODO eliminates impermanent losses as well as reduces the risks for liquidity providers. Using the PMM algorithm ensures stability in market prices for digital assets while maintaining efficient liquidity for cryptocurrencies.
The outstanding features of the DODO protocol are part of its distinguishing attributes. The presence of its private pool, vending machine, NFT vaults, and others boost its performance. In addition, users can develop and personalize their trading patterns.
Furthermore, the platform has a simple and fast interface that ensures easy navigation and accessibility for users. It’s quite easy to understand trading, staking, and liquidity contribution on DODO protocol.
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