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 1: Co-Founder
Mark Wang: Co-Founder and COO
Diane Dai 1: Co-Founder
Project Links:
Contact Information
Contact: Diane Dai
TG: @dianedai
Twitter: https://twitter.com/0xdai2 1
Email: diane@dodoex.io
Do You Acknowledge That Your Team Will Be Subject to a KYC Requirement?: Yes
SECTION 2a: Team and Product Information
Provide details on your team’s past and current experience. Any details relating to past projects, recent achievements and any past experience utilizing incentives. Additionally, please provide further details on the state of your product, audience segments, and how you expect incentives to impact the product’s long-term growth and sustainability.
Team experience:
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Radar Bear - Co-Founder
Radar Bear has a wealth of expertise and experience in blockchain technology and DeFi. He was previously an integral member of the DDEX.io team and developed much of its smart contract infrastructure. He graduated with a bachelor’s degree from the prestigious Peking University, double majoring in space physics and economics.
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Diane Dai - Co-Founder and Chief Marketing Officer
Diane Dai is a well-known thought leader and pioneer in the Chinese DeFi community and has been working in the decentralized exchange space since 2017. She has extensive experience in marketing, social media, and business development, and her WeChat blog DeFi the World is considered a must-read by DeFi enthusiasts. Prior to founding DODO, she spent time at DDEX. She was named amoung Forbes 30 under 30 Asia in 2022.
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Mark - Co-Founder and Chief Operating Officer
Mark is an experienced blockchain entrepreneur and founded DOS Network, a layer 2 decentralized oracle service project. He previously worked for more than five years in the San Francisco Bay Area, serving as tech lead at enterprise giants Oracle and Pure Storage. Mark has a master’s degree in Computer Engineering from Carnegie Mellon University.
What novelty or innovation does your product bring to Arbitrum?
DODO V1 introduced concentrated liquidity around the oracle price to enhance capital efficiency. The mechanism aimed to collect sufficient transaction fees to compensate for impermanent loss. Additionally, it innovated by separating the liquidity of buy and sell orders, allowing LPs to deposit and withdraw a single asset instead of two. To attract more users, DODO V1 dynamically adjusted transaction fees to minimize trading costs.
DODO V2 offers a suite of three distinct types of liquidity pools designed to cater to the diverse needs of various tokens:
- DODO Vending Machine (DVM): Tailored for long-tail tokens, the DVM is an innovative solution for assets that are not widely traded but still require market liquidity.
- DODO Private Pool (DPP): Aimed at mainstream tokens, the DPP provides a more bespoke liquidity environment, allowing for greater control over trading strategies and parameters.
- DODO Stable Pool (DSP): Specifically for stablecoins, the DSP ensures efficient and stable liquidity management, addressing the unique requirements of stablecoin trading pairs.
Is your project composable with other projects on Arbitrum? If so, please explain:
As a DEX aggregator, DODO has integrated the most prominent DEXs on Arbitrum, such as Uniswap, Sushi, Curve, and Balancer, to provide Arbitrum users with the best price. Through liquidity integration with these DEXs, the DODO API has achieved a trading volume of $387M on Arbitrum. View this on the dashboard.
Additionally, DODO offers cross-chain swap and has collaborated and integrated products with cross-chain bridges and aggregators on Arbitrum, including LIFI, Hyphen, Nabox, Bungee, Swft, Stargate, Connext, Squid, Across, Layerswap, OKX Bridge, and Symbiosis, facilitating users in bridging assets from other networks to Arbitrum.
Furthermore, DODO, known for its significant capital efficiency and extremely low stablecoin swap slippage, has also been integrated by aggregators such as 1inch, ParaSwap, OpenOcean, and Slingshot.
Do you have any comparable protocols within the Arbitrum ecosystem or other blockchains?
Although there are many DEX projects, DODO stands out due to its unique PMM (Proactive Market Maker) algorithm, creating a variety of use cases distinct from other DEXs.
The Proactive Market Maker (PMM) algorithm is a new on-chain market-making model. It differs from the constant function market maker model by decoupling the relationship between assets in a trading pair. It allows for flexible setting of asset ratios, curve slopes, and other parameters. Additionally, it can incorporate oracles for price guidance or rely on on-chain market-driven price discovery. This model concentrates more capital around the market price, providing ample liquidity.
- DODO is both a DEX and an aggregator. DODO not only has its own liquidity pools but also supports the exchange of any token in the market.
- DODO achieves higher capital efficiency and single-side liquidity provision. For mainstream assets, DODO can mimic human market maker behavior by distributing more capital around the expected market price, thereby achieving 10 times the liquidity and capital efficiency. DODO also supports single-side liquidity provision or setting the ratio of assets on both sides at will.
- DODO offers the ability to issue new assets at low cost. DODO allows anyone to issue new assets at a low cost through crowdfunding pools, establishing liquidity pools with better liquidity.
- DODO enables on-chain implementation of market maker strategies. Any project, market maker, or individual can implement a complete, efficient, and flexible market-making strategy by adjusting three parameters: the market mid-price, depth, and the spread of the order book.
How do you measure and think about retention internally? (metrics, target KPIs)
In terms of overall metrics, our main focus is on:
- TVL: Total value locked in a protocol, expressed in USD
- Trading Volume: A daily time series of volume traded, also measured in USD.
TVL and trading volume reflect the most genuine protocol activity and metrics that the team can quantify. Additionally, we also focus on the number of trading users, and protocol fees.
- Daily Active Users: the daily count of unique addresses interacting with the protocol’s contracts.
- Daily User Growth: the daily user growth (in addresses) interacting with the protocol’s contracts.
- Daily Transaction Count: the daily number of transactions interacting with the protocol’s contracts.
- Daily Protocol Fee: the daily total protocol fee generated
We track these metrics through the following dashboards:
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DODO Dashboard: It provides statistics on TVL, trading volume, DAU, etc.
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Metabase Dashboard: It is more comprehensive; in addition to the data mentioned above, it also calculates the total trading volume and the protocol fees.
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Dune Dashboard: It is mainly used to track DODO’s share of trading volume on Arbitrum, such as the daily share of stablecoin trading volume.
Relevant usage metrics - Please refer to the OBL relevant metrics chart 7. For your category (DEX, lending, gaming, etc) please provide a list of all respective metrics as well as all metrics in the general section:
DODO Metrics on Arbitrum:
Do you agree to remove team-controlled wallets from all milestone metrics AND exclude team-controlled wallets from any incentives included in your plan:
Yes.
Did you utilize a grants consultant or other third party not named as a grantee to draft this proposal? If so, please disclose the details of that arrangement here, including conflicts of interest (Note: this does NOT disqualify an applicant):
No.
SECTION 2b: 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, Optimism, Scroll, Manta, Mantle, Aurora, and Conflux eSpace.
What date did you deploy on Arbitrum mainnet?
August 30th, 2021.
The txhash: Arbitrum Transaction Hash (Txhash) Details | Arbiscan
Do you have a native token?
Yes, $DODO is a native token for DODO, currently with a total supply of 2.8M on Arbitrum. The tokenomics docs here.
Past Incentivization: What liquidity mining/incentive programs, if any, have you previously run? Please share results and dashboards, as applicable?
Yes, DODO has launched liquidity mining rewards and trading incentives on Arbitrum, offering rewards to LPs for WBTC/USDC, ETH/USDC, USDT/USDC, DODO/USDC, as well as token rewards for each transaction made by traders. Detailed information can be found in this announcement 1.
The Kakapo incentive initiative, specifically launched for the Arbitrum ecosystem, has played a pivotal role in bolstering liquidity and user engagement. Focusing on the USDT-USDC stablecoin pool, the program significantly increased Total Value Locked (TVL), achieving a peak of $3.5 million. This strategic effort solidified the platform’s status as a leading decentralized exchange on Arbitrum, with a retained market share of 40%-50%, even amidst market shifts.
The program’s contribution to a remarkable trading volume of $387 million on Arbitrum emphasizes the substantial impact of the liquidity pools and the effectiveness of targeted incentive schemes in driving growth and adoption within the network. These achievements, meticulously documented and available for review on the dedicated Dune Analytics dashboard [LINK HERE], demonstrate the positive influence on Arbitrum, underscoring the application for further support and collaboration through the grant.
Current Incentivization: How are you currently incentivizing your protocol?
Currently, DODO’s main incentive measure on Arbitrum is liquidity mining, providing DODO rewards to LPs for USDC/USDT.
Have you received a grant from the DAO, Foundation, or any Arbitrum ecosystem related program?
No.
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 billion, with the last 30-day volume standing at $136 million. Please refer to the dashboard.
Additionally, DODO accounted for 50% 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.
Protocol Roadmap:
Q1 2024
- Support Gas Saving Pool
- New Version UI
- DODO Swap Pro Mode
- DODO Wallet and Token list UI
- DODO DEX Developer Portal
- Support Liquidity Widget
- Support Trading Fee Share (Invited Only)
Q2 2024
- Dodochain Testnet Launch
- Dodochain Deposit enabled
- Dodochain Launch Powered by Arbitrum Orbit
- Partnership with more chains and infrastructures
- Dodochain Gas Token Launch
Q3 2024
Dodochain
- Integrate BTC Ecosystem and support BTC assets
DODO DEX
- DODO DEX V3
- DODO DEX Route Service Support High Scalability
- DODO DEX Developer Portal
- Support Mining Widget
- Support UniV4 Hook in DODO DEX V3
Q4 2024
- Integrate more Non-EVM Chains and support more assets
- DODO Ecosystem Expansion with new partnerships
- Global DeFi Awareness Campaigns
- Continue sponsorship of Global Meetups and Hackathons
Audit History & Security Vendors: Security Audits DODO Docs
Security Incidents:
In March 2021, before DODO was launched on Arbitrum, it suffered a hacking attack that resulted in a loss of approximately $3.8 million. However, within the next 24 hours, we were able to recover about $3.1 million of the assets. Here is a detailed postmortem of the entire event.
SECTION 3: 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: 700,000 ARB
Justification for Grant Size and Target Metrics
Baseline and Target Metrics:
- Current Metrics on Arbitrum: Daily trading volume at $5M; TVL at $3M.
- Proposed Targets: Increase daily trading volume to $15M and TVL to $10M, marking a 200% growth.
Strategic Rationale and Financial Calculations:
- Historical Data & Market Potential: Our past campaigns have consistently shown that targeted incentives lead to substantial growth in both trading volume and TVL. For instance, a previous initiative saw a 150% increase in TVL over a six-week timeframe. This success underpins our confidence in achieving the set targets.
- Incentive Plans:
- Liquidity Provider Incentives: To attain a $10M TVL with a competitive 20% APR, the required incentive is calculated at $2,000,000 annually. Over the specific campaign period of 12 weeks, this translates to an estimated need of $461,538. At an ARB price of $1.65 (as of March 17, 2024), this equates to approximately 279,719 ARB tokens.
- Trading Volume Incentives: Aiming for a $15M daily trading volume requires incentives for trading fee rebates projected at $884,423 over 12 weeks. This corresponds to about 535,713 ARB tokens, recalculated with the current ARB price of $1.65.
Grant Ask Reconsideration:
Given the 200% oversubscription to the grant program, we’ve closely re-examined our application. Our revised ask is grounded in detailed calculations, aimed at realistic yet impactful goals. We’ve adjusted our request in line with the ARB token’s current value, ensuring that our projections are both ambitious and achievable, reflecting a balanced approach to support from the grant.
Currently, DODO enjoys a daily trading volume of $5 million and a Total Value Locked (TVL) of $3 million on Arbitrum. Our ambition is to magnify these figures by 200%—aiming for a daily trading volume of $15 million and a TVL of $9 million.
Over the last 920 days, we’ve consistently incentivized our USDT/USDC liquidity pool on Arbitrum, allocating 4.62 million DODO tokens for this purpose. At the current valuation, this amounts to $1.4 million USD.
To reach our ambitious goals, we propose the following initiatives:
- Boosting Liquidity through Higher APRs: To elevate our TVL to $10 million, we plan to offer an attractive 20% Annual Percentage Rate (APR) to liquidity providers. Achieving this target necessitates an incentive pool of $500,000. Based on the exchange rate of $2 per ARB token as of March 4, 2024, this corresponds to an allocation of approximately 250,000 ARB tokens.
- Encouraging Trading with Fee Rebates: To surge our daily trading volume to $15 million, we intend to deploy rebates on trading fees. To sustain this incentive over 12 weeks, an estimated $884,423 is required, which translates to roughly 442,212 ARB tokens at the current rate.
These strategies are designed with a dual focus: to substantially increase both the liquidity and trading activity on DODO, reinforcing our presence in the decentralized exchange landscape on Arbitrum.
Funding Address: 0x01d3E7271c278Aa3AA56EeBa6a109b2C200679fA
Funding Address Characteristics: 2/3 multisig with private keys securely stored
Treasury Address: 0xAB21016BD4127638b8c555e36636449b33dF1C38
Contract Address: [Enter any specific address that will be used to disburse funds for grant recipients]
SECTION 4: GRANT OBJECTIVES, EXECUTION AND MILESTONES
Clearly outline the primary objectives of the program and the Key Performance Indicators (KPIs), execution strategy, and milestones used to measure success. This helps reviewers understand what the program aims to achieve and how progress will be assessed.
Objectives:
- To enhance trading liquidity, minimize slippage, and boost market-making activities for stablecoins on the Arbitrum network.
- 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.
Execution Strategy:
Strategy 1: Boosting TVL and Trading Volume through Higher APR
DODO is praised on Arbitrum for its extremely low slippage and fees in stablecoin transactions, securing over 50% of the market share. However, we are aware that relying solely on stablecoins is not enough for the protocol’s sustainable development. We are introducing more blue-chip and new assets into DODO, including ETH, wstETH, ARB, MAGIC, GMX, etc. By incorporating more assets and increasing TVL, DODO will be able to offer better prices to more users on Arbitrum.
Strategy 2: Increasing Trading Volume and Partner Traffic through Trading Rewards
DODO will reward addresses trading specific tokens or provide gas rebates, thereby boosting the overall trading volume. Furthermore, we plan to extend these rewards to more partners integrated with the DODO Trading API and Trading Widget, bringing rewards to a broader range of users and their customers.
Strategy 3: New Asset Liquidity and Trading Volume Rewards
We also aim to incentivize innovative new projects on Arbitrum, which can introduce new use cases and attract more users to the Arbitrum ecosystem. Guiding them to launch their tokens and create liquidity on DODO, if they meet our set TVL or trading volume criteria, we will provide incentives. The specifics are still being determined.
Strategy 4: The dPoints System to Facilitate Incentive and Reward Distribution
The dPoints system is designed to promote the distribution of incentives and rewards, enhancing engagement and participation within the DODO ecosystem.
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 700,000 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.
In preparation for the introduction of the dPoints system, our team of analysts and data scientists have developed specialized models for analyzing the inflows and outflows of tokens to and from addresses participating in the program. They look for similarities in the trading activities of different addresses and compare them against known patterns of malicious behavior.
DODO conducted extensive internal tests, simulating wash trading activities to refine the aforementioned abuse prevention mechanisms. Through these simulations, we’ve achieved a 95% success rate in identifying potential wash trading, allowing us to preemptively address 98% of simulated abusive actions before they could exploit our incentive structures. Our proactive approach and the refinement of our detection algorithms have led to a 60% reduction in incidents of simulated wash trading compared to previous models.
These efforts underscore our commitment to maintaining a fair and secure trading environment, ensuring the integrity of transactions and the equitable distribution of rewards through the dPoints system.
What mechanisms within the incentive design will you implement to incentivize “stickiness” whether it be users, liquidity or some other targeted metric?
- Full-service offering: DODO provides a comprehensive suite of products and services for users, including exchange, cross-chain swap, liquidity provision, mining, and asset issuance, meeting most needs and generating revenue through trading fees.
- Partner integration: The integration of more liquidity and aggregators, allows users to obtain better exchange rates on DODO. Good liquidity also ensures a continuous user base.
- dPoints incentive system: The dPoints system is an incentive system launched to encourage users to provide liquidity and keep trading. Rewards will be distributed based on points, motivating users to continue using DODO.
- DODO V3: DODO V3 is a vault maintained jointly by LPs (Liquidity Providers) and SPs (Strategy Providers), with LPs providing funds to the pool and SPs offering strategies. Both LPs and SPs share the fee income. It can enable users to contribute assets to the pools without facing impermanent loss and with real yield, attracting them to continue using the service.
Maximizing user retention post-grant is paramount, and our approach incorporates both immediate and long-term strategies:
- Vesting Period for Rewards: Implementing a vesting period for incentive program rewards encourages users to remain engaged with DODO over time, fostering loyalty while they gradually gain access to their full rewards.
- dPoints for Future Rewards: By requiring users to earn DPoints for additional rewards, users are motivated and driven to continue interacting with the platform. This mechanism ensures ongoing engagement by offering tangible benefits for continued participation.
- Superior UI/UX and Trading Experience: Confidence in DODO’s user interface and trading experience is key. A seamless and intuitive platform can significantly contribute to user satisfaction, encouraging them to choose DODO as their preferred decentralized exchange.
Specify the KPIs that will be used to measure success in achieving the grant objectives and designate a source of truth for governance to use to verify accuracy.
In applying for a grant from Arbitrum, DODO is keen to emphasize our strategic focus on enhancing our platform’s performance and contribution to the Arbitrum ecosystem over the 12-week program. Our approach is centered around key performance indicators (KPIs) that will guide our efforts and demonstrate our progress.
Key Performance Indicators (KPIs)
- Pool TVL (Total Value Locked): We aim to grow our liquidity pools, ensuring a diverse and robust market for traders and liquidity providers.
- Pool APY (Annual Percentage Yield): By offering competitive yields, we plan to attract and retain liquidity providers, fostering a vibrant ecosystem.
- Pool Trading Volume: Increasing trading volume is a testament to our platform’s liquidity and user engagement, signifying a healthy exchange environment.
- Arbitrum Ecosystem’s Stablecoin Trading Volume & DODO’s Market Share: Targeting a significant presence in stablecoin trading within the Arbitrum network, we strive to capture a notable portion of the market, bolstering the ecosystem’s overall volume and diversity.
Program Timeline and Milestones
Our focused 12-week program is designed to rapidly deploy and iterate on new incentive mechanisms, with the aim of achieving our targets within the first week of deployment. This agile approach allows us to respond to market feedback and adjust our strategies in real-time, ensuring maximum impact and alignment with Arbitrum’s ecosystem goals.
- Week 1: Deployment of the new incentive program on DODO Arbitrum, with immediate monitoring and adjustments as needed to optimize performance and engagement.
- Weeks 2-12: Continual refinement of incentive mechanisms based on real-time data and community feedback. Strategic marketing and partnership efforts will be intensified to sustain growth momentum, focusing on achieving and surpassing our KPIs. Regular evaluations will be conducted to track progress against our goals, with transparent reporting to stakeholders and the community.
Grant Timeline and Milestones:
If approved, we will immediately create a proposal requesting a matching amount of DODO for joint incentives.
Next, the development team will upgrade and modify the dPoints system to accommodate this incentive plan.
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 1. 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.
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 5: Data and Reporting
OpenBlock Labs has developed a comprehensive data and reporting checklist for tracking essential metrics across participating protocols. Teams must adhere to the specifications outlined in the provided link here: Onboarding Checklist from OBL 9. Along with this list, please answer the following:
Is your team prepared to comply with OBL’s data requirements for the entire life of the program and three months following and then handoff to the Arbitrum DAO? Are there any special requests/considerations that should be considered?
Yes.
Does your team agree to provide bi-weekly program updates on the Arbitrum Forum thread that reference your OBL dashboard?
Yes.
Does your team agree to provide a final closeout report not later than two weeks from the ending date of your program? This report should include summaries of work completed, final cost structure, whether any funds were returned, and any lessons the grantee feels came out of this grant. Where applicable, be sure to include final estimates of acquisition costs of any users, developers, or assets onboarded to Arbitrum chains. (NOTE: No future grants from this program can be given until a closeout report is provided.)
Yes.
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.