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DODO Private Pool (DPP): Tailored Liquidity for Professional Market Makers

The DODO Private Pool (DPP) stands out as a specialized product designed for professional market makers with nuanced needs that surpass the capacities of other liquidity pool models on DODO.

Distinctly, a DPP differs in two primary aspects:

  • Exclusive Liquidity Provision: Only the creator of the pool has the privilege to supply liquidity, ensuring exclusive control over the capital within.
  • Dynamic Parameter Adjustment: The pool creator retains the ability to modify the pool's parameters at any time.

In other words, you can set the price curve and fee rate any way you want and provide any amount of money.

Mechanics#

While most on-chain liquidity is sourced from AMMs, this form of market-making is quite basic, akin to grid trading. Professional market makers, armed with market insights, often outperform AMMs in liquidity provision, achieving higher capital efficiency and capturing more trades with less capital. DODO's PMM algorithm offers flexibility and a competitive edge, allowing for parameter adjustments to align with personalized pricing models.

Best Practices#

The versatility of Private pools lends itself to ongoing exploration and innovative use cases. A common strategy involves adopting a fully or partially hedged position to optimize the use of private pools. While operating a liquidity pool does entail risks, these can be mitigated by deploying automated market-making bots, albeit this requires coding expertise.

Advantages of DODO Private Pool Over UniV3#

A key advantage of the DODO Private Pool (DPP) is the enhanced flexibility it offers market makers, particularly in terms of fee structure and cost efficiency. Unlike Uniswap V3, where changes to fee tiers are more rigid, DPP allows market makers to adjust the transaction fee rates on-the-fly to adapt to market conditions swiftly. This dynamic fee adjustment capability is crucial for market makers to optimize their returns and respond to volatility without being locked into a fixed fee rate.

Moreover, the cost associated with adjusting the central price—central to ensuring the pool remains competitive and profitable—is significantly lower in terms of gas fees on DPP compared to Uniswap V3. This reduced gas cost for modifying the central price not only increases transactional efficiency but also enhances the market maker's ability to maintain a competitive edge in fast-moving market environments. This combination of flexible fee adjustment and lower operational costs positions DODO Private Pools as a compelling option for market makers looking for efficiency and agility in their liquidity strategies.

Upgrade to DODO V3#

DODO Private Pool has performed well, and market makers have utilized DPP to create excellent liquidity and obtain substantial profits. Therefore, we have designed DODO V3 with higher capital efficiency and lower gas costs. The ultimate goal of launching DODO V3 is replacing DPP. If you are interested in DPP, I strongly recommend that you directly try out DODO V3.