All DODO solutions will work towards permissionless “no barriers to entry” and community management.
Interview & Writer: Lou Yue
Interviewee: Leida Xiong, founder of DODO
“Excellent investment background, Chinese DeFi project star, new active market maker…” Soon after it went online, DODO, with multiple “halos” on its head, entered the DEX as a very cute little yellow chicken. An extremely competitive track.
In order to have a deeper understanding of the project and to better grasp the market trends, we invited the founder of DODO, Leida Xiong, to discuss topics such as project review, DEX status, new versions of DODO, and potential development in 2021. , The following is the core content of this interview.
DODO’s “Half-Year Summary”
DEX has ushered in exponential growth since the summer of 2020. Automated market maker (AMM) platforms represented by Uniswap have become the mainstream choice in the market, but users have gradually discovered the ” impermanence loss ” while providing liquidity. (Impermanent loss)” the risk of volatility brought by, the value of the assets in hand will invisibly shrink.
The possible risks of AMM have inspired DeFi’s enthusiasm for innovation. The decentralized trading platform DODO has innovatively proposed the next-generation solution for liquidity supply-the proactive market maker (PMM, Proactive Market Maker) algorithm to reduce impermanent losses and holding risks. Realize the flexible market making and efficient asset issuance of DEX.
DODO’s series of innovative ideas quickly attracted the attention of the market. In its seed round of financing, it was led by Framework Ventures, which focuses on DeFi investment, and it was also its first Chinese DeFi project . In the private placement round of financing, both Binance and Coinbase were invested.
It has been nearly 5 months since the pre-launch of DODO in August 2020, and we also invited the co-founder of DODO, Leida Xiong, to briefly do a “half-year review”.
Dodo in the eyes of the radar bear
Leidaxiong said that what DODO wants to do is to innovate continuously . It will introduce new things unprecedented in the market in each major version; continue to carry out micro-innovation in each minor version. DODO will not do imitation disks, because innovation is the most important driving force in the DeFi world.
The logic of DODO’s thinking is to find a problem and then use new technology to solve it. The DODO team has rich financial and smart contract programming experience. As long as it does not violate the laws of market economy, there must be a way to solve it in a decentralized (DApp) way.
The blockchain world has new problems and challenges every day, but DODO will focus on the general direction of doing transactions and focus on doing transactions well. Including but not limited to spot trading, leveraged trading, derivatives trading, etc. On the other hand, all DODO solutions will work towards permissionless “no barriers to entry” and community management . Because only permissionless can release the creativity of users to the greatest extent and allow more people to participate in innovation.
Three months of “mysterious disappearance”
DODO under the market spotlight has carried a lot of expectations and attention from the beginning. Many people also want to get the latest progress and related news of the project. However, in the nearly three months from October to the end of 2020, some progress on the project seems More “mysterious”, some people speculate that DODO may be preparing for a major product release. We also asked Radar to reveal the “mysterious actions” of DODO during this period.
Radixong pointed out that DODO is mainly doing two things . First, because it is the first time for itself, the generations and the team to do a brand new project, and in the epidemic situation, everyone basically works remotely, so build a remote from scratch. The team and making the team run very smoothly is a very challenging thing.
I spent a lot of time in recruitment around October, interviewed about 100 people, and expanded the team from a few to 20 people in a month or two . At the same time, an efficient way of remote collaboration was explored, and the progress was very rapid.
There is a lot of work in these two months. In fact, they are all underwater. You may not see them, but these tasks are very necessary, because the slowness in the front will make the back very fast. If the team is not well set up in the early stage, the speed cannot be increased in the later stage. It is very worthwhile to give the team some time for running-in and trial and error .
On the other hand, DODO v2 is a major version update . For any team, the release of a major version within six months requires huge and complicated work, and many things need to be demonstrated. The design of a new algorithm without barriers to entry is not like copying. An AMM is that simple. There may be many teams that can make imitations in one month and gain market attention, but this is not what DODO wants, nor do they think it will bring a lot of important value to the DeFi world or China’s DeFi projects, so they are willing to spend A little more time to make a novel, problem-solving product.
Therefore, throughout October , the solution of the PMM algorithm on the long tail coin was demonstrated. In November, the front-end code and contract structure were reconstructed. In December , the aggregator version 1.5 was released. The aggregator has many back-end parts. It’s not that the contract can be taken over and redeployed, so it took some time, and the pace of the current 2.0 version is actually very tight, especially 2.0 is very huge, from product planning to vision to final front-end implementation and contract implementation. It is a large set of works.
DEX industry status
At the beginning of the new year in 2021, decentralized exchanges are still undergoing rapid development. According to DeBank data , the number of decentralized exchanges continues to grow, and the DEX trading volume included in the statistics for the past 24 hours is hovering around US$2 billion. As a member of the DEX circuit, we also asked Leida Xiong to share his views on the entire DEX circuit.
DEX development prospects
Radixiong said that he is very optimistic about the future development of the DEX track. He pointed out that trading is the center of the digital currency world. The crypto world is divided into centralized exchanges and decentralized exchanges. Decentralized exchanges are exempt from entry thresholds. What cannot be achieved in a centralized exchange also allows everyone to see the prospects for the development of DEX.
The fundamental reason behind the entry-free entry threshold is the low operating cost of DEX. It can be listed and traded without a centralized server and strong user trust. This is something that cannot be achieved by a centralized architecture. In principle, do A decentralized exchange may only require ten developers. If DEX has a good experience, it can even provide services similar to Binance. Therefore, in the next five years and ten years, it must be the world of DEX, not centralized The exchange world, because its natural cost is too low, DEX represents the direction of current productivity .
Radixiong further pointed out that DEX will be the No. 1 track for the development of the DeFi industry . Taking the traditional world as an example, any asset-related transactions must eventually fall into the transaction, whether it is trading stocks or bonds or trading funds. Buying and selling, buying and selling requires trading, so there may be some people doing assets, some people doing insurance, security, etc., but they will definitely fall into the transaction in the end, so DEX should be the first track, there is no one. Even newly issued assets may not develop as fast as exchanges.
The “market competition” between DODO and Uniswap
When it comes to DEX, Uniswap may be the first or most frequently mentioned one. Uniswap’s transaction data is indeed in the top position. The airdrop of UNI tokens once caused a huge response in the market. They are also members of DEX. , Leidaxiong also discussed DODO’s current market positioning and the direction of the project’s future breakthrough.
Radixion bluntly said that in the DEX field, DODO’s only opponent is Uniswap , or the only opponent in the entire DEX world is Uniswap, because it is now in an absolute dominant position, and the current number two exchange is more than ten times different from its daily activity. It may account for 90% of the market. If you don’t defeat UNI, it doesn’t make much sense to be the second child.
When talking about the huge development in the DEX field, and the Uniswap transaction volume can even reach the level of Coinbase, Leidaxiong pointed out that because DEX has implemented a free entry threshold, this is something that CEX cannot do.
- Change of thinking from liquidity to asset issuance
Radixiong pointed out that when working on the v1 version, more consideration was given to on- chain liquidity. Better liquidity than Uniswap could defeat him, but later found that this was not enough because it adopted more aggressive parameters at the beginning. When it comes to the “rolling” liquidity advantage, users still go to Uniswap to trade, including the aggregator prices are no worse than Uniswap, but it still has 90% of the users in the market, which proves that there is no future for liquidity alone.
After careful analysis, it is found that Uniswap’s new assets are well found is one of the reasons for its fire, that is, users can buy any currency, but this is not its biggest advantage, because some aggregators, including DODO, can buy any currency. The trading scope and liquidity are even better than Uniswap, but Uniswap mainly enjoys To b services for free. As the traffic master, the project party opens a pool in Uniswap. After the pool is opened, the user will be announced to Uniswap to purchase, so the user’s trading habits are fixed . As the traffic owner, the project party can enjoy the traffic for free wherever he takes the traffic.
In addition, another reason why the project party chose Uniswap is that DEX, including SushiSwap, did not provide more functions than Uniswap , or that they did not provide good enough.
Without resolving the fundamental contradiction, any improvement will not be possible. Therefore, DODO v2 focuses on the new asset issuance model. If the v2 pool is activated and 3% or 5% of the currency is used for selling liquidity, it may be Obtain greater development.
- Selling liquidity theory
If DODO can do one or even many things and functions that Uniswap cannot do, then it can be defeated. For the current thinking, the answer is that DODO can be listed without funding , liberating the liquidity of the project side. this is Uniswap AMM algorithm can not be done, a lot of people do not realize how strong this function.
For a new project, because there is no money, it is impossible to allocate funds in Uniswap. Therefore, the selling liquidity is not enough, and users cannot buy coins at all. Therefore, they must do liquidity mining, and exchange for liquidity through constant inflation of tokens. But in fact, these are unnecessary. DODO v2 provides a new pool of funds flow to achieve a better algorithm is simple and convenient to create the main purpose of liquidity.
- Crowdfunding to build a pool
With reference to the “call auction” in the stock market, DODO designed “Crowdpooling”, a new method of liquidity issuance. The project party provides a certain amount of tokens, specifies the unit price of the tokens and the issuance quota, within a specified time, anyone can recharge for subscription. If the user’s subscription exceeds the token issuance quota, the token quota will be allocated according to the amount of funds recharged by the user. After the crowdfunding period ends, the public pool is automatically established.
Further reading: “New Method of Liquidity Issuance: How to achieve a fair start for “crowdfunding pool building”? 》
- DAU is the most valuable indicator of DEX
Radixion believes that increasing DAU (daily activity) is very important. DAU is the most valuable indicator of DEX. What everyone values most is TVL. The second may be transaction volume, and finally the number of transactions or DAU. Among them, DAU is the most difficult to buy. Mining is equivalent to buying the transaction volume with coins, and then TVL will rise. Only DAU cannot buy it, because it is extremely difficult to change the user’s trading habits . The previous TVL explosion project was only a short-lived, unable to grasp any value, DODO needs to focus on long-term value. The operational goal of DODO v2 is to increase DAU .
How to measure whether a DEX can obtain DAU is based on the ability to obtain resources for free . Market hotspots have been converted very quickly. Uniswap did not spend any energy but gained market attention for free, because the project party as the traffic master attracted traffic.
How to obtain resources for free is to do a good job of tools, apply them to the development of some projects that can detonate the market, and then continue to interact with the market, and always iterate the tools forward, so as to serve the so-called content creators. These content creators are simply the people who issue coins and those who do projects. These people are the traffic masters.
By analogy, content creators are the up owners of station B, and retail investors are tourists who post barrage. Why station B is so popular and why so many people post barrage is because it has a lot of videos that no one else has. The main reason that up chooses station B may be because of good user experience and good service. In short, it must be taken care of here to provide content and bring traffic, and station B can obtain resources for free.
Towards DODO 2.0
From the launch of the project to the iteration of version 1.5 and then to the upcoming version 2.0, DODO is also moving forward. We also invite Radixong to introduce the 2.0 version from his point of view in terms of functions, use cases, products, etc. Some features and main functions of
Both a supplier and a distributor
Radixiong pointed out that 2.0 is both a supplier and a distributor . The supplier is to build a pool, and the button to build a pool is constantly producing content. Distributors are the sharing of liquidity. Therefore, version 1.5 adds intelligent routing . Even if the new content is not produced by DODO, at least it can not be lost. Both hands must be grasped and both must be hard.
Uniswap is just a content producer and did not distribute it. Because all content is now produced in Uniswap, so I don’t feel the importance of smart routing. If one day DODO has half of the new assets and Uniswap has half of the new assets, then users find DODO can trade 100% of the new currency, but only 50% of UniSwap can trade. Then it is self-evident which one he chooses. You may realize that distributors are a vital hand.
DODO v2 realizes the integration of content production and distribution, especially on the production side. New functions will continue to be released to benefit content producers. Only by creating new things can we capture the tastes of changing people.
Further reading: “Towards DODO 2021: As both a liquidity provider and a traffic distributor”
Multiple use cases for the PMM algorithm
In general, the PMM algorithm is a compression of the order book, which can realize on-chain liquidity at a low price and is flexible enough to support various modes.
The PMM algorithm is defined as a universal liquidity framework , through the modification of parameter settings, a variety of use cases are realized , just like AMM is a calculator, and functions such as adding a little reserve are simple and easy to use, but PMM is a general version of the computer. Using the calculator above, this algorithm can be degenerated into AMM through parameter settings, but at the same time it can do a lot of things that AMM can’t, such as playing games, listening to songs, and sending emails.
Extended reading: “Understanding the PMM algorithm behind DODO in five minutes: a universal liquidity framework and multiple use cases”
Economic model
When talking about the DODO token economic model, Radixion pointed out that tokens have two main functions. The first is an incentive plan. Both TVL and DAU can be purchased resources. On the other hand, it is to carry the value of the product, to amplify the value of the product with tokens, and to amplify it in the secondary market. DODO is also very happy to give all the value to the tokens.
The incentive plan includes three aspects, mainly including new gameplay liquidity mining, new gameplay transaction mining and Listing Mining plan. At the same time, it plans to launch a wealth management aggregator similar to YFI “Plus One Mining”.
There is also a systematic method for giving prices, which will give loyal token holders some benefits . The loyalty measurement is to use a coin fee to calculate the growth of users. It is a bit like quantifying the value of the lock-up period. Users can do many things. For example, governance, governance includes the portion of fee dividends, as well as inflation and staking rewards will be given to loyal users, in addition to some special rights.
From the perspective of the overall development of 2.0, the timetable for DODO development is one generation of sales and development . For example, version 1.5 is being sold, version 2.0 is being developed, version 2.1 is being demonstrated, and version 2.1 will add governance and transactions. In other respects, the overall pace and regular innovation.
When developing, I will start thinking about the next generation of argumentation, collect the current pain points in the market, and then see if it can be solved, how to solve it, and continue to innovate. The pace of product development is also driven by new features. Open 2.0 public beta Later, bugs and feedback will be collected for repair.
Looking ahead to 2021
Finally, we asked Leida Xiong to share his forecast for 2021. He expressed his optimism about assets, which is the most promising year for this year.
For example, small country exchanges are obviously inferior to DEX’s issuing assets, because DEX has high liquidity, the assets of small entity exchanges will go to DEX to raise funds and trade in DEX. The DODO 2.0 model is very suitable for the entry of such assets. The entry of new assets will not only bring new users to the entire market, but will also bring value lock-in. The entry of these values into the blockchain world is a huge, long-term The positive.
