The Metaverse Podcast - DeFi to MetaFi, with Diane Dai of DODO
Primer: DODO Exchange is a DEX powered by the proactive market maker (PMM) algorithm. They have now expanded into the NFT sector. Join Jamie Burke as he interviews Diane Dai, co-founder and CMO of DODO Exchange, as to this latest move towards NFTs.
Origins
Co-founder and CMO of DODO Exchange
Entered the crypto space in 2017
Back then, she was attending university and interning at DDEX, an orderbook DEX
In 2018, started to learn about how blockchains can be used for finance (e.g. Uniswap, dYdX, Compound, and other protocols)
Was very excited about the innovations and started a WeChat blog called DeFi Labs to introduce these DeFi products to the Chinese audience
Organized a WeChat group called DeFi the World. Half of the group went on and founded their own DeFi projects
Started hosting local meetups to introduce how DeFi products work and how people can benefit from it
DODO Exchange
Decentralized exchange and liquidity provider powered by the proactive market maker (PMM) algorithm
DODO Exchange has been in operation for a year now
Making moves into the NFT space
Proactive Market Maker (PMM) is a new blockchain market making model. It is different from the non-constant function market maker model, which separates the transaction-to-asset relationship. Parameters such as asset ratio and curve slope can be flexibly set. At the same time, an oracle machine can be introduced to guide prices or price discovery by the market on the chain. This oracle also gathers more funds near the market price and provides sufficient liquidity.
PMM Algorithm
In an orderbook exchange, the orders are distributed across various price points, which is known as the spread
This facilitates the discovery of the market price
The PMM is used to guide the capital in the liquidity pools to trade near the market price of the asset
DeFi Summer In China
DeFi Summer was the same for both the East and the West
Before DeFi Summer, there was DeFi winter in 2018 and 2019. The founders were building hard during this period and investors and users were not aware of it
When DeFi Summer arrived, the products have become more matured and were suitable for a larger user base
The Asian audience has a little bit of advantage as they love to learn about new financial applications and took the opportunity to jump right in
Founded DODO Exchange at that time. Saw that the Automated Market Maker (AMM) algorithm was not capital efficient
Developed the PMM algorithm to address the deficiencies in the AMM algorithm
"My partner at DODO and I discovered a solution that we combined the advantage of orderbooks and also AMM into a high capital efficiency solution. That is the PMM algorithm." - Diane Dai
At the launch of their beta, investors started calling in to express their interest in investing in DODO Exchange
Investors saw the need for local products in the Asian market that can have a global user base
Usage Of DODO Exchange
For traders, they provide the best trading prices
For LPs and liquidity creators, they provide tools for people to create liquidity
Has multichain support for Ethereum, Binance Smart Chain, Polygon, Arbitrum, and, in the future, Solana
On an average day, there is 100 million trading volume across all blockchains on DODO Exchange
Different activities on different chains
More whales on Ethereum. Mining and trading stablecoins in large quantities
Mainly retail users trading on Polygon and Binance Smart Chain. These users love to participate in IDO events and crowd pooling events
Geographical distribution of users
1/4 from China
Indonesia and Vietnam
Europe and the US
Good trend on the growth of DODO Exchange. Will be expanding globally
Why Is DODO Exchange Looking Into NFTs?
Thinks that the NFT space will experience large growth in the following years
Many people are into the Metaverse and there is value in it
There needs to be a platform for people to exchange value
"I think human civilization will grow in two directions. One Direction is we go to space, building rockets and then launch it to space, we explore externally. And another direction is we explore ourselves internally. And like we want to have AI and we want to have maybe like a robot boyfriend, like I mean not go to find a human boyfriend, but maybe a robot boyfriend that can really satisfy me something like this." - Diane Dai
Will be applying the PMM liquidity framework into the NFT space
Existing Peer-to-peer trading model has its disadvantages as they are illiquid
For DODO Exchange, they will be implementing a peer-to-pool model. Anyone can deposit their NFTs/NFT collections into the pool and the pool creator will be launching a fungible token on behalf of everyone to improve liquidity
Can swap your tokens for NFTs and vice versa
Anyone can create a pool with any NFT assets that they like
Those with market-making knowledge can even become the market maker for their own pool
NFT Pool Creation
Using CryptoPunks as an example, the pool creator has to define the swap ratio between one punk to one token
Can add in additional NFTs such as Apes or Cats to make the pool more valuable. Adding new NFTs require the owner to redefine the swap ratio
DAOs will be allowed to create pools and can market make for NFT assets
"Because ultimately I'm seeing these, let's call them blue-chip NFTs, they're increasingly being owned by DAOs, not individuals just because of their value but DAOs still need liquidity so I think that's really cool." - Jamie Burke
Trying to launch Version 1 before October 2021. In the process of designing versions 2 and 3
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