DogeSwap.org — the Dogechain DEX aiming to push the boundaries of capital efficiency in DeFi

DogeSwap.org might look and sound like a joke… and it kind of is. Our Doge-corn Uniswap-knockoff logo pokes fun of the fact that most decentralised exchanges are forks of the Uniswap V2 protocol. However, we think that Dogechain Family is the ideal playground to innovate in DeFi.

Uniswap V2’s Automated Market Maker (AMM) was an innovative design that pushed widespread adoption of decentralised exchanges within the crypto community. However, it’s not without its problems — “impermanent loss” is quoted as a side-effect even by Uniswap themselves, and has become a well-known term to describe the loss that liquidity providers face when adding funds to a pool on Uniswap.

Essentially, if a user provides funds to the eth-usdc pool (for example), then they are always on the wrong side of any price movement. e.g. as the price of ethereum goes down, liquidity providers acquire more and more of it. The reason the loss is described as impermanent is because if the price of ethereum returns, then the liquidity provider has made a profit.

However, the price might not return, and the impermanent loss is a very real cost to liquidity providers. This is something that the DogeSwap.org team has an intimate understanding of.

Over the past couple of years, we’ve taken large sums of money away from liquidity providers… so our profit has come from others’ impermanent loss. And whilst we are grateful to have been able to capture this inefficiency, we thought it was time to see if we can solve the very inefficiency we have been exploiting.

We have 2 major releases planned for DogeSwap:

• DogeSwap V2 = a clone of Uniswap V2, released on Dogechain. Nothing revolutionary, but a proven model in DeFi.
• DogeSwap V69 = a DEX that looks and feels like Uniswap V2, but in the background uses an off-chain oracle to sign prices. We believe this could drastically reduce impermanent loss, and perhaps eliminate it. In turn, DeFi users can benefit from lower trading fees, and liquidity providers will lose less money to arbitragers.

We’ve been toying with the problem of impermanent loss for about a year now, and Dogechain is the perfect playground to experiment with this kind of project — with low gas fees, and a strong community that’s keen to experiment.

Woof! Come join the pack on Telegram: https://t.me/+6eGjC6hMjf5iYWIy