What is Pool?
Pool is an open liquidity market venue through which you, the market maker, can select a trading pair, provide liquidity for the pair, and earn fees accrued from the pair’s trading activity.
How do I create a Pool?
Go to https://app.dodoex.io/pool/list. Alternatively, select “Pool” under the “Developer” tab.
Click on the “Connect Wallet” button in the upper right corner
Click on the “Create a pool” button.
Read the risk disclaimer and confirm you have read, understand, and agree to the Terms of Service. You will be presented with a pool creation page that looks like this:
Select the type of liquidity pool you would like to create. A pool falls under one of the following two types:
- Public Pool (also known as the DODO Vending Machine)
- Anyone will be able to provide liquidity for this pool, and all liquidity providers will share the trading fees accrued proportional to their percentage of the pool
- The pool parameters cannot be modified after creation
- Private Pool (also known as the DODO Private Pool)
- Only the pool creator can provide liquidity for this pool
- The pool parameters can be modified at any time after creation
- Public Pool (also known as the DODO Vending Machine)
Please note that regardless of the pool type, liquidity providers will be able to manage, deposit, and withdraw their assets at any time.
Select the liquidity pool template. There are three pool templates to choose from:
Standard pools are similar to Uniswap v2 pools in terms of capital allocation and efficiency. With standard pools however, you can set the trading fee rate during pool creation. For example, in the image below, the pool creator has selected the standard pool template and is adding 1,000 DODO and 100 USDC. Utilizing the constant product formula, we see that the initial price for this trading pair is 1 DODO = 0.1 USDC (by calculating 100 USDC/1,000 DODO). The depth chart preview gives you a good idea of how liquidity will be allocated.
Single-Token pools are, as its name suggests, created with one token type only. They are useful for selling project tokens to raise funds. You can create liquidity markets with the tokens you have and nothing more. With this pool template, you can customize the token type, the amount of tokens, trading fee rate, init price, and the slippage coefficient. Based on these parameters, DODO will automatically create an ask-side market as follows (the example uses 1,000 DODO, a slippage coefficient of 0.2, a fee rate of 0.3%, and an init price of 1 DODO = 0.1 USDC).
With Customized pools, pool creators are able to configure all parameters, including token types, amount of base and quote tokens, trading fee rate, slippage coefficient, and min price (the market will ensure that the price never goes below this amount). This option gives market makers full control over how their pools are set up in order to execute their market making strategies on-chain.
Note that you will need to give DODO permission to spend your tokens by approval transactions. Do so by clicking on the lock button next to the token amount input field and approving the subsequent wallet transaction.
Once you have approved spend for all the tokens you would like to use, click on the “Create” button below. You will see a confirmation prompt. Double-check that all the parameters are correct and click “Create” again. Approve the transaction and you are done!
So now your pool is up and running, what next? You can manage your pool by clicking on it under the “My Pool List”.
For Public Pools, you will be presented with an interface that looks like the following. Click on “Edit Liquidity” to deposit or withdraw assets into or out of the pool.
For Private Pools, the interface will look like the following instead.
Click on “Modify Parameters”, read the risk disclaimer, and you will be able to change and fine-tune the pool parameters as you see fit. To deposit or withdraw from the pool, set the target liquidity instead.
After you have modified parameters and set the new target liquidity, click “Confirm”, and you will be prompted to confirm the pool changes. Click “Confirm” again, approve the wallet transaction, and you are done.
As for the accrued fees from trading, they are split among the pool’s liquidity providers. A liquidity provider’s share of the pool is calculated as a percentage of their staked amount over the total amount in the pool. When you withdraw some of your assets from the pool, the fees accrued from these assets will be paid out to you immediately. Please note that market making is not always profitable.
There are many different use cases for Pool. We will list two below:
Use Case 1: Create a token liquidity market in mere minutes
- Use the Public Pool and the Single-Token pool template. Simply supply the tokens you are looking to sell, set the initial price to be some numberi, set the slippage coefficient to be 1, and you will get a highly liquid trading pair for your token.
- Once you have created this pool, you can then invite community members to trade for your project token there. We recommend using this solution as the initial liquidity market for tokens, so you don't have to prepare any bid-side liquidity (i.e. ETH or stablecoins to seed the market), and the funds from your community members buying tokens naturally become the buy orders/bid-side liquidity.
- In addition, this market can be used for liquidity mining, because it eliminates the need for buy orders below the initial price, so the capital utilization is high. Community members only need to buy your tokens, contribute some additional capital, and start mining. This is also great for you, because it moves the funds that were providing buying liquidity below price i to above price i, essentially pushing up the price of your token.
Use Case 2: Create a stablecoin liquidity market in mere minutes
- Use the Private Pool and Customized pool template. Set the initial price to 1 and set the slippage coefficient to 0. Top up your tokens and you get a new stablecoin pegged to 1 USDT/USDC/DAI/etc.