For strategy providers, DODO V3 is:
For liquidity providers, DODO V3 is:
With the transition of on-chain liquidity models from AMM to concentrated liquidity models (such as UniV3), LPs have a much larger strategy space. Where to concentrate liquidity, when to adjust the concentration position, and choosing the fee rate are all part of a strategy.
We have found that there is a huge performance difference between different strategies. Most strategies perform poorly, while a few can bring high income for LPs. In other words, a lot of funds are using poorly performing strategies. There is a strategy-fund mismatch in the market. We need a market that matches liquidity providers (LPs) and strategy providers (SPs).
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.
Other strategy management platforms built on UniV3 often impose many restrictions on strategy, such as only being able to adjust the fee parameters or requiring strategies to be written as smart contracts. However, DODO V3 imposes no limitations on liquidity strategies, allowing you to run them as black boxes off-chain. You can adjust parameters such as depth, price, fee rate, etc. at any time.
However, to prevent malicious behavior from causing losses to the LPs, SPs are required to provide collateral. If a strategy performs poorly (e.g., resulting in IL - Impermanent Loss), the collateral will be deducted first. When the collateral is insufficient, the strategy will be removed and free all the fund it controlled. So from the perspective of a strategy provider, DODO V3 is a leveraged market making tool.
SP can choose how much assets to manage, but in order to avoid unlimited occupation of LP funds, SP needs to provide a guaranteed interest rate to LP. As the utilization rate of LP funds by SP increases, the guaranteed interest rate will also gradually increase. This will bring about healthy competition among SPs, and strategies with stronger profitability will receive more funding support.
DODO V3 has made a big improvement in the performance of the pool.
In traditional AMM pools, makers need to provide quotes between two tokens, which becomes cumbersome when providing liquidity for multiple trading pairs. In DODO V3, a single pool can accommodate many different tokens, and any two of these tokens can be exchanged with each other. This helps save maker funds. For example, if a market maker wants to provide liquidity for the DODO-ETH, ETH-USDC, and DODO-USDC trading pairs, in UniV3 they would need to deposit funds separately into three different pools. But in DODO V3, they can reuse ETH USDC and DODO tokens and achieve the same level of liquidity with less money.