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.
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 equilibrium. When a trader “buys” base tokens and the quote token balance of the capital pool becomes higher than the quote token regression target, the opposite happens. PMM will try to sell the excess quote tokens, lowering the quote token balance and increasing the base token balance, in order to move back to the state of equilibrium. When the system is not in the equilibrium state, changes to the oracle price will bring profit or loss. With a small transaction fee charged on every trade. This fee is called the liquidity provider fee and will be distributed to every liquidity provider based on their proportional stake in the capital pool. A maintainer fee is also collected from what buyers received and is transferred to the maintainer. The maintainer can be anyone from the development team, foundation, or a staked decentralized autonomous organization. Since a withdrawal will change the PMM price curve and may harm the interests of other liquidity providers. DODO charges a withdrawal fee from liquidity providers who withdraw their assets and redistributes it to all remaining liquidity providers.
A core feature of the DODO framework is a set of DODO Proxy contracts and a singular DODO Implementation contract. DODO is an open-source contract, and the DODO team welcomes forks. But to keep control, any DODO Pairs registered in this contract will be rigorously tested and audited, as the DODO team believes the safety of DODO users is of the utmost importance. Developers should only look for the entrance called DODO Zoo when developing upon DODO. Because, even if the DODO Template is upgraded, the DODO Zoo Template will remain unchanged. DODO also offers what’s called a Flash Swap and allows users to pay on credit for DODO. When you buy DODO, you can first get the tokens, do anything you want with them, and pay for it later. Market parity is maintained by arbitrageurs, with flash swap completely removing capital requirements. The “UniswapArbitrageur” contract doesn’t need the user to know how DODO or Uniswap works. They call a function and, if the execution succeeds, make a profit. If the execution fails, the users would only lose some gas. All contracts in the DODO ecosystem were audited by PeckShield on July 10th, 2020.
DODO was released as an ERC-20 token on September 29th, 2020 only on the DODO Exchange. With 1% of the total DODO supply being locked in the DODO liquidity pool for the initial offering at a price of $0.10 USD per token. The DODO carnival incentive program also began releasing the 60% allocated for community rewards 7 days after DODO’s IDO ended. With tokens released linearly over a six month period. In the private sale round $5M USD was raised at a $50M USD evaluation of DODO. This included 10% of the total supply allocated to private sale investors at a token price of $0.05 USD per DODO. The private sale allocation was subject to a six-month lockup with 10% of the private sale allocation released, and the remaining 90% released linearly over the next year. An early Seed round in August 2020 raised $600k USD from IOSG Ventures at a $10M USD evaluation. With 6% of the total supply allocated to these seed investors at $0.01 USD per DODO. The vesting schedule for seed investors is identical to the Core Team/Future Hires/Advisors with the tokens being locked up for one year and released linearly over the next two years. With a total supply of 1B DODO tokens, the Core Team/Future Hires/Advisors receive 15%, Investors 16%, IDO 1%, Operations/Marketing/Partnerships 8%, and the remaining 60% for Community Incentives. The DODO token currently serves its only purpose by providing liquidity to the DODO exchange and its yield farming.
DODO started as a private organization without any headquarters or founders information associated with the company. However, on the projects Linkedin they’ve labeled themselves as a non-profit organization. Co-Founder Shichao Dai comes from a background in marketing while Co-Founder and COO Qi Wang is a former Software Developer from Oracle. Shawn Sun is serving as Director of Operations, Ray Wang comes from Bitfinex as Strategic Marketing with something called DODO Breeder associated with DODO and Co-Founder Shichao Dai previous failed project.
Upon the release of the DODO token, the price remained relatively stable in the $0.50 USD price range the first few weeks to market. Following its first few weeks, for around 90 days DODO fell to the $0.15 USD range and remained between $0.15 – $0.30 USD until late January 2021. Here it just recently broke from its previous all-time high and rallied past $2 USD where it sits as of this writing. Of the total 1B DODO supply, only 55M are currently circulating on the open market and gives DODO a total market capitalization of $120M USD. DODo has gathered a following of 2,500 members on Discord, 5k on Telegram, 20k followers on Twitter, and a couple of hundred Reddit followers. After further research I found most of the community to be made up of bots. DODO also has a community forum that doesn’t have much of any engagement happening either. Project updates on development generally happen a few times a month according to Github.
The conclusion of the project’s audit came up with no critical flaws. But, a few informational code flaws were discovered. Including Centralized Governance Issues, Missing DODO Validation in DODOEthProxy, and Misleading Embedded Code Comment Issues. With centralized governance, the current centralized implementation makes the DODO system not compatible to be used with the usual setup towards community-oriented governance for shared responsibilities or reduced risks. It is understood that the system intends to begin with centralized governance in the early days and then gradually shift over time to a community-oriented governance system. But, with the code not built to accommodate these changes later on it appears this may never happen. With concerns for validation in ETH proxy, a user who somehow provides a wrong “quote Token Address”, can lead to possible ETH loss from the user. The misleading code issues relate to a few misleading comments embedded among lines of solidity code, which can introduce unnecessary burdens to understand or maintain the software. While not as detrimental as the previous issues, it’s deeply inherent in poor coding.
If you’ve used DODO before then this will come as no surprise. I’m willing to bet that you’ve felt like there was a striking “similarity” between DODO and another more frequently used DEX. That’s because DODO is nothing more than a white-labeled version of Uniswap. An almost 100% copy/paste version of the Uniswap contract protocol, same fonts and all. There’s nothing original about the design or slight UI differences found on DODO. Just a slapped-together version of Uniswap.
While the idea of ‘flash swaps” sounds great for those uninformed of how central banking works. But, I’m willing to wager that most of you know exactly how it works and started scratching your heads the moment I brought up DODOs “something for nothing” mechanism. Well, I did the same thing and have no idea why this is even part of the protocol. With the verbiage used by the team as “playing with no capital”, summed up as being nothing more than a casino where there’s no risk besides your gas fee. Yeah, I’m not buying that one for a second…
DODOnomics V2! So catchy! Well, I didn’t bring this up in the overview because I don’t want to waste too much of anyone’s time with the details. But, after only being to market a few months with the DODO token, DODO is already introducing a new vDODO token for membership rewards. I mean the original DODO isn’t even being used for governance as intended and already they’re thinning out the total market capitalization with secondary tokens. If you’ve seen me discuss this process in the past then you’ll understand already that this usually indicates the beginning of an end for most protocols.
DODO brings nothing new or original to the table. With the crypto space drowning in Defi opportunities and a new one arising every day, DODO has fallen flat to make any advancements or changes to the existing formula that would drive the adoption of its protocol. While the proactive market maker niche is being portrayed as some breakthrough technology that will change Defi forever in their marketing materials. We’ve already seen this self regulating AMM in projects like Terra Protocol where the supply of the contract pool is adjusted based on the input/outputs of the ecosystem. As seed investors are up over 200x on their investment and only a few months left until vesting distribution begins. DODO is not something I’m looking to take part in at all. According to the latest information on DefiPulse #40 and showing only $26M USD in total locked value, it doesn’t look like many others want to participate either.
Until next time, remember that the only guarantee is BTC. So keep stacking that Satoshi.