Onboarding Millions on Layer 2 Solutions: Interview with DODO Founder

Key Takeaways

  • DODO is set to launch on Arbitrum, and believes that Arbitrum will surpass people’s expectations.
  • While initially, liquidity will be spread between layer 2’s and sidechains like Polygon or BSC, if layer 2 delivers it will eventually prevail.
  • The recent slump in DeFi prices hasn’t affected most projects as they all have more than enough funds to continue building the future of finance.

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In an interview with Crypto Briefing, the founder and CEO of DODO exchange Lei Mingda talks Arbitrum, scaling Ethereum, Polygon, BSC, Three Arrows Capital, concentrated capital, and the future of DODO in a multichain world.

Onboarding Millions to Layer 2

DODO is a decentralized exchange that pioneered concentrated liquidity, the key feature of Uniswap v3, back in August 2020. The exchange achieves concentrated liquidity through a proactive market maker algorithm that automatically allocates funds to a certain range dynamically, achieving a lower price impact on transactions with less necessary liquidity in DODO’s pools.

The twist of the proactive market maker is arguably one of the best advantages DODO has over the cut-throat competition for liquidity between decentralized exchanges. While Uniswap‘s v3 concentrated liquidity feature depends on users moving their liquidity, DODO does it automatically around the relevant price range. As moving liquidity can be expensive, DODO’s automatic system favors smaller users.

While this feature has been integrated into the exchange since its launch, future updates for DODO tell us a lot about the general direction of DeFi for the second part of 2021. High on the agenda for most DeFi protocols, including DODO, is bringing their protocol to layer 2 scaling solutions like Arbitrum. The exchange’s CEO Lei Mingda has a lot of positive things to say about Arbitrum.

“Layer 2 works even better than I expected. Arbitrum is a great project and a team with a solid background. That doesn’t mean there won’t be issues at launch though, but the product is ready and works well,” said Lei. “The reason why they haven’t opened it to the public is that they want everything to be ready and tested before Arbitrum becomes available to the public.”

DODO’s Multichain Future

DODO was also one of the first exchanges to port their protocol on Binance Smart Chain. BSC has been having a complicated few months as it first brought millions of users to the network, using DeFi and Ethereum Virtual Machine. When it comes to layer 1, DODO is chain agnostic. Its strategy has been following the user activity, which has led to the implementation of the protocol on ETH, BSC, and Polygon.

“Binance Smart Chain is an important partner of DODO, but its reputation has taken a hit recently. The biggest problem is Binance’s “move fast break things” style, which has led to great growth when the chain wasn’t really ready and battle-tested,” says Mingda. “Now they’re paying for that.”

One of the key shows of strength for DeFi in the coming months will be the duel for liquidity between sidechains like Polygon or BSC and true layer 2 like Optimism or Abritrum. While the first two already have established user bases, true layer 2 will benefit from better security by directly leveraging Ethereum’s main chain security.

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“Sidechains have developed strong userbases so short/mid-term there’s going to be a split between these two solutions. Eventually, if L2 delivers, that’s where the money will go,” predicts DODO’s CEO. “Splitting capital around different chains is a problem, but this is something DODO’s market maker algorithm is perfectly suited for, as it makes up for lower liquidity.”

State of DeFi

Mingda also had interesting words of wisdom regarding the recent downward price trajectory of DeFi tokens. Between February and May, DODO’s token traded around $4. Today, the token changes hand barely above $1. When asked about it, Mingda seemed more amused than worried.

“We don’t care about that, and we can tell you other projects don’t care either. We’re too busy building to care about secondary market prices. DeFi tokens crashing is a very normal phenomenon that has happened many times before,” he assured. “All the DeFi teams have more than enough cash to continue building and we shouldn’t worry about the industry.”

DODO price over the last year. Source: CoinGecko.
DODO price over the last year. Source: CoinGecko.

Indeed, the exchange has the luxury of being backed by Three Arrows Capital, one of the foremost investment funds in the crypto space. The exchange enjoys biweekly calls with founding partners Su Zhu and Kyle Davies, two veterans of the crypto space who can properly advise DODO’s growth.

Disclaimer: The author held ETH and several other cryptocurrencies at the time of writing.

This news was brought to you by ANKR, our preferred DeFi Partner.

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DODO DeFi Token: Everything You Need to Know

DODO is a decentralized exchange operating on the Ethereum blockchain that utilizes the algorithm of the Proactive Market Maker (PMM) to provide users with tokens to earn transaction fees.

According to DeFi Pulse data, DODO’s native token DODO is now ranked 37th with a $59.1 million total value locked in the decentralized finance (DeFi) market. It has only been listed for two months and is a relatively new project in the crypto space.

Some of the decentralized exchanges we are familiar with, such as Uniswap, use algorithms such as automatic market maker (AMM), allowing investors to deposit funds into the on-chain liquidity pool in advance, in a completely decentralized and non-custodial manner, all the while providing seamless transactions between cryptocurrencies.

However, traditional AMM possesses the pain points of impermanent loss, low capital efficiency, insufficient liquidity utilization, and multi-token risk exposure.

In order to solve the above problems, DODO created the Proactive Market Maker (PMM) algorithm, which aims to generalize the order book matching system.

High capital utilization

PMM adjusts the pricing curve by using a price prediction system so that a larger part of the liquidity is concentrated around the market price of assets. This enables more active and frequent transactions, thereby improving capital efficiency and reducing impermanent losses. As shown below, near the market price, the DODO curve is flatter than the Uniswap curve, indicating higher capital utilization and lower slippage.

Unilateral transaction

At the same time, PMM allows market makers to deposit solely unilateral assets of a certain trading pair, so traders do not need to bear bilateral risks.

Low transaction costs

The DODO mainnet integrates the Chainlink oracle, which provides price updates by aggregating responses from twenty-one different price feeds, and reasonably allocating less costly transaction fees to liquidity providers.

DODO has gained the approval of many top global investment institutions including Three Arrows Capital, Binance Labs, Coinbase Capital, and Alameda Research, to name a few. Dodo is currently listed on the Binance and FTX exchange.

Image source: Shutterstock


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Top 3 Cryptocurrencies To Watch This Week: BTC, DODO, ZEC

With Bitcoin (BTC) regaining its place on the $60K mark, the current battle between bulls and bears is on par and the bulls are actively taking the defense of the important support level of $60K. 

Traders seem to be waiting for BTC to trigger its all-time high (ATH) of $61,781. If the bulls manage Bitcoin above its previous all-time high of $61,781, it will trigger upward momentum for the cryptocurrency. It may also serve to push DODO and Zcash (ZEC) higher, as altcoins have traditionally soared in tandem with Bitcoin’s surges.

At the same time, Coinbase will be listed directly on Nasdaq on April 14. A successful listing will stimulate bullish momentum in the entire cryptocurrency market, attracting more traditional investors to enter.

If Coinbase’s $COIN stocks fall on debut on April 14, then BTC, DODO, and ZEC may face a potential headwind. The indifference of investors to Coinbase’s listing can even cause the bears to gain an upper hand on the entire crypto market. But at present, the occurrence of this situation seems unlikely.

Bitcoin (BTC) Price Analysis

SourceBTC/USD Daily via TradingView

Bitcoin soared above the $61,000 resistance level on April 10, reaching a maximum of $61,222.22, a short cry from its all-time high.

However, it seems that the bulls are still not active enough. They tried to retest the psychological barrier of $61K again over the weekend, to no avail. This shows that investors are still very hesitant at a price level. High prices and uncertainty about future trends may make investors reluctant to buy actively.

At the time of writing, the price of Bitcoin has not yet closed above $60K and is trading at $59,785. This shows strong resistance for the bears.

The MACD index has been stagnant for a short period of time while the trading volume has shrunk, which shows the hesitation of both bulls and bears. This indicates that Bitcoin’s price may continue trading sideways at around $60K for a while.

The Stochastic RSI indicator has entered the overbought zone, indicating that a bearish crossover may be formed at a high level in the future. The bears are currently trying to drive the price down to a 20-Exponential Moving Average of around $57,780. A strong rebound from the support level will increase the possibility of breaking through $61,785.

If this happens, the BTC/USD currency pair may start the next segment of the uptrend, which may push BTC up to $70K. However, if Bitcoin undergoes a downtrend, $55,600 will be the first key support level to look out for. If the bulls fail to defend this key support level, this will be the first sign of a trend reversal for Bitcoin and the cryptocurrency may test the $51,326 support level.

DODO Price Analysis

Source: DODO/USDT Daily via TradingView

DODO is a Decentralized liquidity aggregator service powered by the Proactive Market Maker (PMM), supporting the best price exchange between any tokens through intelligent routing.

Yesterday, a long bullish candlestick made the price of DODO regain the exponential moving average ribbon. This started a new round of uptrend for DODO and an increasing trading volume, which is worthy of investors’ attention.

If the bulls can push the decisive closing price above $5.68, then the bullish momentum may prompt DODO to reach its all-time high of $10.

Both the upward sloping moving average and the bullish MACD indicate that the bulls are currently dominating the market.

Stochastic RSI stepped into the overbought zone, which is the bearish side of the oscillator. If a large number of sell orders are triggered, then DODO/USDT will test the $4.18 support level. If the bulls fail to defend $4.18, then the positive bullish view for DODO will disappear.

Zcash (ZEC) Price Analysis

Source: ZEC/USD Daily via TradingView

Zcash (ZEC) is a cryptocurrency aimed at offering enhanced privacy for its users compared to other cryptocurrencies such as Bitcoin and Ethereum.

The Zcash blockchain allows users the option of either revealing or hiding their transaction details. Zcash is currently ranked as the No.47 largest cryptocurrency with a market cap of $2,718,955,341. In the past 7 days, it has risen by 24.88%.

Zcash is still a far cry from its highest point of $2,175. However, it has shown a strong recovery since the beginning of 2021, going from $57 to $236, an increase of more than 400%.

From March 26 to today, ZEC has maintained a steady growth. The transaction price of ZEC/USD is much higher than the Exponential Moving Average ribbon. Although there was a retracement on April 6 and April 7, ZEC has rebounded strongly and started a new round of uptrend.

Both the upward sloping moving average and the bullish MACD indicate that the short-term trend remains bullish.

Stochastic RSI shows that ZEC is entering the 80 overbought levels. There may be minor corrections in the next few days. But this correction is needed for ZEC to continue rising healthily.

Image source: Shutterstock


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Focus on DeFi ‘fairness’ benefits Holochain, Orion Protocol and Dodo

Bitcoin’s (BTC) strong bull run and the immense popularity of the decentralized finance space have attracted several new investors to cryptocurrencies. A report from Crypto.com shows a massive increase in crypto users as the figure rose from 66 million in May 2020 to 106 million by January this year. 

Crypto market data daily view. Source: Coin360

Contrary to the popular notion that new crypto users are mostly speculating on the price, data from Unchained Capital shows that investors who bought in the past three to five years are still holding and are not yet tempted to book profits.

Unlike the 2017 bull market where many low-cap altcoins rallied, the current bull trend has rewarded projects with strong fundamentals. Let’s have a look at three such tokens and also analyze their charts.