Hello and welcome to another edition of Wealth Mastery Coin Review. While the last few days have seen the majority of altcoin portfolios in the red. A few golden tickets have still come out this week with Icon, Dash, The Graph, Ravencoin, and Amp all producing 100% plus gains this week. Making quite a few bag holders very happy they held through the crypto winter and showed that some old dogs still have a lot of bites left in them. This week we’ll be looking back into the Defi space with a newer exchange and liquidity provider protocol called DODO.
Introduction
DODO is a next-generation on-chain liquidity provider, which leverages a new Proactive Market Maker (PMM) algorithm to provide pure on-chain and contract-fillable liquidity for everyone. By accepting various liquidity providers’ assets, it gathers funds near market prices to provide enough liquidity. To cut the counterparty risks for LPs, DODO adjusts market prices to encourage arbitrage interjection and LPs’ portfolio stabilization powered by this new Proactive Market Maker algorithm. This PMM algorithm leverages price oracles to retrieve accurate market prices of assets as input. Then acts to provide enough liquidity near the market price for every asset. The result being that liquidity decreases rapidly when it’s far away from the market pegged price. With a PMM curve being flatter than the traditional AMM curve near the market price, PMM can possibly provide higher fund use and lower slippage. Making prices provided by PMM more favorable than AMM. With most funds gathered near the market price, this allows for more frequent trading and increased fund use. As an algorithmic market maker, DODO differs slightly from other approaches by attempting to lower their disadvantages and increase their advantages. The Proactive Market Making allows for easy increases in contract fillable liquidity for various on-chain assets.
How it works is that with PMM, the asking liquidity is determined by the amount of base tokens in the pool, and the bidding liquidity is determined by the number of quote tokens in the pool. This allows the base and quote pools to have different sizes, and so allows liquidity providers to deposit any amount of either quote or base tokens, rather than requiring both (like Uniswap). DODO Liquidity providers deposit what they already have, and nothing more. This process may also help mitigate some impermanent loss and ensure that liquidity providers get what they deposited when they withdraw their tokens. Done by heavily encouraging arbitrage trading. When individual traders buy base tokens, PMM slightly increases the price to make it more profitable for arbitrageurs to sell base tokens. In PMM, arbitrage trading makes sure that the number of tokens in the pool is always roughly equal to the number of tokens deposited by liquidity providers. At any given time, PMM is in one of only three possible states: equilibrium, base token shortage, and quote token shortage. When a trader “sells” base tokens, the base token balance of the capital pool becomes higher than the base token regression target. Making the quote token balance now lower than the quote token regression target. When this happens, PMM will try to sell the excess base tokens, lowering the base token balance and increasing the quote token balance, to move this state back to the state of…
