Provide personal or organizational details, including applicant name, contact information, and any associated organization. This information ensures proper identification and communication throughout the grant process.
Applicant Name: DODO DAO
Project Name: DODO
Project Description: DODO is a decentralized trading platform that uses the innovative Proactive Market Maker (PMM) algorithm to provide efficient on-chain liquidity for Web3 assets, making it easy for everyone to issue and trade these assets.
Team Members and Qualifications:
Radar Bear: CEO
Mark Wang: COO
Diane Dai: CMO
Do You Acknowledge That Your Team Will Be Subject to a KYC Requirement?: Yes
Detail the requested grant size, provide an overview of the budget breakdown, specify the funding and contract addresses, and describe any matching funds if relevant.
Requested Grant Size: 900,000 ARB
Grant Matching: 600,000 DODO
300,000 ARB tokens allocated for LP Incentives in USDT/USDC stablecoin swaps, matched by 300,000 DODO tokens
300,000 ARB tokens allocated for trading incentives on DODOX, covering a range of activities including swaps, limit orders, and cross-chain swaps of major trading pairs.
150,000 ARB tokens allocated to incentivize DODO V3 strategy providers (SP), matched by 150,000 DODO tokens
150,000 ARB tokens allocated to incentivize DODO V3 liquidity providers (LP), matched by 150,000 DODO tokens
Funding Address: Arbiscan
Funding Address Characteristics: 2/3 multisig with private keys securely stored
Clearly outline the primary objectives of the project and the Key Performance Indicators (KPIs) used to measure success. This helps reviewers understand what the project aims to achieve and how progress will be assessed.
- To enhance trading liquidity, minimize slippage, and boost market-making activities for stablecoins on the Arbitrum network.
- To mitigate the risk of impermanent loss for Liquidity Providers by delegating market-making strategies to expert market makers via DODO V3.
- To accelerate the flow of assets into the Arbitrum network via streamlined bridging solutions, and to elevate the on-chain trading experience through seamless swaps and limit orders.
Key Performance Indicators (KPIs):
The Key Performance Indicators (KPIs) we are closely monitoring are:
- Trading volumes for incentivized stablecoin pairs within the Arbitrum ecosystem.
- The aggregated volume of standard swaps, cross-chain swaps, and limit orders executed on DODOX.
- The Total Value Locked (TVL) in the DODO V3 Liquidity Provider (LP) pool, along with the utilization rate of LP assets.
How will receiving a grant enable you to foster growth or innovation within the Arbitrum ecosystem?:
Over the past two years since deploying on the Arbitrum, DODO has leveraged its DODO tokens to incentivize liquidity in the USDT/USDC trading pair. Despite efforts to sustain liquidity, total value locked (TVL) remains below $2 million. However, thanks to our capital-efficient Proactive Market Maker (PMM) algorithm, we still achieve millions in daily trading volumes. To further incentivize market-making and reduce slippage in large stablecoin trades, we aim to significantly elevate the TVL. Stablecoins are the cornerstone of decentralized finance (DeFi). It’s estimated that stablecoin pairs account for 30% of trading volumes on mainnets. This trend hasn’t yet been mirrored on Arbitrum, presenting an opportunity to establish it as a hub for stablecoin trading. Securing this grant would markedly increase the TVL in our incentivized USDC/USDT pool, reduce slippage for sizable transactions, and elevate trading volumes on the Arbitrum network.
DODO V3 introduces a transformative market-making model designed to empower strategy providers (SP) with enhanced capital efficiency and risk mitigation. We believe that DODO V3 will redefine the landscape of intent-centric market-making. It allows SPs to earn more from market making, while LPs can invest without worrying about losses versus rebalancing. Receiving this grant would be instrumental in launching DODO V3, marking its debut on the Arbitrum network. This strategic move will not only attract market makers from various ecosystems and centralized exchanges but will also incentivize users to migrate to Arbitrum to experience the unique benefits our new model offers.
Justification for the size of the grant: [Enter explanation]
At present, our USDC/USDT pool holds approximately $2 million in liquidity. To scale this fivefold to $10 million and offer a 10% Annual Percentage Rate (APR), we would require total incentives of $250,000. Based on today’s exchange rate of $0.81 per ARB token, this equates to approximately 308,000 ARB.
A total of 300,000 ARB tokens will be designated to fuel incentives for trading on the Arbitrum network. This allocation is planned for a three-month period, during which we anticipate a substantial uptick in trading volume, user acquisition, and asset bridging to Arbitrum.
Similarly, 300,000 ARB tokens will be set aside to incentivize the launch of DODO V3, with an equal distribution of 150,000 ARB for Liquidity Providers (LP) and Strategy Providers (SP). This balanced allocation aims to ensure a robust launch by offering competitive lending APYs and utilization ratios. As a result, we expect to attract a greater number of market makers and seamlessly integrate more assets into the Arbitrum ecosystem.
Execution Strategy: [Describe the plan for executing including resources, products, use of funds, and risk management. This includes allocations for specific pools, eligible assets, products, etc.]
We plan to create a new USDC-USDT liquidity pool, or additional stablecoin pools, based on community demand. The pool will be incentivized through a combination of the 600,000 ARB grant received and a DODO token match over the 3-month period, subject to an upcoming DAO proposal.
We will commence the collection and in-depth analysis of transaction activities—including swaps, cross-chain swaps, and limit orders—on DODOX. Rigorous measures will be in place to identify and exclude wash trading. Qualified transactions will be eligible for a share of a 600,000 ARB incentive pool with a vesting period of 3 months, distributed based on a point-based system, known as dPoints.
The earning structure for dPoints based on accumulated trading volume on each trading activity is as follows. To mitigate the potential for wash trading, the activities are restricted exclusively to non-stablecoin swaps.
- A trading volume above $50 will be rewarded with 10 dPoints.
- A trading volume above $500 will be rewarded with 20 dPoints.
- A trading volume above $1,000 will be rewarded with 30 dPoints.
- A trading volume above $5,000 will be rewarded with 50 dPoints.
- A trading volume above $10,000 will be rewarded with 100 dPoints.
The maximum dPoints a user can get is 300 from all three activities.
We plan to roll out DODO V3 on the Arbitrum network, where we will monitor all Strategy Provider (SP) and Liquidity Provider (LP) activities. Incentives for SPs will be determined by the volume of assets borrowed and the associated borrowing costs. For LPs, incentives will be calculated based on the amount deposited into the liquidity pool at specific intervals during the incentive period.
Grant Timeline: [Describe the timeline for the grant]
Upon receipt of the grant, we will promptly create and incentivize liquidity pools for USDC-USDT stablecoins using the ARB allocation and the matched DODO tokens.
For trading incentives, we aim to complete wash trading filtration and proceed with distribution by January 2024.
Following the deployment of DODO V3 on the Arbitrum network—expected in November, pending a final audit—we will initiate incentives for both Strategy Providers (SP) and Liquidity Providers (LP) to actively participate in the ecosystem.
Do you accept the funding of your grant streamed linearly for the duration of your grant proposal, and that the multisig holds the power to halt your stream? YES
Provide details about the Arbitrum protocol requirements relevant to the grant. This information ensures that the applicant is aligned with the technical specifications and commitments of the grant.
Is the Protocol Native to Arbitrum?:
Although DODO is not native to the Arbitrum network, we were among the first protocols to deploy there. With over two years of successful operation on Arbitrum, it has become our third-largest network in terms of both TVL and trading volume.
On what other networks is the protocol deployed?:
DODO is currently deployed on Ethereum, Arbitrum, Polygon, BNB, Base, Avalanche, Linea, and Optimism.
What date did you deploy on Arbitrum?: August 29th, 2021
DODO was among the pioneering protocols to support the Arbitrum ecosystem. Over two years of deployment on Arbitrum, we have amassed a total trading volume of $2.47 billion, with the last 30-day volume standing at $173 million. Please refer to the dashboard.
Additionally, DODO accounted for 70% of Arbitrum’s stablecoin swap volume over the past quarter. For more details, please see the Arbitrum Stablecoin Dune Dashboard
DODOX includes Swap, Cross-Chain Swap, and Limit Order, allowing users to exchange any two tokens across different networks at the best price. Additionally, DODO X provides developer tools such as Trading API and Trading Widget, enabling any protocol to quickly integrate all the functionalities of DODO X into their products.
PMM stands for Proactive Market-making Algorithm. The PMM is an inventory management strategy with high capital efficiency. When the quantity of an asset decreases, the PMM algorithm automatically increases the price quoted for this asset in anticipation of buying back the missing inventory from the market.
Audit History: DODO | Security Audits
Provide details on how your team is equipped to provide data and reporting on grant distribution.
Is your team prepared to create Dune Dashboards for your incentive program?:
Yes, we will set up a Dune Dashboard specifically for the incentive program to closely monitor key performance indicators.
Does your team agree to provide bi-weekly program updates on the Arbitrum Forum thread?
We are pleased to offer bi-weekly updates on the incentive program through our dedicated reporting team, who will showcase our dashboards.
Does your team acknowledge that failure to comply with any of the above requests can result in the halting of the program’s funding stream?: Yes