Introducing Dove
Dove is a cross-chain AMM. It is our take on the “dAMM” that was conceptualized by both Louis Guthmann and Brett Davos.
It is based on existing designs of constant function market makers (CFMMs) such as Uniswap v2, Solidly, and others. The main advantage is that it uses cross-chain messaging to allow for trading to take place on multiple chains (Polygon, Optimism, Arbitrum, etc.). This way liquidity stays unified and secure on Ethereum.
In short ; provide liquidity on L1, trade on L2.
In the eye of the Dove
One of the highest risks in all of DeFi is the risk that liquidity providers incur when bridging their LP tokens outside Ethereum mainnet. Furthermore, the current state of DeFi operates on disjointed AMMs across different chains, which causes liquidity fragmentation across the L2 ecosystem. This leads to a decrease in the amount of available liquidity for trades, resulting in less favorable prices overall.
Dove aims to address this issue by introducing a protocol that not only offers the same benefits as CFMMs such as lazy LP token management and user-friendly interface, but also enables liquidity to be accessible to swap demand across multiple layers, rather than being limited to just one.
Contrary to a typical AMM where liquidity and pricing are coupled together, we separate these two. As a result, Dove can operate multiple AMMs for a specific trading pair across different L2 layers, all utilizing the same liquidity sourced from L1.
This increased capital efficiency benefits both LPs [exposed to more fees] and traders [better prices].
What’s to come
The asynchronous and cross-chain nature of the protocol introduces new challenges that, in the context of a traditional AMM, are considered trivial. We are still in the process of carefully crafting tests as robust as possible to ensure it is safe to use.
For its first iteration, we decided to have a limited support of tokens that restricts it to like-assets [stablecoins, ETH, stETH, …].
It is part of our plans to get the codebase audited, including by a FV team and through public auditing platforms.
