[DODO] [DRAFT] [STIP - Round 1]

Archive Short Term Incentives Program (STIP) Round 1
1

SECTION 1: APPLICANT INFORMATION

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

Project Links:

Contact Information

TG: link

Discord: link

Twitter: @BreederDodo

Email: contact@dodoex.io

Do You Acknowledge That Your Team Will Be Subject to a KYC Requirement?: Yes

SECTION 2: GRANT INFORMATION

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

Grant Breakdown:

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

Contract Address: 0x01d3E7271c278Aa3AA56EeBa6a109b2C200679fA is the multisig for receiving the grant. The list of DODO contracts deployed on Arbitrum: Arbitrum - DODO Docs

SECTION 3: GRANT OBJECTIVES AND EXECUTION

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.

Objectives:

  1. To enhance trading liquidity, minimize slippage, and boost market-making activities for stablecoins on the Arbitrum network.
  2. To mitigate the risk of impermanent loss for Liquidity Providers by delegating market-making strategies to expert market makers via DODO V3.
  3. 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:

  1. Trading volumes for incentivized stablecoin pairs within the Arbitrum ecosystem.
  2. The aggregated volume of standard swaps, cross-chain swaps, and limit orders executed on DODOX.
  3. 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.]

  1. 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.

  2. 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.

  3. 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

SECTION 4: PROTOCOL DETAILS

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

Protocol Performance:

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

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Relevent Products:

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.

DODO V3 White Paper

Audit History: DODO | Security Audits

SECTION 5: Data and Reporting

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

1 Like
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Struggling to understand where there is value here to spend such a large % of the grant specifically on an USDC/USDT LP.

Other DEXs asking for similar amounts are heavily incentivizing Arbitrum builders.

Please can you clarify why the Arbitrum DAO should spend so much on one stablecoin pool and clearly explain the benefits for the Arbitrum community as to why this value proposition is far greater v all other DEXs.

This looks like it will just be a wash trading competition promoting unnatural activity

Providing grants for a product that is not yet released and still pending audit completion is not something the DAO should be supporting with this program. There could be delays or risks to an unreleased product. Whilst i respect the desire to bootstrap with incentives, should you not prioritise your own tokens emissions towards a new product release?

1 Like
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Why does Arbitrum need to spend $1.8M ARB to grow your pool tenfold? How will the Arbitrum ecosystem benefit from this pool growth? What guarantees that this pool will not sink right after the grant ends? It seems that only the Dodo protocol and its mercenary liquidity providers will benefit from this proposal.

2 Likes
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A too large number for a DEX Aggregator.

5

Agree with comments, the requested amount of ARB for an aggregator is far too much. Again another project asking for far too much ARB with little benefit to us holders. At least DODO team is offering some of their own token towards this.

There is sufficient stablecoin liquidity on arbitrum eco systems. Looking at 1inch a $10m swap to stablecoins produces 0.8% slippage which is not bad. Adding additional liquidity for mercenary LP’s makes little sense then.

The incentives plan looks ok but it seems like 99% of volume for DODO is stablecoins, these will be wash traded and the ARB tokens will be dumped unless there is a plan.

@peter @0xGDucky @flindy - Also just looked at the funding address provided and there are almost 2.2m ARB tokens in here which look like the original arbi grants? Why have these not been used then or is this something else, can someone help confirm?

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This is a good point, DODO were the recipient of an already large grant that to my understanding has not been utilised at all (even governance involvement).

1 Like
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Hello @DODO_DEX thank you for your application! Your submission meets all requirements to be considered for a snapshot vote.

8

Thanks for the comments and feedback on our proposal @flindy @ArbUSER @0xGDucky , we appreciate the time taken. Some answers below to your points.

  1. ARB held by DODO DAO:

Yes, we confirm we do still hold the original ARB grant in our MS wallet as outlined. These tokens were given to many projects including DODO with no conditions or requirements as with this round of grants. You may note that some projects sold the tokens to boost their own treasuries, some used them for incentives and others including DODO have retained them for now. We deeply appreciate this grant and have treated it with respect given the bear market conditions we are all facing. For now, the ARB tokens are delegated to Diane Dai (DODO Co-founder) and current Abitrum Security Council delegate. If there are any changes to this, we will always inform our community.

  1. DODO as an aggregator, TVL not required:

We fully acknowledge that DODO is indeed an aggregator and our smart contracts pull liquidity from various sources on Arbitrum to ensure that our users get the best prices. We have always strived to provide this advantage to our users. While that means we don’t need our own TVL, there is no denying that the higher the TVL on Arbitrum as a whole the better it is for everyone. We still offer liquidity pools and there is demand from our users to be able to LP on DODO. By being able to incentivise this with ARB tokens that means we can grow not only DODO’s total TVL but also the total TVL on Arbitrum which is net positive for the ecosystem. The crosschain aggregator DODOX is one of our products. There are also liquidity pools with good performance. We want to optimize the advantage of our stablecoin pool to Arbitrum offering minimal slippage with a reasonable TVL.

  1. DODO DPOINTS:

The purpose of the DODO DPOINTS system is to attract new traders and users to Arbitrum via incentives and rewards for actions. We believe that due to the current landscape at present it is a requirement to be able to offer incentives to try and attract new users and therefore new capital to Arbitrum. We have run these programs before and have strong anti-wash trading systems in place to disqualify any bad actors. We will also be using our DODO token as incentives as well, showing that we are not expecting ARB holders to fully fund this part of our grant proposal.

DODO are strong believers and supporters of Arbitrum, we were one of the first to deploy and have been active and bringing new features to Arbitrum with all our updates to our DEX and users. We have almost $2.5 billion in trade volume on Arbitrum which we believe to be a significant number and we look forward to growing this even more. The future is bright!

Thank you again.

DODO

1 Like
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Dodo team are good builders, with strong multichain presence. Their request for the ARB grant is matched with 120k DODO tokens as incentives - which showcases commitment to Arbitrum. We at Stella support this proposal.

10

Given your TVL on Arbitrum there seems to be small demand to LP on DODO. Ofc with incentives, there will be demand. But the need for incentives is not high, as you said yourself you are an aggregator that pulls from other sources.

A grant request this size remains unreasonable high due to limited justification. The DAO should not fund this, the value return is clearly low relative to other requests and expected value generation elsewhere.

11

Hello @DODO_DEX,

Now that your application has been marked eligible, please be advised of the remaining steps in the application process to be completed prior to the Review Period Deadline:

Please complete the following steps required for your application to proceed to Snapshot:

To change your proposal to final, please tag an Arbitrum Foundation Forum Moderator (@ stonecoldpat @ cliffton.eth @ eli_defi) by the Review Period deadline to notify them of your proposal’s readiness to proceed from [Draft] to [Final] status.

Once notified, the Arbitrum Foundation Forum Moderator will adjust your title from [Draft] to [Final] status. Once marked as [FInal], your application post will be locked by moderators and you will no longer be able to edit your proposal.

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Firstly, thank you for your proposal and your evident enthusiasm for enriching the Arbitrum ecosystem.

Introduction and Rationale

Your proposal aims to secure a grant of 1.8M ARB tokens to incentivize various pools on DODO, a DEX with a unique focus on stableswaps through its Proactive Market Maker model. Since its launch last year, DODO has shown effectiveness with a TVL of 3.42M USD on Arbitrum and a six-month dominance in the USDC-USDT trading pair. We’re impressed by the volume and user engagement your platform has generated. With these factors in mind, we believe your proposal has a lot of merits, although there are some concerns we’d like to discuss.

Major Concerns

Grant Size Relative to TVL

  • The ask of 1.8M ARB tokens is high considering the TVL on Arbitrum
  • Our recommendation for change: We recommend lowering the requested amount of ARB tokens.

Sustainability of the APR

  • Concerns about the sustainability of offering a 10% APR on USDC-USDT
  • Our recommendation for change: A more detailed plan or explanation concerning the sustainability of the APR would be helpful.

Minor Concerns

  • Lack of Focus on Arbitrum Native Stablecoins
  • Our recommendation for change: We’d like to see opportunities explored to deepen the liquidity of more Arbitrum native stablecoins.

Summary

Castle Capital appreciates the efforts put forth by DODO and the innovation you bring to the Arbitrum ecosystem. While we think a grant is justified given your platform’s performance, we believe that the current request is high. If the grant amount is lowered and other concerns are addressed, we would be in favor of supporting the proposal.

We hope our comments are constructive and contribute positively to the growth of the broader ecosystem.

1 Like
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@DODO_DEX Friendly reminder to complete the following:

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Please change the proposal to FINAL, thank you!